In advance of the Federal Reserve meeting at the end of June, the chairman of the Fed advises against tariffs.
Speaking before the Senate Finance Committee, Mr. Greenspan said tariffs and protectionism would not help Americans keep their jobs. And, it would lower the US standard of living.
In turn, Senators from both sides of the aisle disagreed with the Chairman, demonstrating the frustrations that their constituents in turn have vented at them over Asian economic and industrial policies.
Other Senators criticized Chinese policies on the valuation of the yuan, which China keeps pegged to 8.3 on the dollar through the purchase of Treasury securities. And more criticism was heaped on China due to its failures to rein in rampant intellectual property piracy.
Senator Charles Schumer (D-NY) has proposed a tariff of 27.5 percent on imports from China, should that country fail to let the yuan float on currency markets. “I do not believe the communist leaders of China believe in free trade,” he said.
But Mr. Greenspan says that strategy will not work. According to the LA Times, goods assembled in China that bear a Made In China label will simply be assembled in other Asian countries. Making the yuan, and Chinese labor, more expensive will not benefit the US.
“A return to protectionism would threaten the continuation of much of the extraordinary growth in living standards worldwide, but especially in the United States, that is due importantly to the post-World War II opening of global markets,” he said.
The way to combat economic losses would be with education and job retraining programs, he also said.
David Utter is a staff writer for Murdok covering technology and business. Email him here.
