Two U.S. senators said yesterday that they would renew their push for a bill that would impose tariffs on Chinese products unless Beijing does more to increase the value of its currency.
Charles E. Schumer (D-N.Y.) and Lindsey O. Graham (R.-S.C.) introduced the bill, which calls for a 27.5 percent tariff on Chinese goods, in February. They delayed a vote on it last month, saying that Treasury Secretary John W. Snow and Federal Reserve Chairman Alan Greenspan had assured them that China would soon raise the value of the yuan.
Last week, China's central bank revalued the yuan by 2.1 percent against the dollar and said it would no longer peg the yuan to the U.S. currency. Instead, China will link the yuan to a basket of unidentified currencies and allow its value to fluctuate within 0.3 percent of the previous day's close. On Tuesday, the bank indicated that the revaluation was not the beginning of a series of such actions.
U.S. officials have long complained that China keeps the yuan artificially cheap, giving Chinese exporters an unfair advantage.
"We can tell you that we are not satisfied with simply a 2 percent revaluation," Schumer said. "We don't want to tell the Chinese how to do it, and we understand that it will take some time."
Schumer said he and Graham are in a period of "watchful waiting" to see if the currency appreciates further, Schumer said. They plan to decide around Oct. 1 whether to press for a vote on the bill.
Despite Tuesday's announcement, Beijing may still revalue the yuan further to avoid tariffs, said David Gilmore, a partner at Foreign Exchange Analytics in Essex, Conn.
"They'd probably like to do 2 percent this year, 2 percent next year, and move in 2 percent stages," Gilmore said. "I'm sensing they really want to drag it out as long as they can, but if they see a stiff reaction from Congress, we'll see some movement."