Concerns Over Yuan Depreciation Met with "Strong Response"
Amid Donald Trump, the President-elect of the United States set to take office in January next year, announcing additional tariffs on all Chinese imports, Janet Yellen, the U.S. Treasury Secretary, expressed concerns that China is expected to retaliate.
On the 11th (local time), Secretary Yellen stated in an interview with Bloomberg Television, "Many countries find ways to retaliate when faced with unilateral tariffs."
Regarding the Biden administration’s imposition of $18 billion in tariffs targeting strategic industries such as electric vehicles, she explained, "We trade with China, and these measures were necessary to ensure that China’s actions do not undermine plans to support this (tariff-imposed) sector." She identified clean energy and semiconductors as industries likely to face Chinese retaliation.
Secretary Yellen said, "Almost all economists agree that tariffs cause companies reliant on Chinese imports to raise prices, which harms us," adding, "The U.S. has adopted a strategic (tariff) approach focused on a narrow scope, but like most economists, I have serious concerns about a broad approach."
During his campaign, President-elect Trump pledged to impose an additional 60% tariff on all Chinese imports. On the 25th of last month, after the election, he declared a 10% tariff on China citing drug issues.
There is analysis that if President-elect Trump imposes massive tariffs, China may respond by devaluing the yuan to enhance export competitiveness. Although Secretary Yellen did not specify any country, she said, "We do not tolerate countries manipulating their currencies to gain competitive advantages. We pay close attention and respond strongly to any country manipulating its currency to maintain an advantage." However, she noted that there is currently no such market intervention.
Nonetheless, Secretary Yellen emphasized the importance of "maintaining open channels" with China and urged continued dialogue. She added, "When taking measures such as export controls or restrictions on overseas investments, we explain our objectives through these channels to avoid misunderstandings that could unnecessarily worsen relations."
Last year, Secretary Yellen established separate working groups on economic and financial matters with China. The economic working group is scheduled to meet on the 12th, and the financial working group on the 15th and 16th.
Regarding the recent weakness in the global oil market, she said, "Prices are relatively low, global demand has decreased, and supply has increased," adding, "This creates opportunities for additional (sanctions on Russia)." She continued, "Oil is a significant component of Russia’s budget, and we have focused on Russian oil imports from the beginning." She also stated, "What we aim to do is strengthen Ukraine, help it develop the ability to defend itself, and hope that someday it can negotiate peace with Russia."
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