Sen. Bob Corker (R-Tenn.) is making a last-ditch effort to convince his colleagues to vote against the China currency bill, warning that passage of the bill would “start a trade war” with China and could bring a return to Smoot-Hawley.
“The bill seeks to create U.S. jobs by imposing tariffs on imports from China in the amount that China undervalues its currency,” Corker wrote in an op-ed in the Wall Street Journal on Tuesday. “The bill’s actual effect, though, won’t be to bring production from China to the U.S. — only to make the things that we buy from China more expensive.”
Corker, a member of the Senate Foreign Relations Committee, said there was “no question” that China manipulates its currency and that the value of the yuan is determined by a “managed float” instead of market forces.
However, signing the China currency bill into law, Corker warned, would prompt China to “retaliate with tariffs of its own” and also cut off business with American companies. The U.S., which imported $365 billion worth of goods from China in 2010, could inflate the price of U.S. consumers and businesses pay for those items by 20 to 30 percent, the senator warned, tacking on an extra $60 to 100 in costs that the U.S. cannot afford in the middle of a recession.
“If we want to compete with China in manufacturing, we need to create a better business climate for manufacturing in the U.S.,” Corker said. “We should also address China’s disregard for intellectual property rights, push China to end preferential procurement policies and to invest in manufacturing plants in the U.S., and ensure that we maintain access to China’s 1.3 billion consumers. These are the right policy responses toward Beijing.”
Corker noted that Congress had passed the Smoot-Hawley Tariff Act in 1930, which, “in a moment of populism, legislators reached for simple answers to complex problems.”
“The result was a deeper depression and a decade of increased joblessness,” he said. “We must not repeat these mistakes.”
In the Journal op-ed, Corker made no mention of the Obama administration’s role in the currency debate, but last week, the Tennessee Republican had lashed out at the White House from the Senate floor, saying, “one of the most shocking aspects of this debate has been the Home Alone syndrome at the White House – a total lack of leadership from this administration on an issue of great international importance.”