When you turn on the news, it seems as though the only thing they have been talking about is the US and China Trade War. We have witnessed the effects of this for many US farmers, such as wheat and soya farmers. There have also been fears that the US could be digging their own grave and taking themselves towards a recession. The US could also be making decisions to increase unemployment rates which is currently settled at 3.7%.

The US has also labelled China a currency “manipulator,” for their undervalued currency, which they have devalued further. This is no surprise, because Donald Trump has been addressing this issue from as early as his campaign.

What is the criteria for a country to be declared a manipulator?

• The nation must have a trade surplus with the US of more than $20 billion

• A current-account surplus of more than 3% of GDP

• Must buy assets worth 2% of GDP in attempting to reduce the value of its own currency on foreign exchange markets.

This accusation is nothing new to China, as they once carried this “title” from 1992-1994. Fast forward to 2019, China dropped its currency value to the lowest since 2008, of about 7 yuan to a dollar.

Closing Questions?

Will this move increase uncertainty with the markets? What does this mean for other countries (Mexico, Indonesia..) that had benefited from this trade war- countries where companies had moved their operations running away from these tariffs and tensions?