The article discusses how changes in prices in Japanese and U.S. manufacturing are influenced by productivity growth and exchange rate fluctuations. Productivity growth helps keep costs competitive in the long run, but exchange rate changes have a bigger impact in the short term. When exchange rates shift, firms adjust their export prices to protect their market share. Japanese firms are more likely to lower their export prices in response to a stronger yen, to prevent their prices from rising in dollars. This strategy is called "pricing to market" and is used by firms in both countries, but more extensively in Japan.