“We’ve lost anywhere between 4 and 7 million jobs because of China,” Trump told Fox Business’ Neil Cavuto during the debate. “A lot of that is because they devalue their currency.”
Then he added: “Japan, the same thing.” The Japanese were driving down the value of the yen, he said, and giving domestic manufacturers such as tractor maker Komatsu KMTUY, -3.41% an unfair advantage against U.S. competitors such as Caterpillar CAT, -0.37% “Friends of mine are ordering Komatsu tractors now because they’ve de-valued the yen to such an extent that you can’t buy a Caterpillar tractor. And we’re letting them get away with it, and we can’t let them get away with it.”
A cheaper yen means anything made in Japan will become cheaper to American consumers, while anything made in the U.S. will become more expensive in Japan.
The essential context for this is that the Japanese yen has slumped since 2012 because the Japanese government has been printing lots more yen to stimulate the economy. It is their version of “quantitative easing,” a policy first launched by the U.S. Federal Reserve back in late 2008.
China is now “easing” its own currency to forestall its sharp domestic slowdown, and currency experts predict they will shortly do a lot more. And they are not alone. The British pound is down to very low levels against the dollar. Ditto the euro, and markets expect further quantitative easing by the European Central Bank in due course.