In a recent interview with Fox News, President Donald Trump expressed a preference to avoid implementing tariffs on China. However, he emphasized the substantial leverage these threats provide over the Asian nation, noting that China is eager to sidestep such economic pressures.
Trump has often used the threat of tariffs as a strategic tool against both allies and adversaries, while promising additional domestic revenue from such measures. Shortly after assuming office in his second term, he warned of a 10% tariff targeting China, accusing the nation of allowing the influx of fentanyl into America.
In a wide-ranging dialogue, Trump addressed several pressing international issues. He warned of imposing significant financial penalties on Russia should it fail to engage in negotiations to resolve the Ukraine conflict. Additionally, he criticized Iran’s leadership and indicated an intention to initiate dialogue with North Korean leader Kim Jong Un.
Meanwhile, markets view Trump’s decision to hold off on immediate tariffs on China as a positive signal, interpreting his recent rhetoric as less severe compared to last year’s campaign bluster, where he suggested tariffs as high as 60%. Economists have warned that such steep tariffs could severely disrupt U.S.-China trade, particularly affecting the export-heavy Chinese economy.
Following Trump’s latest remarks, the yuan experienced gains in both onshore and offshore markets. The offshore yuan appreciated by 0.3% against the U.S. dollar, while the onshore yuan climbed 0.2%. Chinese equities also benefited, with the CSI 300 Index closing the morning session 1% higher, while a Hong Kong-listed Chinese stock index surged over 2%.
