situation report

Aug 5, 2019 | 13:37 GMT

1 min read

China: Currency Falls Below 7 Yuan per U.S. Dollar

What Happened: China's currency has fallen below the threshold of 7 yuan for 1 U.S. dollar for the first time since 2008, less than one week after U.S. President Donald Trump announced new import tariffs on $300 billion worth of Chinese products, Bloomberg reported Aug. 4. Separately, China reportedly canceled earlier orders for imports of U.S. agricultural products, including soybeans.

Why It Matters: The Chinese government is allowing the yuan to depreciate to partially offset the latest round of U.S. tariffs. Beijing's latest move, together with canceling agricultural purchases, raises the possibility of Trump following through with his tariff threat, which could result in additional Chinese retaliatory measures.

Background: Trump announced via Twitter on Aug. 1 that he will impose additional tariffs on $300 billion in Chinese imports, just days after a meeting between U.S. and Chinese officials in Shanghai yielded little progress on trade disagreements.

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