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Bulk Vending Imports Could See Price Hike As Congress Gets Tough On China

Posted On: 9/30/2010

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WASHINGTON -- The House of Representatives approved legislation that allows the U.S. to seek trade sanctions against China and other nations for manipulating their currency to gain unfair trade advantages.

China continues to come under pressure for what is perceived as an intentionally undervalued currency, leading to multibillion-dollar trade deficits and loss of manufacturing jobs in the U.S. The Currency Reform for Fair Trade Act (HR 2378), which cleared on a 348 to 79 vote on Sept. 29, is part of the Democrats' Make It In America initiative, which seeks to create more domestic jobs in the manufacturing sector.

The bill, which targets China, goes to the U.S. Senate, which will vote on it following the November elections.

Lawmakers have long believed that Beijing is deliberately keeping its currency undervalued by as much as 25% to 40% to give its exports an unfair advantage. The latest estimates suggest that China's currency policy reduces U.S. GDP by 1.4% annually. In 2009, imports from China totaled $296.4 billion compared with $70 billion of U.S. exports to China.

The currency conflict between the U.S. and China has flared up in previous years, but bulk vending suppliers, who mostly import their capsuled goods from China, are watching this particular skirmish closely. The anemic economy coupled with an election-year push has apparently inspired lawmakers to finally get tough on the yuan.

"We do this because one million American jobs could be created if the Chinese government took its thumb off the scale and allowed its currency to respond to market forces," said House Speaker Nancy Pelosi (D-CA).

Critics say the legislation could significantly raise the price of many Chinese imports. "The available evidence is that the price of many of these Chinese goods will go up 10%," said Rep. Jeb Hensarling (R-TX), who voted against the bill.