Both sides blame the other for starting the fight, and every attempt to get even looks like one-upmanship
, the Prussian military theorist, never wrote about currency wars. But some policymakers see them in his terms: as the continuation of trade politics by other means. That, at least, is how the Trump administration views China’s decision on August 5th to let its currency weaken past seven yuan to the dollar for the first time since 2008. Though arbitrary, that threshold has assumed huge symbolic importance among traders, economic officials and fund managers . They were left stunned.
Both sides blame the other for starting the fight. China has raised tariffs only in response to America’s. But America sees its combative economic diplomacy as a belated response to decades of intellectual-property theft and other misdeeds. Each side’s attempt to get even looks to the other like one-upmanship.
The next round of tariffs will hit goods for which China has fewer competitors. That should make it harder for American buyers to switch suppliers. Nonetheless the new tariffs’ direct impact could reduce China’s growth by at least 0.3 percentage points in 2020, according toTo support a slowing economy, China’s government has already cut taxes, increased infrastructure spending and relented in its campaign to restrain credit growth.
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