Chinese Yuan enters "withdraw" before Trump's commercial attacks

In the trade dispute between the two largest economic powers in the world, China will soon run out of "park" to apply tariffs to United States but remains an "ace in his sleeve", adjusting the exchange rate of his currency with the dollar.

During the last three months, the currency China depreciated 6.36%, with what happens What some analysts call the weakness of the currency because the Asian giant means greater competitiveness of its exports.

The yuan served as a variable of adjustment for the purpose of amortizing Trump's commercial attacks .

"China would favor a gradual and gradual depreciation of its currency so as not to create a crisis of confidence, it could also apply other measures of retaliation against US tariffs, such as limiting business licenses US, stop approval of mergers and acquisitions of Chinese companies by US entities, "said Diego Colman, market analyst and currency specialist for DailyFX of Grupo Financiero IG.

apply tariffs in the United States , potentially, for an amount of only 129 thousand 894 million dollars, which corresponds to its imports from this country, according to the US Census Bureau.

While Donald Trump's administration has a larger margin, to be able to punish the Asian giant with tariffs for a figure of 505 thousand 470 million dollars, which were increased purchases made to the world's second largest economy during the past year.

China's weak potential to make the "hit" in the United States in the application of tariffs causes the conflict to be transferred to the exchange rate of the yuan with the dollar, but it can also be extended to other key areas for exchange between the two nations.

China has been able to meet the United States tariffs of US $ 34 million without much difficulty with a similar amount, but it would not have enough room to revise the tariffs. new announcements announced Tuesday by the United States.

The administration of Donald Trump has threatened to apply duties on its imports from China for an amount of $ 200 billion.

If Trump fills his threat, China's tariffs will rise to $ 234 million. The Asian giant could no longer respond in the same proportion, because its purchases in the United States are well below this level.

The exhaustion of response from China, to the reprisals imposed by the United States, leaves the door open to exchange rate adjustments, as it is already the case.

However, for Diego Colman Although "China could devalue its currency substantially to increase the competitiveness of its exports and counteract the protectionist measures of the administration of Donald Trump, but it would not be his favorite tool to fight against tariff penalties A sharp and sharp devaluation of the yuan, like the one that occurred in August 2015, would cause large capital outflows from the Chinese market and destabilize its financial system. "

The effect of the fall of yuan in Mexico

In the trade war between China and the United States, Mexico may be damaged collaterally .

The devaluation of the yuan against the dollar, also made it lose against the Mexican currency. ] From June 13 to date, the yuan has fallen 13.06 against the peso, making its exports to Mexico more competitive and making the products sold by our country to the Asian giant more expensive.

The question of exchange rates is particularly important because Mexico has the largest trade deficit with China . Only in the last year, the imbalance amounted to 67 thousand 432 million dollars.

Mexico will not only have to redefine its trade relations with the United States, but also with the Asian giant.