Will Trump really declare China a "currency manipulator"?

For almost all Sino-US trade experts, Trump’s so-called policy announcements on the Sino-US economy are very unprofessional rhetoric. First of all, the marketization of China's exchange rate has been confirmed by the International Monetary Fund's inclusion of the RMB in the basket. It is not just Trump's statement that "China manipulates its exchange rate" that counts. In addition, if Trump really declares China a "currency manipulator" and significantly increases tariffs on Chinese imported goods, China will definitely retaliate in tit-for-tat fashion. No matter what happens in China by then, it is certain that the U.S. economy will not get any benefits, but will instead suffer losses.

Declaring China an "exchange rate manipulator" will increase the pressure on the appreciation of the RMB. This is opposite to the current direction of shorting the RMB in the international financial market. The two are counterproductive, and the actual effect is limited. However, China's "reputation" will be slightly affected, and the trade atmosphere between the two countries will become tense.

However, a tariff of 45% is imposed on Chinese imported goods. This is a number made up by Trump during the election campaign. The maximum authority of the US president is to impose a 15% tariff on all imported goods within a 150-day period. This limit can only be exceeded by declaring a national emergency. In addition, the U.S. president can only request higher tariffs on individual goods.

Trump, who is a businessman, is very shrewd. We don’t think he will be so naive about Sino-US trade alone. Several U.S. presidents have not dared to fight a full-scale trade war with China. Moreover, today's economic and trade interests between China and the United States are intertwined. It is also an old trick to threaten China with the label of "currency manipulator." Successive U.S. governments have ultimately chosen the prudent route because doing so is in the best interest of the United States as a whole and is also the easiest to be accepted by American society.

Trump has no magic, and he cannot change the pattern of interests between China and the United States. Power is stronger than people. The huge Sino-US trade is naturally formed on the basis of mutual benefit and win-win. Even if Trump is president, the impact he can have is limited.

Once Trump disrupts the overall trade situation between China and the United States, causes losses to many American industries, and directly causes "self-inflicted harm" to American companies in China, there will definitely be many forces in the United States that use the topic to accuse him of being "reckless." "Ignorance" and "incompetence" finally made the new US president miserable. We very much suspect that some American media are deliberately pushing him in the direction of the Sino-US trade war because they want to see Trump’s jokes. Here’s a reminder to the president-elect of the United States: Be careful not to fall into the pit dug by those people.