The Trump administration may view the drop in the Chinese yuan exchange rate – now at a 14-month low against the US dollar – as intentional devaluation and could be the motivation behind Trump’s proposal to raise tariffs on the Chinese imports to 25 percent from the previously proposed levy of 10 percent, economists at Goldman Sachs believe, according to CNBC report.
Key quotes (Source: CNBC)
“While it is unclear whether the Administration will move forward with a 25 percent tariff, we believe the announcement that it is under consideration further raises the probability that tariffs of at least 10 percent will be imposed on a substantial portion of the $200bn in imports recently detailed.”
“We expect that the decision to increase the rate to 25 percent will depend in part on whether recent CNY [yuan] depreciation reverses or continues.”
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