US Lawmakers in Threat to Raise Tariffs on Beijing

A group of Republican and Democratic lawmakers will today revive a bill that threatens to raise tariffs on Chinese goods to punish the country for what they call "currency manipulation".

Highlighting the protectionist sentiment within Congress, the bill would let companies apply for tariffs on imports from countries deemed to be deliberately undervaluing their currencies to be more competitive. China is its main target.

"By illegally subsidising its exports through the undervaluation of its currency by 30 per cent or more, China distorts the gains from trade, creates barriers to free and fair trade, harms US industries and has destroyed millions of US jobs," those sponsoring the bill said in a statement.

Their move comes as countries across the world consider protectionist trade rules in the face of recession. Measures such as anti-dumping investigations rose 18.8 per cent in the first quarter of this year against the same period in 2008, according to research by Chad Bown at the Brookings Institution, with China's exporters the target in two thirds of those cases.

In the US there have been several attempts in the past four years to introduce a currency manipulation bill, none of which has gained real traction. On the campaign trail, Barack Obama suggested China was a currency manipulator, but his administration has since backed away from confrontation over the issue.

Nonetheless, a group of lawmakers from manufacturing-dominated states are determined to give it another try and some analysts think the US recession could help build support this time. The charge in the Senate will be led by Debbie Stabenow, a Democrat from Michigan, and Jim Bunning, a Republican from Kentucky. In the House, it will be pushed by Tim Ryan, a Democrat from Ohio, and Tim Murphy, a Republican from Pennsylvania.

"The rising unemployment rate in the US warns that there might be more support for such a measure than in the past," said Marc Chandler, global head of currency strategy at Brown Brothers Harriman.

"Even if the measure dies an ignoble death like the other bills, the mere proposal reminds China and others of the protectionism that lurks below the surface in the United States."

The US is not alone in facing rising protectionist sentiment. Three-quarters of the new anti-dumping investigations launched this year were by developing countries - half by India and Argentina alone.