The offshore yuan in China sank to an all-time low on Tuesday, dropping as much as 0.5 percent to 7.3848 per U.S. dollar in New York trading. The drop comes after the People’s Bank of China on Thursday set its daily reference rate at 7.2038 — the weakest fix since September 2023. It is a major loosening of the central bank’s grip on the currency during an increasingly economic squeeze.
The steep drop comes as the latest escalation of the U.S.-China trade conflict unfolds. Tuesday, the White House said it was immediately imposing a sweeping 104% tariff on a battery of Chinese products. The Biden administration’s approach to “unfair trade practices” will also involve collecting additional levies starting on April 9.
Ju Wang, head of Greater China FX & Rates Strategy at BNP Paribas, noted that after a little more than a week of China’s strong retaliation against U.S. tariffs, the market is growing increasingly concerned about the potential for a weaker yuan, and added that such pressure “is not going to be lifted so easily.”
Some Key Opinion Leaders are calling this win a “Good Tuesday” after the historic Black Monday observed on Apr 7. Crypto czar, David Sacks, posted on X saying that the Black Monday hoax was over.
However, many are criticizing Donald Trump's 104% tariff on China.
Peter Schiff, an economist wrote, "The U.S. has consistently run annual trade surpluses in services. By Trump's logic that means that the U.S. has been cheating and ripping off other nations. Should those nations retaliate with reciprocal tariffs on U.S. services to level the playing field?".
Bo Hines believes that Trump's new tariff law has brought the era of digital assets too. Just after the tariff news hit the internet, he said, "the era of digital asset and financial technology innovation in the U.S. has arrived—and it’s only just beginning."