The president suggests that tariffs will compensate for America’s disadvantages.
President Donald Trump said he warned Japanese and Chinese leaders against undervaluing their currency to gain unfair trade advantages.
“It’s unfair to us, so you can’t do it. It’s very difficult to make a tractor (sweet) here when Japan, China and other places are killing currency. “So, all this goes well and the way you can solve it very easily is with tariffs.
“Look, let them do it, and we’ll make up for it with tariffs.”
Tokyo’s foreign exchange market responded to Trump’s comments by pushing Japanese currency upwards by Tuesday morning for a short time every 148°, surged yen buying. Some yen accrued later, and the exchange rate was 149 yen to 149 yen by 5pm local time, but it is stronger than the previous day’s rate.
At a press conference after Tuesday’s Cabinet meeting, the Japanese Finance Minister dismissed the notion that Japan is deliberately weakening the yen.
Related Stories
Kato also confirmed that Japan will continue to respect the exchange rate commitment that it gave in its bilateral speech with US Treasury Secretary Scott Bescent on January 29th.
Japan is on the Ministry of Finance’s “watch list” of major trading partners with increased scrutiny of foreign exchange. In its latest report from November, the bureau noted that Japan has maintained a trade surplus of $65 billion with the US during the review period, with the global current account surplus of GDP increasing from 2% the previous year to 4.2%.
The Ministry of Finance has acknowledged that Japan’s currency intervention is transparent, but has reiterated that such measures should only be taken in “a very exceptional situation with appropriate prior consultations.”
Speaking of China, the Treasury said China’s current account balance fell slightly, but fell to 1.2% of GDP, but exports rose significantly, indicating a decline in export prices. The November report repeated calls for more transparency in China’s forex practices, including only a 2% increase or fall in the Chinese yuan on both sides of the “daily amendment” without official explanation.
