NEW YORK — Sen. Charles Schumer said Friday he will introduce legislation, co-sponsored by Sen. Lindsey Graham, that would apply a 27.5 percent tariff to all imports from China, with the aim of lowering the growing trade deficit the U.S. has with that country. Schumer, New York’s senior Democratic senator, said he plans to introduce the tariff measure in the Senate this week, which “will send a shock that will be heard round the world.” Graham is a Republican senator from South Carolina, a major textile producing state.
Their proposal is an effort to offset the competitive advantage that Chinese exporters get from their country’s fixed exchange rate. The Chinese currency for more than a decade has been pegged at about 8.28 yuan to the dollar, a conversion some economists estimate is undervalued by as much as 40 percent.
“They don’t let their currency float,” Schumer said. “They artificially have it set at a low value.”
Although China enjoys some inherent advantages in the manufacturing arena, such as lower labor costs, he said its fixed exchange rate poses a major hurdle to U.S. competitors by making its exports seem comparatively even cheaper and imports from the U.S. comparatively more expensive.
Schumer said U.S. manufacturing executives have told him “even with [China’s] lower cost of labor, we can compete, but once you add another 25 percent to 40 percent advantage, we’re dead.”
He made his comments outside the Jacob K. Javits Convention Center here, where the Chinabrand 2005 trade show, an event sponsored by China’s Ministry of Commerce, was in its second day.
“I’m troubled by the Chinese government coming here today to flat-out try and steal jobs from New York businesses,” said Schumer, who charged the undervaluation of the yuan has contributed to the loss of 100,000 manufacturing jobs in New York State alone since 2001.
A spokesman for the show disputed Schumer’s assertion that the event would take a toll on U.S. employment.
“What they’re doing is trying to introduce China brands in the U.S. and therefore create jobs, surely, for U.S. distributors,” the spokesman said during a phone interview. “If they took it to the next stage, which was to invest in U.S. companies, surely that in itself would be creating American jobs.”
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