Principal Asset Development

By Robert Schroeder, MarketWatc

WASHINGTON (MarketWatch) — Ratcheting up pressure against a major U.S. trading partner, the Senate on Tuesday approved a bill that would allow new duties on goods from China and other countries that lawmakers say manipulate their currencies.

Overriding objections from some senators and business groups that said the measure would start a trade war with Beijing, the Senate voted 63 to 35 for the bill on Tuesday night.

Action on the measure may stop there, however. House Republican leaders and President Barack Obama have been cool to the bill — a bipartisan measure that its sponsors say would help bring down the 9.1% U.S. unemployment rate.

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The bill instructs the Commerce Department to investigate if any country is subsidizing companies through an artificially low currency, and allows for retaliatory U.S. tariffs.

But the main focus of the bill is China, which lawmakers and the White House long have accused of manipulating the value of its currency, the yuan USDCNY -0.01% , for export advantage.

The Treasury Department has not formally named China a currency manipulator, though, and the Senate bill seeks to act where the administration has not.

China is gradually allowing the value of its currency to rise. Late last month, the People’s Bank of China set the yuan’s midpoint trading range against the U.S. dollar at a new record high of 6.3735.

It’s unlikely that the House will pass the Senate bill as written, but it’s “clearly possible” that the House could pass its own version later, according to Alec Phillips of Goldman Sachs.

“The most likely scenario is that at some point over the next few months, the House will take up a different bill to address the currency issue, but one that does so in a more incremental manner than the Senate’s approach,” Phillips wrote in a note this week.

U.S. manufacturers and the bill’s sponsors say it will stem a decline in American jobs by making U.S. products cheaper overseas.

Obama, meanwhile, readily says that China intervenes in currency markets but also says that any measure targeting China must be consistent with world trade rules. The White House hasn’t yet issued an official policy statement about the bill

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This is me talking:

What?

"U.S. manufacturers and the bill’s sponsors say it will stem a decline in American jobs by making U.S. products cheaper overseas.

WTF? A DECLINE?  in American jobs by making products "Cheaper" overseas?  Really, I thought if you make a quality product and are the low cost provider itwould DRIVE DEMAND not lessen it. 

What representative sponsoring this Bill said it would create a decline in American jobs?  That is a representative I will not vote for.  Perhaps they got confused and meant to say it would stem a decline in the American unemployment rate to export more goods as the low cost provider to countries who are UNFAIRLY inflate their currency?


Folks, bottom line is this is the beginning of the end when you start poking your biggest creditor and saying, "Hey, dude your money is too expensive".  Laughable!