The problem is the big trade deficit with China. If less goods are imported from China, the substitutes have to be imported from other third world countries at a higher price. But America could demard those countries to buy more US made products to keep trade balanced, while it seems China cannot import any more from US. With inflation level so low, more export is preferrable than low inflation. My two cents, you comment is welcome.
Bearish view in barron's on floating the currency....... http://online.wsj.com/barrons/artic...00.html?mod=b_this_weeks_magazine_market_week
Are we going back to the 1930's? We don't need trade wars. We don't need Chinese Tariffs. We need to just admit that manufacturing is not going to come back to America anytime soon. There are too many other spots in the world that can offer low cost production of goods. The US had it easy after WW II. After all, most other major countries had been wiped out. By the 70's, the Japanese were catching up to the bloated US auto industry. Then they dominated the 80's. Then China continued opening up, and now they are going to run circles around us and every other country in the world. Raising tariffs to protect American manufacturing now is like an orchestra playing on the sinking Titanic. It sounds good. It feels good. But you're still on a sinking ship. China could send us into a recession/depression in a hurry if they started to unload their massive position in US treasuries. Interest rates would soar, the housing market would crumble, GDP would dive, etc.
All in all, this comesdown to politician's pandering to their constituants. The people in the know realize that this measure to increase tariffs to 27% is impractical and they also know the possible horrendous consequences of such a tariff in sparking a global trade war. I am sure these senator's proposing this bill also realize this and realize that there is a high probabilty of there bill being shot down. I thought it was interesting in one of the articles that was mentioned, that Walmart is importing something close to 20 billion in goods from China. What the hell, an American company doing this. Why doesn't the Senators attack Walmart for not supporting the US. I personally don't have a problem with Walmart or any other company or individual getting the best price for goods. That is what a free market is all about.
China's yuan undervalued by 15-20 percent: expert group Tue Oct 21, 2:31 AM ET BANGKOK, (AFP) - China's yuan currency is undervalued 15 to 20 percent, the respected Institute of International Economics said, and urged the United States to adopt a multilateral path in prodding Beijing to free up its exchange rate regime. <more at url> http://story.news.yahoo.com/news?tm.../20031021/bs_afp/apec_china_yuan_031021063120
And I could not agree with you more. That is exactly what a free market economy is all about. Of course it may not always be in the best interest of the working class of the country, but so what? Most of them are Democrats anyway. Most of them are too stupid to realize that when shirts or sheets, or what ever are made in China, the cost at the store doesn't really go down. But the cost of making the crap does. And how best to keep this scheme going? Scare the poor bastards with talk of "Depressions", and of course 27% price increases. Look, let's not sugar coat this. As an American entrepreneur, you have the right to export American jobs for your own personal gain. You have the right to undermine American industry no matter the longer term consequences. As for the suckers who's work and sweat built this place? Frankly, who cares. Their American Dream doesn't count. Working class fools are a dime a dozen. And the best part is that their votes are easily bought with hot button issues like guns or motorcycle helmets and the like. Or to put it another way, they are basically unrepresented in Government, and are not really a political force to reckon with.