The House is expected to vote today on a bill that would allow U.S. companies to petition the Commerce Department for protective tariffs against imports from countries with “misaligned currencies.” Everybody knows the bill is aimed squarely at China.
Advocates of the legislation say it is about jobs, and they are partly right. The bill is about saving the jobs of incumbent lawmakers who are desperate to appear tough on China trade, which they blame for the loss of U.S. manufacturing jobs.
As my colleague Dan Ikenson and I have argued at length, in blog posts, op-eds, and longer studies,
- A stronger Chinese currency will not put a major dent in our large bilateral trade deficit with China, certainly not any time in the near future.
- The bilateral deficit with China and America’s overall trade deficit is not a drag on growth or a barrier to manufacturing exports and output.
- U.S. manufacturing has not been decimated by trade. In fact it has been expanding as American producers move up the value chain to more sophisticated, high-tech products.
- Provoking a needless trade spat with China will jeopardize the healthy export success American companies have enjoyed in China’s fast-growing market.
Let’s hope cooler, wiser heads in the Senate and the White House save us from this election-season folly.
