Stories by Brad Setser

Expert Voices

Truce extension likely as U.S.–China trade deadline looms

As the Trump administration’s March 1 deadline for a trade deal with China approaches, with another Xi–Trump summit to follow, it seems almost impossible that a comprehensive agreement will be reached in time. The likely outcome is a punt that defers tariff increases in exchange for ongoing Chinese purchases of U.S. soy and energy.

Expert Voices

Latest Trump tariffs avoid steep escalation, but future threats loom

Illustration: Lazaro Gamio/Axios
Illustration: Lazaro Gamio/Axios

President Trump announced this week a 10% tariff on an additional $200 billion of Chinese imports on September 24, and threatened to impose 25% tariffs on essentially all imports from China early next year. China retaliated with new tariffs of its own, as expected.

Why it matters: By keeping the rate at 10%, the Trump administration has limited the tariffs’ short-run economic impact. China’s currency has weakened by more than 5% since its peak earlier this year, mitigating some of the pain befalling Chinese manufacturers and U.S. consumers, and 10% is low enough that both Chinese exporters and U.S. importers can absorb a portion of the cost.

Expert Voices

China's currency drop helps exports but comes with risks

Since the middle of June, China’s currency — the yuan — has fallen more than 3% against the dollar, and by a bit less against the currencies of China’s main trading partners. After a particularly large drop last Monday, China is reported to have intervened to limit the yuan’s fall.

Why it matters: Few prices matter more to the global economy — or to global trade — than the value of China’s currency. A weaker yuan supports China’s exports and generally pushes down the currency values of countries that compete most intensely against China in global markets.