U.S. President Donald Trump accused China of manipulating its currency to offset the impact of retaliatory tariffs, warning that the practice may ultimately harm the oil-importing Asian nation. Speaking at a National Republican Congressional Committee event on April 8, Trump criticized Beijing’s alleged currency tactics, which he said made it difficult for the U.S. without elaborating further. The remarks came hours before the latest U.S. tariffs were set to take effect.
Offshore Yuan Falls to 7.42 Per Dollar
China’s yuan weakened sharply as trade tensions escalated. According to a Nikkei Asia report, the onshore yuan, which trades within a 2% band of a reference rate set by the People’s Bank of China (PBOC), fell to 7.35 per dollar in morning trading on April 9. The freely traded offshore yuan dropped to a low of 7.42 per dollar a day earlier, marking the weakest level in 17 years. Critics argue that the PBOC began setting a weaker reference rate after Trump imposed a 34% “reciprocal” tariff on China on Liberation Day, though the central bank maintains its rate-setting is based on economic fundamentals.
Trump’s 104% Tariff Regime Takes Effect
In retaliation, China levied a 34% reciprocal tariff on American imports. President Trump responded by imposing an additional 50% tariff, bringing the effective tariff on Chinese imports to 104%. “In the end, it’s not good because they have to buy oil. We don’t need oil and gas, we have more than any other country, they have to buy it and that’s where it hurts them,” Trump said at the event, highlighting China’s reliance on foreign oil.
History of Currency Manipulation Allegations
Allegations that China manipulates its currency have long strained bilateral relations. In 2019, the Trump administration officially designated China as a currency manipulator for the first time since 1994, following a sharp decline in the yuan. This time, it remains unclear what specific punitive measures the administration will take against China’s alleged currency manipulation. Trade experts note that the escalating tariff war and currency tensions could further destabilize global financial markets.
Crypto Markets Under Pressure Amid Risk-Off Sentiment
While the article focuses on traditional currency and trade disputes, cryptocurrency markets are not immune to such macroeconomic shocks. Investors often view Bitcoin as a hedge against fiat currency debasement, but broad trade war escalation typically triggers risk-off sentiment, leading to sell-offs in both equities and crypto assets. As geopolitical uncertainties mount, digital asset traders should monitor the potential for increased volatility and capital outflows from risky positions.