Chinese stocks and renminbi hit by Trump’s 10% tariff threat.

Open the White House Watch newspaper for free

Your guide to what the 2024 US election means for Washington and the world

The renminbi weakened and Chinese stocks fell after US President Donald Trump said he may impose 10 percent tariffs on China starting next month.

The CSI 300 index of companies listed in Shanghai and Shenzhen was down 1 percent on Wednesday afternoon. Hong Kong’s Hang Seng index retreated 1.8 percent, led by lower levels of Chinese companies listed in the territory.

The offshore renminbi, which trades free of restrictions imposed by Chinese financial authorities, weakened 0.3 percent to $7.29 on Wednesday.

The dollar strengthened by 0.15 percent against a basket of currencies including the pound and the yen.

China has shied away from Trump’s direct focus on his first day in office, where he proposed 25 percent tariffs on America’s biggest trading partners, prompting traders to hedge their bets on a restart. A trade war began in the first reign..

Trump said the 10 percent tariff was intended to punish China opiate fentanyl to Mexico and Canada. The United States has accused China of sending chemicals used to make fentanyl to Mexico, which cartels use to make the drug.

It was a repeat of a threat the new president made during the campaign.

Traders widely expect the U.S. dollar to remain strong against the currencies of major trading partners, including China, as high tariffs and low interest rates weigh on China. Renminbi.

In a Bank of America survey, 27 percent of fund managers said “long the U.S. dollar” was the most crowded trade in January.

Shares in the rest of Asia were broadly higher on Wednesday. Korea’s Kospi index rose 1.3 percent and Japan’s broader index rose 0.9 percent. Taiwan’s benchmark index rose 1 percent, while India’s Sensex rose 0.2 percent.

During the presidential campaign, Trump also threatened to impose a separate 60 percent tariff on Chinese goods.