Gist: In the foreign exchange markets, the U.S. is accusing China of keeping their currency, the Yuan, artificially low contributing to the $250 billion trade gap between the two countries.
What advantage does China get undervaluing their currency? Say a widget costs $18 to make in the US and 100 Yuan (currently $15) to make in China. The US firm will have a tough time selling in China, all things being equal. But if the Yuan were suddenly stronger, say 100 Yuan will now buy $20, then the US firm will have an easier time selling in China. It works the other way, too. The US dollar is artificially strong, so our dollar buys more Chinese goods. This creates a big trade gap (we buy more from them than they buy from us). US jobs are lost--at least in the short term.
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