Recently, Senate has been weighing the pros and cons of a bill that would essentially punish China for undervaluing its currency. Besides the politics of this legislation, there are serious economic and international relations concerns that need to be addressed. The bill does have backing from both democrats and republicans, but there are many questions over whether it will or should become law. Although the U.S. economy may have been damaged by China undervaluing its currency, I'm not sure that these types of punishments and sanctions will actually help the U.S. economy and effectively punish China. Also, why do we need to punish China? Sure, China has undervalued its currency, but at this point in time, the U.S. depends on a favorable exchange rate with China and low manufacturing costs. Without that, the U.S. would not be able to manufacture products inexpensively, and we would surely be in more trouble than we are in right now.
The bill in question is not specifically against China, (in fact, I don't think it even mentions China) but it will impose higher tariffs for goods from countries that have misaligned currencies, namely China. Many politicians think that such a measure is needed to show China that they cannot essentially cheat and have no consequences. However, will the Chinese even be negatively affected by these tariffs? I'm sure some companies may consider importing products from other countries, but for many goods, there are no viable alternatives to China. As of right now, China is the world's manufacturer.... where else would we go to have the things we use everyday made? There is some promise in South America and Southeast Asia, but those economies are not developed enough to truly sustain manufacturing like China does. They lack the infrastructures that has allowed China to become so successful. Does the U.S. really want to punish a country that we rely on so much? Also, will this bill end up hurting American consumers? Unless we stop importing so many goods from China, the retailers and consumers are going to have to absorb some of the costs associated with higher tariffs in the long run. Can the consumer and the American economy handle that right now?
Needless to say, I have a lot of questions and doubts about this bill... there are definitely pros and cons, but from my perspective, it seems like a bad idea that will surely backfire and hurt the American economy. Plus, will the Chinese even notice? They have been investing in so many underdeveloped areas (Africa, Southeast Asia, etc.) that their economy as a whole might not even suffer from the tariffs we impose on their goods.
Can we really punish China???
