Both Democrats and Republicans have exercised too much caution in dealing with China on the issue of currency manipulation, Sen. Chuck Grassley, R-Iowa, said on Thursday.
"We've never wanted to charge them with manipulation and I think our caution has been to the disadvantage of the American consumer, to the disadvantage of our producers in this country," he told CNBC's "Squawk on the Street."
Chinese officials have leaned on the excuse that American concerns about currency manipulation amount to interference in China's domestic policy, said Grassley, who sits on the Senate's Committee on Finance and the Joint Committee on Taxation. He continued to say he would encourage the Chinese to open a dialogue with the United States on aspects of its own domestic affairs with which they disagree.
Measures taken by independent central banks that result in currency devaluation are valid, but monetary policy that aims to weaken a currency for the purpose of subsidizing exports ought to be an issue that is addressed in trade negotiations, Grassley said.
He said this tactic is used most often in China, and to some extent in Japan. A weaker currency makes a nation's goods more affordable in foreign markets.
China has long been accused of keeping the yuan artificially low, and the People's Bank of China has recently launched stimulus measures, including reducing the amount of cash it requires banks to hold in reserve, which allows them to originate more loans.
The Bank of Japan is currently buying 80 trillion yen ($661 billion) per year in government bonds and other assets as part of a massive stimulus program. Prior to the program's launch, Japanese officials denied it was intended to weaken the country's currency, saying it was engineered to end two decades of deflation in the country.
Grassley said politicians had not interfered with the U.S. Federal Reserve, which ended a third bond-buying program in October after roughly six years of stimulus. The central bank has kept interest rates near zero, as well.