Is China Preparing a Yuan Surprise in the Trade War With the US?
AFP 2018 / FRED DUFOUR Business17:00 09.04.2018Get short URL10572
US President Donald Trump imposed 10% and 25% tariffs on imported aluminum and steel respectively on March 8, 2018, prompting a harsh response from China, which has so far suffered the most under the new regulation.
China is viewing a gradual depreciation of the yuan as one of the possible instruments in a trade war with the US, reports Bloomberg news, citing sources familiar with the matter.
They are currently performing a two-pronged analysis of the yuan in terms of the current situation with the US. One scenario supposes using it in trade negotiations, the other — devaluing it to negate effects of the trade tariffs that curb export.
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According to the media outlet’s sources, it doesn’t mean that devaluing the yuan is a done deal, as it requires approval at the top level, but noted that such an option is being examined.
US President Donald Trump imposed the trade tariffs on steel and aluminum on March 8, although it has temporarily excluded some of the countries from being affected by it, such as Canada, Mexico and European countries. China, which will reportedly suffer the most from the tariffs (with an estimated $150 billion loss annually), has imposed 10-25% in taxes on 128 categories of goods imported from the US as a reciprocal measure.
READ MORE: Chinese Ambassador Calls New US Tariff Policy ‘Step in Wrong Direction’
Trump later expressed his opinion that eventually Beijing will lift its trade barriers, as it’s “the right thing to do” and that the intellectual property theft issue with China will be resolved. Beijing, for its part, announced that it doesn’t want to wage a trade war with the US, but noted that is ready to do so if needed. The spokesman for the Chinese Foreign Ministry said on April 9, that Washington is solely responsible for starting the latest trade war.