Plaza Accord

The Plaza Accord shows how exchange rates can reshape where goods are made. The dollar had risen about 50 percent against major currencies between 1980 and early 1985, widening the U.S. trade deficit, and coordinated government intervention pushed it sharply lower. The yen strengthened from about 240 per dollar in September 1985 to around 150 in 1986, making Japanese exports much more expensive. Many Japanese manufacturers responded by moving production to Southeast Asia, the United States and later China. For importers, the lesson is that currency moves can change landed costs and sourcing decisions as much as tariff changes do.

• Landed CostTotal cost to get a product ready to sell
• Country of OriginCountry where goods were made
• Cost of Goods SoldCOGSDirect cost of the products you sold

• Nixon Shock1971 · The US ends dollar convertibility into gold
• Bretton Woods Conference1944 · 44 nations create the IMF and World Bank

1. Plaza Accord (Wikipedia) en.wikipedia.org
2. The Plaza Agreement and Japan: Reflection on the 30th Year Anniversary (Baker Institute, Rice University) bakerinstitute.org