Addicted to Cheap

China is not making happy faces at the US Senate these days. Monday, Senators voted 79-19 to debate a new bill that would smack Chinese currency manipulation with steep new tariffs. Chinese spokesman, Ma Zhaoxu, immediately pouted that any action against their products would violate World Trade Organization rules and obstruct China-US trade ties. Nice try Ma, but it's time to pay the piper! China has been stealing our jobs and markets for too long, now the tide is turning - well... maybe!

Who can blame China for wanting to maintain this crazy good trade deal? It is never easy to knock off leeches once firmly attached! A $273 billion trade surplus - up from $83 billion just ten years ago - is worth a few grumbled threats about trade wars. The Chinese 'renminbi' (who knew?) is currently fixed at about 6.4 to the dollar - at least 25% cheaper than its actual value. This not only makes US imports more expensive, it also makes cheap Chinese crap even cheaper. Given this unbalanced trade balance, is a trade war really such a bad idea? It would be nice to think that we can just run the Chinese trade train off the cliff, but Old Ma does seem to have a point. What would we do if they forced us to quit Chinese cheap cold turkey? It would be rather gruesome to see everyone running around naked - to say nothing of the impending Toyaggedon! Can you imagine our children forced to play with real wooden blocks and their parents trying to tweet with an abacus!

Still, it is tempting to tack on a nice 1000% tariff and knock China completely out of the market. Wouldn't it be refreshing to go to the store and actually find something made in the USA. I even get nostalgic on the the rare occasion I find a TV still made in Japan. Unfortunately, bashing China is not entirely practical. Walmart, as we know it, would cease to exist - putting over 2 million people out of work. Even worse, many of these new unemployed would be 'greeters', workers who would be forced to run for congress - the only other job for which they are qualified.

I should have guessed there was no simple solution. It seems we are now addicted to cheap Chinese products and pay for our addiction by exporting jobs. If we continue down this road we will soon not have even enough 'renminbi' left to buy even he cheap Chinese junk that feeds our consumer addiction. Still, if we go the other route and bash our pusher-in-chief, we will soon go crazy broke buying Indian saris and Swedish computers. A tricky problem, for sure!

Not to worry! As usual, it seems nothing positive is happening in Washington. The House Republicans have already decided not to take up the senate's lead and even Obama is hedging his bets. Sound familiar? Boehner and Obama want a more comprehensive trade deal with China and look at currency manipulation as just 'one part of the problem' - Washington code for 'don't rock the boat'. Such all or nothing tactics may be the current flavor of the day - but right now they just giving keep China laughing all the way to the bank. Maybe we should let The Donald negotiate with Beijing!