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Congress seeks higher tax on Chinese goods

WASHINGTON -- Congress is taking another stab at retaliating against what many see as Chinese manipulation of its currency to make its exports to the United States cheaper and U.S. goods more expensive in China.

The Senate is expected to take up legislation Monday that would impose higher U.S. duties on Chinese products to offset the perceived advantage that critics say China gets by undervaluing its currency.

It's a political given here that China's economic policy has damaged U.S. manufacturers and taken away American jobs.

Beijing denies that its exchange rate is responsible for the huge trade deficit that the United States has with China, and it's not clear that U.S. lawmakers have the political will to follow through.

The Senate bill has bipartisan support and is expected to clear a procedural hurdle Monday evening. But opposition by U.S.-based multinational corporations and their trade associations could spell trouble for the legislation.

In addition, the Obama administration, like the Bush administration before it, doesn't like the bill, saying quiet diplomacy is a better way to influence Chinese policy and warning that overt penalties could lead to a destructive trade fight.

Sens. Chuck Schumer (D-N.Y.) and Lindsey Graham (R-S.C.), along with others, have tried for years to pass legislation making it easier to impose higher tariffs on Chinese goods. That would help compensate for what they say is Beijing's effort to keep the yuan undervalued against the dollar.

Under U.S. pressure, China did take steps last year that allowed for some flexibility in the exchange rate. But the yuan has risen only a few percentage points since then, and economists say it is still undervalued against the dollar by as much as 40 percent.

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