US congress raises taxes...

...on China. Indeed, the Senate is about to impose tariffs on the goods imported from China (i.e. a tax on Chinese produce sold in the US.)

The economists typically oppose such restrictions on the free trade, since such restrictions result in domestic consumer having to pay higher prices. The question is however complicated, with many strong arguments for protectionism, nicely summarized in Chapter 9 of Greg Mankiw's economics textbook. The argument used here is "The jobs argument", as well as "The infant industry argument", as some of the economists pointed out that "losing manufacturing meant losing our [US] edge in innovation."

The preservation of the manufacturing has been a hot topic lately, due to the apparently quick surge from the recession by the countries with a strong manufacturing base, most notably Germany.

The emphasis on manufacturing explains why the higher tariffs have bi-partisan support: while it is usually the Democrats who favor higher taxes and oppose free trade/free market, it is the Republicans who are most concerned about the manufacturing and the workers employed in the private industry.

Current situation and Romney's economic plan

New Greg Mankiw's article in New York Times. Don't disregard it as merely "conservative thinking" - the first half of the article is an overview of the current economic situation which is unbiased and enlightening.

In the second part of the article Mankiw does express his view on the economic recovery: he opposes the "traditional fiscal stimulus", and instead argues for 1) lower taxation of income from corporate capital; 2) more pro-business policies, such as passing the free trade agreement with South Korea and reigning in the National Labor Relations Board, i.e. reducing unions's interference with businesses.

One may recognize the points of the economic plan recently unveiled by Mitt Romney - and indeed, Mankiw is apparently advising Romney's campaign on the economic matters.