China: Lower US tariffs support trade flows – ABN AMRO

💡 DMK Insight

China’s potential tariff reduction is a game changer for trade dynamics, and here’s why: The US Supreme Court’s ruling to scrap IEEPA-based tariffs means China could see a significant reduction in costs, particularly with the new 15% Section 122 rate. This shift not only benefits Chinese exporters but could also lead to lower prices for US consumers, potentially boosting demand for Chinese goods. For traders, this is a crucial moment to reassess positions in related markets, especially commodities and currencies tied to China. If the yuan strengthens as a result, it could impact forex pairs like USD/CNY, making it essential to monitor those movements closely. But let’s not overlook the flip side: while this could stimulate trade, it might also provoke a response from other nations feeling the pinch of increased competition from China. Keep an eye on geopolitical tensions that could arise, as they might lead to volatility in markets. For now, traders should watch the yuan’s performance and any shifts in commodity prices, particularly in sectors heavily reliant on Chinese manufacturing.