so why is Treasury calling for this? I think they finally understand its getting out of hand. I am not sure why they haven't seen it already, apparently it took this whole textile thing (and a strong stand by the Europeans) to cause the flash point. the US textile industry has invested billions in automation, and in fact the cost of apparel has been declining to the US consumer as a result. But now, they understand that without the import restrictions, no amount of investment in the US can compete with a pair of Dockers that can be imported at $4.75.
So why didn't they listen to one of your earlier, breathless, posts and act then?
The only two reasons I can think of why the Treasury would support putting pressure on China are these: 1) Bush told them to do so, and 2) they are worried about the dislocation that would result if China suddenly stopped pegging the dollar.
My view is that it won't happen. The Chinese might slowly move the peg closer to the market rate, but it's not in their best interest to suddenly end the peg. In any event, if it were to happen, it would hurt them a whole lot more than us. They are pegging the dollar by using dollars to purchase US bonds. If they suddenly stopped supporting the dollar, then the value of those bonds would decline precipitously, and we'd pay them back with dollars worth less. More their problem than ours.
The decline of the dollar would of course cause some inflation, but only because the cost of imports would increase, which is what you want anyway. So why worry? The worst thing that can happen is that you end up having your way in the end.