By Cui Tiankai |
If the bill that the Senate approved is passed into law, it will make it easier for our government to place tariffs on Chinese imports.
Whether this legislation is justified because of China's monetary policy is irrelevant. More important are the effects this bill will have on our economy.
It seems nonsensical to punish a foreign country by raising taxes on your own citizens, but that's exactly what this bill does. A tariff on Chinese imports will hurt both American consumers and businesses. For consumers, it's a regressive tax that hits low-income and middle-income people the hardest. They are the ones who rely on cheap necessities that allow them to invest and save whatever is left on retirement and their children's education. Businesses will suffer as well. China ships many raw materials and capital equipment that our own businesses buy to make a final product that is priced competitively in the global market. If you raise taxes on them through higher tariffs, you hurt American businesses and the people they employ.
Supporters of this bill must be blind to the near certainty that China will retaliate. China quickly imposed tariffs on American products after we slapped tariffs on imports of steel in 2002 and tires in 2009. Those retaliatory duties did direct harm to our economy.
When you combine the higher tariffs that we would enact against China, and the retaliatory tariffs that they would impose upon us in response, it's a double whammy to our economy.
Protectionism is bad policy that history has shown time and time again to have a negative effect on the economy. Let's hope cooler heads prevail before it's too late.
About Andrew Roth Vice President of Government Affairs at Club for Growth
Joseph Gagnon Senior Fellow at Peterson Institute for International Economics