China Relations: US Will Retaliate If China Further Devalues Yuan

Andrew Cummings
August 11, 2019

According to Yahoo Finance, the tariffs has cost USA importers $6 billion in tariffs in June, a 74 increase since previous year despite a slight decline in the value of imports.

With the four-year anniversary of China's shock devaluation approaching on August 11, currency traders are adjusting to a new reality without the line in the sand that has helped cushion declines since 2015. The US has announced further tariffs will be applied to Chinese imports from next month, levying a 10% burden on $300 billion worth of goods.

The US dollar (USD) wrapped up its after-hours session just a tad higher versus most of its counterparts late Thursday, but it was the Chinese yuan (CNY) that stole the show after China's central bank fixed the currency and elevated it on a stronger position.

"So the fear of rapid depreciation is fading".

China's currency "should remain flexible and market-determined", which would mean "less intervention", he told reporters.

By keeping its currency undervalued, China can make its exports cheap and imports expensive. According to China, Monday's fall that China's market witnessed happened was a reflected pressure on the newly imposed exchange rate from the US.

Stephen Moore, distinguished visiting fellow at Washington-based think tank The Heritage Foundation and a senior adviser to Trump's 2016 presidential campaign, said devaluing the yuan is a short-term strategy to neutralize the effects of USA tariffs.

Imposing tariffs is Trump's tactic to get China to negotiate faster.

In the words of US President Donald Trump, China is a "currency manipulator', but in a way that's different to market forces".

Trump is unlikely to back down in trade talks, Moore said, given that the relationship has been lopsided in Beijing's favor for decades.

"I think the economy of China could really implode if this trade war continues", he said.

China deliberately allowed the yuan to slide past 7-per United States dollars, triggering widespread worries that the US-China trade showdown was getting out of hand.

"The Chinese government is trying to masquerade the impact that these tariffs are having on the Chinese economy".

Other reports by iNewsToday