Topline
Chinese Embassy officials in the U.S. warned Monday that a trade war between the two countries would have no winners, after President-elect Donald Trump reiterated his plans to impose additional tariffs on Chinese imports.
U.S. President-elect Donald Trump speaks at a House Republicans Conference meeting at the Hyatt … [+] Regency on Capitol Hill in Washington, DC.
Key Facts
In a statement to the press, Chinese Embassy Spokesperson Liu Pengyu said: “China believes that China-US economic and trade cooperation is mutually beneficial in nature…No one will win a trade war or a tariff war.”
In his announcement, Trump accused Chinese authorities of failing to act against the inflow of fentanyl into the U.S. and said the tariffs would remain in place until this was stopped.
Liu, however, dismissed this allegation pointing to an agreement between Chinese President Xi Jinping and President Joe Biden to crack down on the drug trade and said “the idea of China knowingly allowing fentanyl precursors to flow into the United States runs completely counter to facts and reality.”
Shortly after Trump’s announcement, the Chinese yuan slumped to a four-month low of 7.2730 per dollar.
The Canadian currency slumped to 1.41 per U.S. dollar—its worst level in more than four years—while the Mexican peso stumbled to 20.5 per dollar.
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Tangent
Trump’s announcement also hit Asian stocks, with Japan’s Nikkei 225 index dropping nearly 2%, before recovering to 38,442 points, down around 0.9% from the previous day. Japanese carmakers Nissan and Toyota, which have major production facilities in Mexico, were the worst hit, with Nissan’s shares dropping 4.9% at one point, while Toyota’s fell 2.9%—before recovering slightly to 3.64% down and 1% down respectively. South Korea’s KOSPI index fell 0.5% while the Taiwanese TAIEX was down 1.17%.
Further Reading
Trump Promises New Tariffs On China, Mexico, Canada After Taking Office (Forbes)
