By Philip Ballentine
One of Mitt Romney’s top foreign policy planks is declaring China a “currency manipulator” and fighting back with across-the-board “countervailing duties” (taxes on all Chinese imports), policies introduced in his Sept. 2011 economic policy paper and reiterated since then. Today, his vice presidential pick Rep. Paul Ryan (R-WI) echoed Romney’s call:
They manipulate their currency… We’re not going to let that happen. Mitt Romney and I are going to crack down on China cheating and make sure trade works for Americans.
Watch the video:
Ryan’s position was right before his flip-flop: declaring China a currency manipulator would open the door to slapping a tax on every shoe, children’s toy, t-shirt, iPhone, and washing machine imported from China, raising prices for every American consumer. In addition to spiking the prices of Chinese imports (worth almost $400 billion in 2011), Romney’s duties would spark a trade war with America’s third largest export market. China would almost certainly react with duties of its own on American goods. That would be a job killer for the U.S.; America exported $103.9 billion in goods and services to China in 2011, up almost 50 percent from 2008.
In fact, Ryan wasn’t the only conservative who opposed China policies like Romney’s. Among the many conservative experts (including a campaign adviser) who side against Romney, here are two prominent Republicans, unlike Ryan, haven’t flip-flopped on the issue:
House Speaker John Boehner (R-OH) dismissed the importance of the exchange rate last month, saying, “Every administration for the last 15 years has worked with [China] to get them to revalue their currency “and “the value of their currency has continued to come up.” Boehner is right. The Chinese yuan has risen 30 percent against the dollar since 2005 and 7 percent since January 2009.
John Huntsman, former Republican presidential candidate, Utah Governor, and ambassador to China, blasted Romney’s countervailing duties in late 2011: “You’ve got a host of issues that are all part of the U.S.-China relationship. And a trade war would grind it all to a halt, all the while killing small business and exporters.” Huntsman said Romney’s China policies were “wrongheaded.”
Some local Chinese governments do embrace unfair trade practices. They provide cheap loans and materials to some Chinese companies and refuse to protect American intellectual property rights while erecting barriers for American firms. The yuan is still slightly undervalued, but Romney’s proposed solution isn’t the right approach, as these conservative politicians and experts point out.
We need to confront unfair Chinese trade practices as they occur and negotiate with China to ensure the yuan reaches its fair value. President Obama has been very successful in this effort, confronting China in the WTO and on its own with duties on specific Chinese goods that benefit from those unfair subsides. Romney’s across-the-board taxes on Chinese imports would punish American consumers with higher prices for everyday goods and American businesses with a futile trade war.
Romney’s ideas don’t make for sound policies. Perhaps that why Huntsman dismissed his China-bashing as “typical campaign rhetoric.” A purported wonk like Ryan apparently isn’t above it either.
Philip Ballentine is an intern with the Center for American Progress.