USD/CNY: Gradual downside seen with tariff shifts – MUFG
|Michael Wan at MUFG argues that changes in US tariff implementation and a weaker Dollar backdrop support a gradual move lower in USD/CNY. China is seen as a relative beneficiary versus some Asian exporters as effective tariffs on Chinese exports are expected to fall. This narrows tariff differentials and reduces incentives to re-route exports via other Asia economies.
China seen as relative tariff beneficiary
"Third, countries which were beneficiaries and who have trade deals have come out slightly worse off in the interim, while those such as China and Brazil which have not finalized full trade deals have come out much better."
"Meanwhile, the likes of Brazil and China will likely see effective tariffs cut by around 7% to 16% over the next few months, based on analysis by Global Trade Alert, and as such they come up as relative beneficiaries."
"From a relative export competitiveness perspective, this also means that the tariff differential between other Asia exporters versus China has been narrowed in the interim, and reduces the incentive to re-route exports to the US at the margin."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.