Senators Charles Schumer (D-NY) and Lindsey Graham (R-SC), along with several bi-partisan
co-sponsors, have introduced legislation (S.295) that would permit the president to impose tariffs
of 27.5 percent on Chinese imports in order to help offset what they see as an unfair subsidy
resulting from an artificially pegged currency. The legislation calls for a negotiation period of
up to six months, and if agreement is not reached, the United States could impose the tariffs.
While there is a specific timetable for imposing the tariffs, they could be delayed further if the
president determines there is progress toward parity. Since that could drag out any action for a
year or more, the legislation appears to be designed to encourage a negotiated solution to the
problem.
US textile manufacturers contend that Chinese currency manipulation amounts to a subsidy of as
much as 40 percent on textiles and apparel, but the legislation appears to be a step in the right
direction, especially if it could lead to a negotiated solution.
February 2005
