Friday, June 11, 2010

Talk of Trade Wars with China, Tariffs, and Currency Manipulation Move to Forefront; US Trade Imbalance - Whose Fault is It?

Congress is one again shaking its currency-manipulation rattle. What's different this time is Geithner appears to be listening.

Please consider Geithner signals U.S. patience waning on China currency. http://www.reuters.com/article/idUSTRE65A07V20100611

Treasury Secretary Timothy Geithner indicated U.S. patience on China's currency policy was wearing thin on Thursday as a key lawmaker warned that he would move soon on legislation that would penalize Chinese goods.

Striking his toughest tone on the yuan since delaying a decision in early April on whether to name China a currency manipulator, Geithner told a U.S. Senate hearing Chinese policies had a harmful worldwide impact.

"A stronger renminbi would benefit China because it would boost the purchasing power of households and encourage firms to shift production for domestic demand, rather than for export," he told the Senate Finance Committee.

"The time is long past for any Treasury Department to admit publicly what everyone else already knows, that China is manipulating the value of its currency in order to gain an unfair advantage in international trade," said Charles Grassley, the senior Republican Senator on the committee.

Democratic Senator Charles Schumer told Geithner to "be prepared" because lawmakers would move forward soon with legislation that would slap anti-dumping penalties and countervailing duties on goods from China and other countries with a "fundamentally misaligned" currency.

Senator Graham Threatens Veto-Proof Currency Legislation

Congress is increasingly frustrated with the China's currency peg, so much so that senators suggest there may be enough votes to override a presidential veto. Bloomberg reports Graham Says China Yuan Measure Has ‘Huge’ Support in Congress. http://www.bloomberg.com/apps/news?pid= ... K6FU&pos=9

U.S. Senator Lindsey Graham said legislation aimed at getting China to raise the value of its currency has “hugeâ€