There are some unifying themes that Tea Party types and Occupy Wall Street demonstrators can actually rally around... One of them is to slap a tariff on Chinese imports that would be proportional to the perceived amount they undervalue their currency with respect to the US dollar, the Yen and the Euro.
Occupy Wall Street demonstrators, and their supporters, generally oppose free trade because it allows companies to export factories (and jobs) to facilities off-shore. A tariff would lessen (but not eliminate) the incentive to export to China, and might even keep some manufacturing here.
Tea Party demonstrators want countries to play by the rules, and China's currency manipulation flies in the face of what other industrialized countries (like those in the US, EU, Brazil, Japan, Russia, India, other non-EU countries in Europe, etc) have to do in order to live with the headaches of fluctuating currencies. Others in the Tea Party (myself included) strongly dislike subsidies, in that they distort markets and create inequalities (read:bubbles) that inevitably rectify themselves (read:pop), often causing significant turbulence (read:market crashes). Currency manipulation is one giant subsidy. There are also a significant number of Tea Party types who agree with the protectionist sentiment of the Occupy Wall Street'ers, who are similarly frustrated by the job loss caused by seeing manufacturing moving overseas.
So a bill that slaps tariffs on Chinese imports should be a slam-dunk in Congress, one would think. However, the Republican leadership in the House is pushing back against this bill because they don't want to start a trade-war with China, and because they're being lobbied heavily by Chinese-backed interests.
Increasing tariffs on Chinese manufactured goods will be a hidden tax on many items consumers purchase. China's currency manipulation has indirectly benefitted the American consumer by making their imports cheaper than they otherwise would be if the Chinese Remimbi were to float along with other currencies. The Chinese people themselves are hurt by the lowering of their currency, since imported commodities (like grain, oil, coal, timber, etc.) are all more expensive with a devalued currency. However, all other countries would secretly applaud the US for slapping a tariff on Chinese goods if, simultaneously, we pursued trade agreements with other countries to remove existing barriers with them. It could be a win-win for everyone except China. Even if we kept the status quo, other countries would benefit from increased trade as some manufacturing would leave China and go elsewhere.
At some point, China would have to let their currency float. At that point, the Chinese people would benefit from a fairly-valued Remimbi. The world economy would benefit from the subsequent equilibrium, since other countries' exports would benefit in comparison. The American consumer would pay more in goods, but it wouldn't come at the cost of Chinese workers being underpaid for their labor.
So what would happen if the US were to pass a bill? There would be winners and losers, and Wall Street indexes would drop with the initial uncertainty. However, if done properly, the amount of disruption would be minimized by allowing markets to actually work. If I were to craft legislation, I would use carrot-and-stick incentives to hike tariffs higher than the perceived devaluation of the Remimbi, while clarifying the ability of immediate tariff reduction and elimination based on Chinese actions towards letting their currency float. I would not subsidize companies that export goods or services to China, even if that means a loss of exports to China--better to pursue trade with other countries which have played by the rules. I would not subsidize companies dependent upon cheap Chinese manufactured goods: let the market create incentives or find alternatives--as would inevitably happen anyway.
The ultimate goal is to create equilibrium with respect to elimination of subsidies on both sides of the Pacific. We need to reduce, if not eliminate, subsidies to our industries. We need China to phase-out their currency devaluation. American manufacturing can compete with the rest of the world if we keep energy prices low (to allow automation to keep productivity high for each worker) and allow innovation to be rewarded.
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