In a testimony to the U.S. Senate Finance Committee, Federal Reserve Chairman Alan Greenspan and Treasury Secretary John Snow advised against tariffs against China.
Lawmakers have been losing their patience with China for not revaluing its currency. Greenspan and Snow claim that there is no evidence to show that China doing so would improve the U.S.’s economic situation.
“The broad tariff on Chinese goods that has recently been proposed, should it be implemented, would significantly lower US imports from China but would comparably raise US imports from other low-cost sources of supply,” said Greenspan. “US imports…would in part shift from China as the final assembler to other emerging-market economies in Asia and, perhaps, in Latin America as well. Few, if any, American jobs would be protected.” Glen Somerville of Reuters reports:
Clearly worried that spiraling U.S. deficits were driving Congress toward trade action, Greenspan and Snow sought to tamp down the angry mood by pointing out the possible consequences for the United States.
Both said China should loosen the peg it maintains for its yuan currency against the dollar, in its own interest and that of the global economy, but said it would be futile to try to force Beijing to do so through trade sanctions.
“A policy to dismantle the global trading system, in a misguided effort to protect jobs from competition, would redound to the eventual detriment of all U.S. job-seekers, as well as millions of American consumers,” said Greenspan.
China recently reached an agreement with the European Union over similar trade issues. They agreed to put limits on certain textile imports for the next three years.
Chris is a staff writer for murdok. Visit murdok for the latest ebusiness news.
