Trump’s Currency War Smacks of the 1930s
Too many have forgotten the searing pain of the last “uncoordinated break-up” of the world’s currency regime.
FDR learned his lesson. Will President Trump?
Photographer: Dan Kitwood/Getty Images
A trade war between China and the U.S. has become something bigger: a currency war. Beijing’s weakening of the yuan prompted the Treasury Department to brand it a “currency manipulator.” Central banks around the world, including Thailand, India and New Zealand, promptly followed China’s lead nonetheless.
This isn’t the first time that protectionism became entangled in exchange rates. In fact, what we’re seeing has an eerie resemblance to a back-and-forth volley of currency devaluations and retaliatory tariffs that ripped apart the global economy in the 1930s. There’s no reason something similar won’t happen again.