The Chinese yuan is cratering against several major currency rivals to start the trading week. After the US government unexpectedly raised tariffs on $200 billion in Chinese goods, Beijing responded by raising tariffs on $60 billion worth of American products.
On Monday, the Ministry of Finance announced that it would be increasing their tariffs on more than 5,100 US goods, ranging from 5% to 25%. The highest rate will target liquefied natural gas (LNG), soybean oil, frozen vegetables, and petrochemicals. The next highest rate â 20% â will penalize meat, peanuts, sugar, and wheat.
The Finance Ministry said in a statement that it hopes the US will return to bilateral trade and economic consultations and meet the country halfway.
The escalation of trade friction is not in the interests of the people of the two countries and the people of the world. China feels deeply sorry for that. If the U.S. tariff measures are implemented, China will have to take necessary countermeasures.
The White House and the Treasury Department have not issued a statement since Beijing unveiled the countermeasure.
Prior to the announcement, President Donald Trump went to Twitter to discourage the worldâs second-largest economy from responding, warning that it âwill only get worse.â He stated many companies affected by the tariffs will eventually flee China and move operations to Vietnam and other Asian neighbors, or even in the US.
Because of this, Trump thinks âthatâs why China wants to make a deal so badly!â
Despite the words of caution, China promised that it âwill never surrender to external pressure.â
On the data front, motor vehicle sales plunged 14.6% in April, down from the 5.2% contraction in March, according to the China Association of Automobile Manufacturers. In the first four months of 2019, auto sales have dropped 12.1%. Several other key pieces of data will be published this week, including industrial output, retail sales, housing prices, and fixed-asset investment.
The USD/CNY currency pair tumbled 0.79% to 6.8783, from an opening of 6.8241, at 19:34 GMT on Monday. The EUR/CNY fell 0.83% to 7.7281, from an opening of 7.6645.
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