The U.S. Congress is on course for a dangerous slide down the slippery slope of protectionism, and a politically weakened White House is in no position to stop it. China is the lightning rod in this debate. As a senior Washington insider confided to me recently, "Concerns over China are boiling over in this town." While extreme actions on the tariff front have been deferred--at least for the moment--it is starting to look as if an even bigger train has left the station. The angst of worker insecurity is proving to have irresistible bipartisan appeal within the American body politic. The odds are rising that Washington will enact some form of protectionist legislation before the mid-term elections this November.
The good news is that Senators Charles Schumer(D-NY) and Lindsey Graham(R-SC) have once again postponed a floor vote on their proposal for a so-called "currency-equalization tariff" of 27.5 percent that was to be levied on all Chinese imports into the United States--a surcharge they believe would provide fair compensation for an undervaluation of the renminbi by a like amount. When I ran into them in Beijing in late March, they boasted that they had eighty votes in favor of their proposal. There is a new threat of a September 30 floor vote on this measure, but my guess is that this type of extreme legislative action has now fallen out of favor in Washington.
