The U.S. Senate is considering legislation that would penalize China for promoting its exports by keeping its currency undervalued. If passed, it would signal that U.S. lawmakers are fed up with Chinese trade policies that undercut American manufacturers and take away jobs. It also could challenge future advancements in the market for U.S. agricultural exports, including pork.

The Senate could vote on the bill, supported by a bipartisan majority, by Tuesday night. The goal is to force China to appreciate its currency, which would make U.S. goods more competitive and in theory put Americans back to work. The U.S. trade deficit with China was $273 billion last year and is on pace to reach $300 billion this year.

According to Sen. Sherrod Brown (D-Ohio), a chief sponsor, the Senate’s “currency bill” has the potential to create or save around 2 million jobs.

But while the Senate favors the bill, House Speaker John Boehner (R-Ohio) opposes it and may not present it for consideration, reports the Associated Press.

The White House has not taken a position on the legislation and has warned that such unilateral action could violate international trading rules and could trigger a trade war.

This issue has surfaced periodically and the legislation would make it easier for the U.S. Treasury Department to declare a currency misaligned, requiring action if the offending country doesn’t act. Individual industries also could petition the U.S. Commerce Department if a competitor nation is using its currency as an export subsidy, reports the Associated Press. The bill does not specifically mention China.

Estimates are that the Chinese yuan is undervalued by 25 percent to 30 percent-- possibly by as much as 40 percent, against the U.S. dollar.

Chinese officials argue that the two countries’ trade imbalance is due to U.S. economic policy and not the currency exchange. They have warned that such action would damage economic relations. Adding to the concern is China’s large holdings of U.S. government bonds.

"In the end, such unilateral action would very likely cause retaliation by China and ultimately damage the U.S. economy, including exporters, investors, workers and consumers," Bruce Josten, U.S. Chamber of Commerce vice president for government affairs, wrote in a letter to senators.

Source: Associated Press