With just hours before the latest U.S. retaliatory tariffs against China were set to take effect, President Donald Trump publicly accused Beijing of manipulating its currency to soften the impact of the punitive tariffs. Speaking at a National Republican Congressional Committee event on April 8, Trump criticized the policy, saying it made things difficult for the United States without elaborating further.
Yuan Hits 17-Year Low Against Dollar
The president's remarks came as China's yuan neared its lowest exchange rate versus the dollar in 17 years. According to a Nikkei Asia report, the onshore yuan, which trades within a 2% range 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 had already dropped to a low of 7.42 per dollar a day earlier.
Although the PBOC formally sets the reference rate in line with economic fundamentals, critics believe it began setting a weaker rate after Trump imposed a 34% "reciprocal" tariff on Liberation Day. In response, Beijing imposed its own 34% reciprocal tariff on American goods, which Trump retaliated by adding an additional 50% tariff. The latest U.S. move means Chinese imports will face an effective tariff rate of 104%.
Allegations of Currency Manipulation and Energy Risks
Trump specifically criticized China's alleged currency manipulation tactics and warned the approach could backfire — because China imports a massive amount of oil. "But 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, [but] they have to buy it and that's where it hurts them," Trump said.
The currency manipulation allegations have long been a strain on U.S.-China relations. Previous U.S. administrations have employed various measures, including threatening to label China a currency manipulator, to pressure Beijing to abandon such practices. In 2019, the Trump administration officially designated China as a currency manipulator — the first such designation since 1994. It remains unclear what punitive measures the current administration will take this time.
Analysts warn that the combined effect of tariff and currency wars is amplifying global trade uncertainty, putting pressure on digital assets and commodity markets. Investors should watch for policy twists that could fuel volatility.