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  • Taxing Americans to Punish China

    President Obama reportedly spent much of his meeting this week with Chinese Premier Wen Jiabao urging action to revalue the Chinese Yuan relative to the dollar. Simultaneously, Democrats in Congress are pushing a bill that would tack countervailing duties on Chinese imports in response to an alleged distortion of the exchange rate. Whether the Yuan is undervalued is a hard question. Given the many distortions in the Chinese economy, and despite assurances by protectionists to the contrary, we cannot really know, absent a free currency market, what the real exchange rate with China should be. What we can know is that if the Yuan is undervalued, as so many claim, U.S. consumers are getting a break on the price of the goods they buy that are made in China.

    When the President says he wants to “fix” the Chinese currency situation, what he is really saying is that he wants Americans to pay more for Chinese goods. How much more? The math is pretty simple: Chinese goods account for 19 percent of U.S. imports, and imports account for 16 percent of American consumption, so if the Administration puts a tariff on Chinese imports of as much as 30 percent (as the Democratic House bill would allow), then these measures to “protect” us from China could add up to a new tax on Americans’ overall consumption of almost 1 percent. Just what we need in these hard times!

    Posted in International [slideshow_deploy]

    3 Responses to Taxing Americans to Punish China

    1. John Ritchie says:

      Your point is spot on. I recently had an entry linked on our blog that talks of Reich's comments regarding not to sanction China but focus on rebuilding our industrial base in the U.S. to compete with China. Reich is correct but for the wrong reasons. We do need to focus on bringing industry back to the U.S. but through lower taxes and less union – not tariffs and fees. These would only add to what your are pointing out – we the U.S. citizens would have to fit the bill. Please check the Reich's piece out at http://www.goforesight.wordpress.com. Thanks.

    2. elenore,usa says:

      Unions are less than 8% of workers.It not Unions you want to destroy it's labor laws in general.People like you are just filth wanting a return to slavery in this nation were people get paid with tokens instead of money like the Coal miners and children were doing work 10 hours a day instead of in school.Taxing Americans that's rich,especially since Corporate Gluttons like Walmart and Kroger would have been seriously closed down if it weren't for food stamps and Banks renting properties through Housing credits.Corporate Scum pay more to other governments than their own as well as getting Corporate Welfare and Poverty Welfare by way of customers flowing into their pockets.How much lower can taxes get.You just don't want to pay any taxes except for police so they can protect you Greedy Scum.We have cut so many taxes so we will all have dirty water,broken bridges,Brown outs,because scum like you bribe politician because you just don't care about your fellow citizens.Selfish.The more workers who lose jobs,the more taxes you'll pay anyway for Welfare(but who cares at least you can make poor people choices for them about how to live,how much to spend and have that income returned to Corporations/Banks) or risk upsetting a whole lot of people in this country who'll have nothing left to loose.You people are just grotesque to hate your own people or any people so much, your okay with human slavery where ever you can get.

    3. Octavian, Toronto says:

      Elenore, what you are saying is not all true.

      While it is true that corporate greed is holding back America and screwing up a lot of our society and politics, the answer is not raise taxes and revert to socialism.

      The answer is cutting taxes, and cutting spending by even more. The answer is also for America to let go of the past where having a military presence in all continents was needed to ensure blocking the expansion of communism.

      America needs to drastically cut it's defense budget, bring troops home, cut taxes, cut spending, encourage innovation, stop corporate greed, get wallstreet and all the other gangsters out of government, decentralize the government and respect the constition, encourage the manufacturing sector and once again become a nation that lends out money, not borrows it.

      Some of these ideals are from both the Democrats and Republicans, but the one true movement that is truly for America is the Tea Party.

      Don't think in terms of Republican or Democrat, left or right. Think it terms of rational and a duty to protecting what your country was founded on. Divide and conquer works well, it's time to stop being fooled into fighting amongst yourselves.

      I may not be American, but what your country does affects all of us, so it's only natural everyone is interested in the US making the right decisions.

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