China Braces for Trade War with US, Yuan Weakens and Tensions Rise!

Updated

April 9, 2025

Gambar China Braces for Trade War with US, Yuan Weakens and Tensions Rise!

Jakarta, Pintu News – Trade tensions between the United States and China are heating up again after US President Donald Trump threatened to impose an additional 50% tariff on imported products from China. The Chinese government immediately responded with a firm statement, stating that it would “fight to the end” if the US stuck to its decision.

This statement was made by China’s Ministry of Commerce, marking the latest escalation in the trade conflict between the world’s two largest economies. This adds to global market concerns about the possibility of a prolonged decoupling.

A Strong Response from the Chinese Government

China’s Ministry of Commerce called the new policy from Washington a “mistake on top of a mistake” in a statement on Tuesday. It emphasized that if the United States continues to impose its will, then China is ready to face up to the last point. This rhetoric comes in response to Trump’s threat to raise import tariffs by 50% if China does not lift the countervailing duties that have been applied previously.

The new move will increase the total tariffs announced so far this year to 104%, including the 34% increase planned from April 9 and the previous addition of 20%. Economist Michelle Lam of Societe Generale said that China will not back down easily. She also warned that without a change in attitude from the US side, investors should prepare for an economic separation between the two countries.

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Impact on Market and Yuan Currency

In the midst of rising tensions, the Chinese government began to take economic stabilization steps to calm the domestic market. One of the strategies taken is to loosen controls on the yuan to support export performance. The onshore yuan weakened to its lowest point since September 2023, while the offshore yuan also fell to its lowest level in two months.

The government also instructed the national team of funds to buy market assets to maintain stability. This step was taken after the Hang Seng China Enterprises index recorded a sharp decline, then rebounded to rise 2.26% the next day. On the other hand, reports also indicated that the government would accelerate stimulus to strengthen the domestic economy.

Diplomatic Tensions and Potential Escalation

The political situation between Washington and Beijing shows no signs of easing. Since returning to office earlier this year, Trump has not had direct communication with Chinese President Xi Jinping. This is the longest period a US President has not had direct contact with a Chinese leader in the last two decades. This lack of high-level communication is feared to exacerbate the escalation of the conflict.

Although China’s dependence on American demand has diminished, trade observers warn that a sustained tariff war will still have a negative impact on both economies. If there are no compromise measures from both sides, the world could witness one of the most prolonged trade conflicts in modern history. Global investors are keeping a wary eye on the situation.

Conclusion

The trade conflict between the US and China is now not only impacting bilateral relations, but also creating uncertainty for the global economy, including the crypto and digital currency markets. The weakening of the yuan reflects internal economic pressures amid heightened external tensions.

The policy measures taken by China signal that the country is ready to face long-term challenges. However, in the absence of a constructive dialog between the two countries, concerns about the long-term impact on world economic stability will continue to loom large.

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