Donald Trump’s threat to increase tariffs could boomerang, hit America hard like Dragon…

China has already banned exports of rare metals to the US.

New Delhi: Even before Donald Trump took over the office of the president, China has started giving messages to the country. The message is clear: It will not bow to America.

China has already banned exports of rare metals such as gallium, germanium and antimony to the US. These metals are extremely important to the US engineering and defense industries. This is expected to cause a loss of more than $3 billion to the United States.

Not only this, in response to Trump’s threat to increase tariffs, China has now prepared another cycle. It is not easy to break through this cycle. By 2025, China is considering weakening the yuan. The devaluation of the yuan will make Chinese exports cheaper. This will reduce the impact of tariffs.

Trump has said he plans to impose a 10% tariff on all imports and 60% on Chinese imports into the United States. The devaluation of the yuan may make Chinese exports cheaper. This will reduce the impact of tariffs and loose monetary policy in China.

Reuters has cited sources as saying that a devaluation of the yuan may be allowed next year. At a meeting of the Politburo, the decision-making body of Communist Party officials, this week, China pledged to adopt reasonably loose monetary policy next year. This is the first such relaxation in its policy stance in nearly 14 years.

Yuan policy has featured heavily in financial analyst notes and other think tank discussions this year. The People’s Bank of China (PBOC) has considered the possibility that the yuan could fall to 7.5 per dollar to counter any trade shocks. That’s down about 3.5% from the current level of 7.25.

The yuan weakened more than 12% against the dollar during tariff announcements between March 2018 and May 2020 during Trump’s first term as president. The yuan’s weakness could help the world’s second-largest economy. It reduces deflationary pressure by increasing export earnings and making imported goods more expensive.

Analysts predict that the yuan will fall to an average of 7.37 per dollar by the end of next year. The currency has lost about 4% of its value against the dollar since the end of September.

When a country weakens its currency, it means that it makes other currencies more valuable than its currency. This makes the country’s exports cheaper and imports more expensive. For China, a weakening of the yuan will reduce the prices of Chinese products on the global market. This will give them a competitive edge. However, this will make imports more expensive and may lead to inflation.