Yuan, Dollar Inch Lower as Trump Slaps 10% Tariffs On More Chinese Goods
The yuan and the U.S. dollar traded slightly lower on Tuesday following an announcement by the Trump administration that the U.S. would put 10% tariffs on $200 billion in Chinese goods, which will go up to 25% at the end of the year.
The USD/CNY pair was trading at 6.8640 by 12:01AM ET (04:01 GMT), up 0.1%.
The fall in the Chinese yuan came after U.S. President Donald Trump said in a statement on Monday that U.S. is slapping 10% tariffs on $200 billion worth of Chinese goods, and that the tariffs would rise to 25% in January 2019.
Trump added that "if China takes retaliatory action against our farmers or other industries, we will immediately pursue phase three, which is tariffs on approximately $267 billion of additional imports."
"We have been very clear about the type of changes that need to be made, and we have given China every opportunity to treat us more fairly," he said in the statement.
"But, so far, China has been unwilling to change its practices."
According to reports, the U.S. removed about 300 goods from a previously proposed list of affected products, including smart watches, some chemicals, along with some other products.
Meanwhile, the U.S. dollar index, which tracks the greenback against a basket of other currencies, also traded 0.05% lower to 94.04. The index received some support earlier in the session and popped up to 94.607 following the trade news.
The greenback has benefited from safe-haven demand in recent months amid the escalating Sino-U.S. trade conflict.
"Of immediate concern to the market is how China responds to the tariffs," said Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo.
Elsewhere, the Aussie dollar, which is seen as a proxy to China-related trades, was up 0.14% at $0.7194, after hitting a low of $0.7144 earlier in the session.
The NZD/USD pair also gained 0.2% to 0.6593.
The USD/JPY pair was trading at 111.97, up 0.07%.