Trade War?

Foreign Exchange – A House of Representatives committee scheduled a vote tomorrow on a China currency bill, and a Democrat aide said the full house was expected to vote on the measure next week. Critics inside and outside Congress say that China deliberately undervalues its currency by between 25% and 40%. Nancy Pelosi said “It is time for Congress to pass legislation that will give the administration leverage in its bilateral and multilateral negotiations with the Chinese government. If China allowed its currency to respond to market forces, it could create a million US manufacturing jobs and cut our trade deficit with China by USD100bn a year”. The proposed legislation, which is clearly gaining momentum, would essentially treat China’s undervalued currency as an export subsidy and allow the Commerce Department to impose counter veiling duties to offset the undervaluation. I wonder whether they know what kind of damage they would be releasing?