Offshore yuan steady amid escalating US-China trade war

The offshore yuan steadied around 7.31 per dollar on Friday, after a brief increase earlier in the session, as investors navigated escalating US-China trade tensions.

Offshore yuan steady amid escalating US-China trade war

China’s Ministry of Finance announced it would increase tariffs on American goods to 125%, up from the previous 84%, effective April 12. The move followed the US clarification on Thursday that its tariffs on Chinese goods now stand at 145%, higher than the previously signaled 125%. In a sharp escalation, Beijing declared it would no longer consider U.S. tariffs in bilateral negotiations, stating there is “no longer any possibility of American products being accepted in China’s market.” This aggressive rhetoric underscores the deepening trade divide between the two economic superpowers.

Market struggles with inflationary concerns

The timing of these tariff hikes and the heightened tensions come amid an already fragile global economic environment, adding pressure on markets already struggling with inflationary concerns and supply chain disruptions. Meanwhile, top Chinese officials are scheduled to meet on April 11 to deliberate fresh stimulus measures aimed at shoring up the housing market, boosting consumer spending, and accelerating tech innovation. The outcome of these discussions is keenly anticipated, as China seeks to stimulate its domestic economy in the face of mounting external challenges. Analysts will be closely watching for any new policies that could provide a cushion against the impact of these tariffs, particularly in sectors critical to China’s long-term growth, such as technology and infrastructure development.