China Hit by Tariff Bomb, Triggering Currency War

Counterattack with Yuan Devaluation Card

US 'Bombards' China with 104% Tariff

Yuan Value at Lowest in 19 Months

Won-Dollar at Highest Since Financial Crisis

On the 9th, as the US imposed an additional 104% tariff on China, China raised the yuan exchange rate to the highest level in 19 months. This was a countermeasure against the US's reciprocal tariffs by devaluing the yuan.

The People's Bank of China announced the yuan exchange rate at 7.2066 per dollar, up 0.04% from the previous day. This is the highest since September 2023. The People's Bank raised the yuan exchange rate to the 7.2 yuan level per dollar for the first time since Donald Trump was elected in the US presidential election last November. China had been managing the yuan exchange rate to not exceed 7.2 yuan, but this was breached.

Analysts suggest that China's move to devalue the yuan is to support export companies inevitably hit by the US's high tariffs. The Trump administration enforced the announced country-specific reciprocal tariffs, imposing an 84% tariff on China on this day. The Trump administration had also imposed an additional 10% tariff on China in February and March. This raised the US's additional tariffs on China to 104%, making exports to the US virtually difficult. Lowering the yuan value can partially offset the tariff shock.

President Trump directly criticized at a National Republican Congressional Committee (NRCC) dinner in Washington DC before the reciprocal tariffs took effect, saying, "China announced today that they are devaluing their currency," and "They are manipulating the exchange rate." He added, "That's why the '104% tariff on Chinese products' effective tonight (1:01 PM Korean time on the 9th) will remain until they negotiate."

As the US-China tariff war intensified, the value of the won also plummeted. On this day, the won-dollar exchange rate closed at 1,484.10 won, up 10.90 won from the previous day, marking the highest level in 16 years since the 2009 financial crisis.

Beijing=Kim Eun-jung/Washington=Lee Sang-eun Correspondents kej@hankyung.com