Ford's popular Fusion sedan gained ground on Toyota's Camry last year. Ford is worried that Toyota could use its currency advantage to make big price cuts. Photo credit: Ford.

It's no secret that Japan's moves to devalue its currency have led to huge profits for Toyota (TM 0.69%). 

Japan's auto giant reported a huge $5.1 billion profit last quarter, and said that the yen's decline was a big reason for its success.

It's also no secret that some of Toyota's biggest competitors think that this is unfair. And one of those competitors, Ford (F 6.10%), hasn't been shy about saying it.

Ford is really unhappy with Japan's government -- and Toyota, too
Joe Hinrichs is Ford's president of the Americas. He's the chief, in other words, of the automaker's North America and South America regions. He's a big deal, a well-regarded senior executive. 

So it's significant when Hinrichs steps up and calls out Toyota and the Japanese government, as he did last week. 

"When Toyota came out and said half their profits are due to currency change of the yen, that's a big deal. They said that," Hinrichs said after a speech in Chicago, according to Automotive News. "When [Toyota CEO] Akio [Toyoda] came out in support of [Japanese Prime Minister Shinzo] Abe saying we need a weaker currency, that's a corporate policy statement."

Hinrichs reiterated Ford's opposition to a trade agreement called the Trans-Pacific Partnership, which is being debated in Congress, if the deal doesn't limit a country's ability to manipulate its currency.

This isn't the first time Hinrichs has taken a swing at Japan's monetary policy. Last year, he expressed concern that the weakened yen would allow Japanese automakers to crank up exports to the U.S. -- just as Ford and other U.S. automakers were struggling to expand their production capacity. 

Hinrichs' remarks last year followed Ford CEO Alan Mulally's comments in June 2013 that the Japanese government was manipulating its currency to give automakers like Toyota an advantage.

So what's really going on here? Does Ford have a legitimate beef, or is Hinrichs just expressing frustration after being outflanked by a competitor?

Why a cheaper yen means fat profits for Toyota
Well, it's true that the Japanese government has made multiple moves to devalue the yen, in hopes of jump-starting its domestic economy. And it's also true -- as Toyota freely admits -- that Japan's largest automaker is making a ton of money right now as a result.

What has happened is that the yen has fallen in value against nearly every other major currency over the last couple of years, including both the U.S. dollar and the euro. Two years ago, $1 was worth about 76 yen. Now, it's worth about 102 yen.

For Toyota, $1 earned in the U.S. is now worth a lot more yen at home. Ford's complaint is that the Japanese government unfairly manipulated things to make that happen.

But it's not Toyota's profits that Ford is worried about.

Ford's real fear: A U.S. price war
So far, at least in the U.S., Toyota and the other Japanese automakers have mostly chosen to hold prices steady and take the extra profits. 

(I say "mostly" because Nissan (NSANY 1.56%) did cut prices on some models last spring, including the Altima sedan (its biggest seller in the U.S.), and saw sales jump -- but its profits have suffered.)

Ford's concern is that Toyota could use its currency advantage to make big price cuts that the Blue Oval couldn't match. Already, Ford's average transaction prices on key models like the Fusion are higher than seen at Toyota. Ford's emphasis on design and features has made that work out, and its profit margin in North America have been strong.

The Fusion is a great car. But if the Camry were to suddenly get a whole lot cheaper, Ford's sales could struggle -- unless the company cut its own prices (and hard-won profit margin) in response.

Ford really, really doesn't want to do that. 

That's why Hinrichs is trying to push Congress to make Japan knock it off.