The excellent High Frequency Economics newsletter produced by Carl Weinberg, which we read every week with great attention, believes that the Schumer-Graham bill which calls for a tax of 27.5% on the price of all goods imported into the United States from China unless China revalues its currency by some ridiculous amount will never get to the floor of the House of Representatives for a vote. Carl’s argument is that it is now widely recognised that no one will win if it comes to a vote.
The argument is persuasive. The two senators, somewhat better educated following their brave trip into the alien world of Communist China, now have the unenviable task of finding a way out of their un-painted corner.
Carl goes further and suggests that the world’s interests are best served by the yuan staying as weak as possible for as long as possible, because it benefits both US consumers and US businesses. We don’t necessarily need the senators to concede that. Just killing the bill will be sufficient, thank you.