October 06, 2009

TRADE WAR: Obama Labor Showdown on China Currency

Big labor is pushing hard for President Obama to declare China a currency manipulator when his Treasury department must report to Congress next week. Obama maintained that Beijing manipulated the Yuan exchange rate up to the eve of the presidential election and as freshman Senator from labor stronghold Illinois. Now the AFL-CIO and others want Obama to live up to his rhetoric. Will he disappoint them as he has so many other supporters?

If labor doesn't get their way, which most economists say would be detrimental to both nation's trade and finances, expect a big push for anti-dumping countervailing duties from Congress and the Commerce department. The USA has not accused any nation of manipulating its currency since 1994 when it last leveled that designation on China (see graph at left)....

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