International trade in the US, which in 1960 only amounted to 5% of GDP, today accounts for 14%. Most countries today have a floating currency rate, and in theory should be fair to all. But what happens when one country devalues its currency against a trading partner's currency? Basically, devaluation makes domestic goods cheaper relative to foreign goods. In short, world demand for those goods will increase at the expense of other countries goods.
Such currency manipulations are explicitly forbidden by the International Monetary Fund (IMF). However, there are no enforcement procedures to insure compliance. Thus, currency manipulations by various countries does exist. These "beggar-thy-neighbors" practices inhibits exchange rates from acting as an automatic stabilizer to macroeconomic events and therefore leads to trade distortions and imbalances.
If there is active currency devaluation going on, it is especially crucial at the time of this writing to ferret it out. We are in the middle of negotiations for the Trans-Pacific Partnership (TPP), and much work needs to be done to insure a level playing field. Given that, what are the clues that a country has implemented a beggar-thy-neighbor policy? Probably the biggest smoking gun is a country that has accumulated a high balance of foreign exchange. Buy Swiss francs, buy US dollars, buy Euros, etc etc all with the intention of driving your currency down. Is China guilty of this practice? You betcha. China's foreign reserves as a % of GDP amounts to 35.5%. Compare that to the US which has less than 1%. But China is not the only offender. The Japan rate is 25.2%, Thailand 40.2%, Switzerland 79.2%, and Singapore 85.8%. But China is such a large player in international trade, that it is obvious why the focus would be on them.
In short, Mr. Trump has a point. And for the near term, the players in TPP must adopt mechanisms which will quelle unfair trade practices.
