Literary Corner: The Case of the Delayed Devaluations

Joan Miró, L'Été, lithograph, 1938, via Denis Bloch Fine Art.

It's a Story

by Donald J. Trump

Just to—just to finish,
I think a lot of good things
are going to happen, but I
delayed my devaluations.

Monetary, you know, on
the monetary—the devaluations,
my currency manipulations, and also
my tariffs, for a period of a year,
with China, because I wanted to
get as much help as—as they could
give us with respect to North Korea.

That had an impact. So I delayed it.
But there came a time when I couldn’t
delay it any more because it’s too much
money that they drain out of our country.
Just too much money. That’s where we are now.

So I put 50—I hope you can cover
this pretty much as I say it
because you can’t really cut
it out. It’s—it’s a story.

It's actually true that Trump single-handedly brought about a huge devaluation of the RMB, in early July, through the last round of crazy tariff impositions, as Bloomberg reported at the time:

Donald Trump’s tariff barrage pushed Chinese markets into their worst selloff since a shocking currency devaluation three years ago.

The offshore yuan fell the most since August 2015, on a closing basis, as the White House said it’s ready to impose 10 percent tariffs on $200 billion of Chinese-made products. Beijing said it would be forced to retaliate, describing the move as “totally unacceptable.” Meanwhile, the iShares China Large-Cap exchange-traded fund extended a two-day slide to 2.5 percent.

Why he'd want to do that remains unclear, since he's always complaining that the Chinese manipulate their own currency in that direction; as he seemed to agree elsewhere in Thursday's Bloomberg interview, a cheaper currency helps them sell more products, whereas we thought he was aiming at having them sell fewer—

TRUMP: We’re doing, we’re competing against not only -- not only the yuan, we’re competing against the euro. So they keep dropping, dropping, dropping...

BLOOMBERG: Sure.

TRUMP: ... which, ultimately, is not good for them. But it is certainly good in the shorter term. And it lets them do some business that they wouldn’t be doing. And it -- it -- it -- not even close to nullifies. But it has a little bit of an impact on the tariffs.

That last bit would be the ghost of something Kudlow told him when he was begging him not to do the tariffs—that it would jolt the Chinese currency and lead to more Chinese exports, not fewer, competing successfully with US exports—whimpering in a hard-to-access region of his brain, like an air-conditioning duct, and no longer endowed with the meaning it had when it got in there.

I wanted to say a word on the subject of NAFTA, while I'm up, and the question of whether it was the worst deal ever concluded.

I don't think it was—it was understood when it was being put together that its implementation would cause some initial "pain", in the form of lost jobs in certain industries, and in my view what was done wrong was the weakness of the effort (in the Trade Adjustment initiative) to minimize the pain. As I've always said, the German government sacrifices industries relentlessly on the altar of free trade, but never in such a way that workers lack good-paying jobs, and the reason is that's how they plan it.

But in any case, the pain, which was pretty awful, not just for Midwestern factory workers but also for Mexican corn farmers, is over. All that's left is the positive effects the treaty was meant to have, which by all accounts it is having. If you wanted to scrap NAFTA 20 years ago, I'd say you deserved some attention. But wanting to scrap it now is plain stupid. You might as well push for the re-secession of the Confederacy on the grounds that the Civil War was excessively bloody and cruel: it was, it was one of the most hideous wars ever, but that part of it's finished. If suffering went into it, all the more reason to enjoy it now. Does that make sense?