Maybe the chance to talk face-to-face with Chinese on their home turf is what it took to make Mr. Graham and Mr. Schumer realize that just as trade is a two-way street, so too are sanctions. If lawmakers actually went ahead with the Schumer-Graham bill, which would impose 27.5 percent tariffs — a staggering amount — on Chinese goods, they would be accomplishing little to cut American unemployment, while hurting poor Americans who rely on inexpensive goods and poor Chinese whose livelihoods depend on making those products.
The Schumer-Graham bill is based on a fundamental misunderstanding of the root cause of America's economic problems. No question, the United States trade deficit and the loss of American manufacturing jobs are very serious. But most of the imbalance with China is caused by Americans' insatiable appetite for Chinese imports for which there are few domestic substitutes. While it's unfortunate that the textile industry has all but faded away in this country, the fact is that few American factories make things like low-priced apparel any longer.
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Thus far the Bush administration has resisted calls to accuse China of currency manipulation, but Treasury Secretary John Snow last month hinted that could change. That too, would be a mistake. The administration has done a fair job so far in its tap dance around America's relationship with the world's fastest-growing economy. Now is not the time to slide back into election-year shortsightedness.
I still think that the way is being prepared for the Senate to back off without losing too much face. The spinning has only just begun.
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