Following recent comments from President Donald Trump suggesting the U.S. is being forced to “sit there like a bunch of dummies” as it’s taken advantage of by the economic policies of China, Japan, and Germany, leaders from those countries responded this week with comments of their own.
On Tuesday, Donald Trump, along with one of his top economic advisors, unleashed what Reuters described as a “barrage of criticism” over what the two men perceive as the three key U.S. trading partners’ deliberate devaluing of their currencies — to the detriment of the American consumer.
“Every other country lives on devaluation,” the president said in a White House meeting with executives from the pharmaceutical industry. “You look at what China’s doing, you look at what Japan has done over the years. They — they play the money market, they play the devaluation market and we sit there like a bunch of dummies.”
As he did with the auto industry, Trump is pressuring pharmaceutical companies to relocate production facilities to the United States. Complaining of red tape, Trump claimed “other countries take advantage of us with their money and their money supply and devaluation.”
Prior to the president’s meeting at the White House, the head of his newly created National Trade Council, Peter Navarro, had told the Financial Times the European Union’s euro was the equivalent of an “implicit Deutshe Mark” that gave Germany an edge over the United States on trade.
Defending her country’s practices while in Stockholm, Sweden, German Chancellor Angela Merkel stated Tuesday:
We don’t exercise any influence over the European Central Bank, so I can’t and I don’t want to change the situation as it is now. We strive to trade on the global market with competitive products in fair trade with all others.
Japanese Prime Minister Shinzo Abe didn’t take the jab lying down, either. He, along with the governor of the Bank of Japan (BOJ) and Japan’s chief cabinet security, all denied Trump’s allegations.
On Wednesday, Prime Minister Abe stated before parliament that “Criticism that the BOJ’s policy is trying to devalue the yen is wrong.”
Hours before, BOJ Governor Haruhiko Kuroda said Japan’s monetary policy is designed “solely for the purpose of achieving our price target at the earliest date possible,” and that Japan does not “directly target currency rates in guiding monetary policy.”
Chief Cabinet Secretary Yoshihide Suga stated simply that Trump’s allegations were “completely baseless.”
Such back and forth verbal sparring between the still-forming Trump administration and an increasing number of countries — including U.S. allies — on the issue of international trade has many concerned over the future of global markets.
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While the fact that the brash Trump would initiate such bouts with his unpredictable comments should, at this point, surprise no one, the fact that the president is making these specific comments has some analysts thinking there may be real cause for concern.
“Those comments, talking about somebody else’s currency, talking about valuation, almost seem like they’re criticizing the construction of the euro zone which is a whole other issue,” Greg Anderson of BMO Capital Markets in New York, told Reuters. “I’m sure a lot of people have those thoughts. In the gentleman’s agreement, as an official you don’t mention those thoughts.”
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