Japan's currency moves are heating up a trade problem
As Howard Schneider observes in today's Washington Post, U.S. trade with Japan is climbing the ladder of thorny issues facing the Obama Administration. Schneider says that the U.S. trade deficit with Japan is second only to that of the deficit with China, and recent moves by Tokyo to devalue the Yen could pose serious problems for U.S. manufacturers.
In fact, some analysts believe the yen could fall an additional 20 percent or more against the dollar, which would have significant consequences for U.S. trade in autos and auto parts.
Schneider reports that some members of Congress are now urging the Obama administration to hew a tougher line on currency issues and to potentially penalize countries deemed to be active currency manipulators. Japan’s involvement in a potential Trans-Pacific Partnership (TPP) has helped to spotlight the worrying consequences of the currency battle.
Schneider quotes Alliance for American Manufacturing (AAM) President Scott Paul on the specific impact of Tokyo's currency devaluation:
“You will see the effect on autos. On the auto parts supply chain. On steel. On other sectors where Japan has a presence,” said Scott Paul, president of the Alliance for American Manufacturing. “The question is not whether the policy will have a detrimental effect. The question is what will the government do about it.”
Schneider said the answer is an opaque "wait and see."
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