Trump has already shown that he can shift swiftly from campaign tweet to U.S. policy, opening an early front with Mexico in a push to impose a tax on imports from there to pay for a border wall. That means no one can afford to take his threats lightly.

Abe told parliament that it's inaccurate to say that Japan is devaluing the yen, and that he would explain Japan's monetary policy to Trump if necessary. He'll get a chance to do so when he meets Trump in the U.S. next week. Trump had said on Tuesday that China and Japan “play the money market, they play the devaluation market and we sit there like a bunch of dummies.”

Merkel rejected a charge from Peter Navarro, the head of the White House National Trade Council, in the Financial Times that Germany's excessive trade surplus is a sign of a “grossly undervalued” currency. The euro's exchange rate was the province of the European Central Bank and the German government had long upheld the ECB's independence, Merkel told reporters in Stockholm on Tuesday.

'Strive to Trade'

“We strive to trade on the global market with competitive products in fair trade with all others,” said Merkel, who is campaigning for a fourth term while presiding over the Group of 20 countries this year on a platform of free trade. She plans to host Trump at a G-20 summit in July, two months before Germany's election.

As the trade barbs grow, so do new alliances. Merkel and Chinese Premier Li Keqiang last week talked by phone and spoke out in favor of closer trade ties, signaling a global pact opposed to Trump's protectionist agenda.

“Trump thinks in very zero-sum terms about winners and losers, but international trade is not about win-win,” Leonard said. “If he ends up precipitating a global recession and destroying a lot of jobs, he could end up with a Pyrrhic victory.”

The next international gatherings may prove an opportunity for Trump. If his administration intends to take its trading partners to task on the subject of currency manipulation, real or imagined, a conventional forum to do that would be the G-20 meeting of finance ministers and central bank governors scheduled for March 17-18 in Baden Baden, Germany.

The G-20 has stressed in recent years the importance of avoiding competitive currency devaluations, though members have struggled to draw the line between clear manipulation and the foreign-exchange effects of central bank policy. On the sidelines of the G-20 meeting in Shanghai a year ago, the Bank of Japan's unprecedented stimulus emerged as a source of worry for other nations.

'Ignore or Correct'

Even as they defend their policies, leaders should be careful not to overplay their hands, said Klaus Baader, chief Asia-Pacific economist at Societe Generale SA in Hong Kong.

“How many times did Trump say he would label China a currency manipulator on his first day in office? It was pure rhetoric,” Baader said. “It's like many things that are coming out of the White House. Rhetoric that cannot be implemented.”

And while the greenback fell at least 1.9% in January against all major developed peers, it's still up from election day.

“The paradox for President Trump is that his actual policies, such as fiscal stimulus, the border adjustment tax and a homeland investment act, are positive for the dollar,” said Athanasios Vamvakidis, head of G-10 foreign-exchange strategy at Merrill Lynch International in London. “As long as the U.S. data remains strong, the Fed will be tightening, which is also dollar positive.”

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