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A bipartisan group of lawmakers announced an agreement on legislation that would allow the U.S. government to cut off billions in Americans investments into China on Monday.
The agreement, led by Sens. Bob Casey, D-Penn., and John Cornyn, R-Texas, is just one piece of a larger bill aimed at securing U.S. supply lines for computer chips. If signed into law, the deal would allow the U.S. government to review nearly half of all direct investment transactions from the U.S. to China, according to an analysis.
“Over the last couple months, we have engaged in constructive discussions with stakeholders on developing a robust, targeted outbound investment mechanism to ensure the United States is not ceding its manufacturing power in industries critical to our economic and national security to foreign adversaries,” the senators wrote.
The floor of the U.S. Senate.
“The refined proposal released today has bipartisan, bicameral support and addresses industry concerns,” they added.
US ECONOMY ON CUSP OF STAGFLATION, WORLD’S LARGEST HEDGE FUND WARNS
The harsh China policy comes as President Joe Biden considers ending U.S. tariffs on China imposed under former President Donald Trump. While the Biden administration previously praised the tariffs as effective, removing them may alleviate some inflationary pressure.
Biden’s White House is searching frantically for ways to curb inflation, which remains at a 40-year high and at the top of voters’ minds heading into the 2022 midterms.
The administration repeatedly dismissed inflation as “transitory” last year, a diagnosis Treasury Secretary Janet Yellen has since admitted was “wrong.”
“I think I was wrong then about the path that inflation would take.” she told CNN in early June. “As I mentioned there have been unanticipated and large shocks to the economy that have boosted energy and food prices and um, supply bottlenecks that have affected our economy badly, that I didn’t, at the time, understand.”
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Yellen also confirmed the potential for ending some China tariffs as an inflation measure last week, though she cautioned that it wouldn’t fix the problem entirely.
“I think some reductions may be warranted and could help to bring down the prices of things that people buy that are burdensome,” Yellen said. “I want to make clear, I honestly don’t think tariff policy is a panacea with respect to inflation.”
