On April 8 2025 the USD/CNH exchange rate reached an all-time high touching a level of 7.4273. This was obviously a market reaction on the tit for that trade war escalation between the US and China, Rabobank's macro analyst Teeuwe Mevissen reports.

Yuan shows strength amidst escalated US tariffs

"This initially resulted in the US imposing import tariffs as high as 145% with China imposing tariffs on US imports of 125%. However, soon the US and China agreed to implement a trade truce of 90-days which lowered tariffs to 50% for Chinese exports and 30% for US exports. This 90-day pause was prolonged with another 90-day pause after the first pause ended on August 12 this year."

"Since then the USD/CNH exchange rate declined and has largely been trading within the bandwidth of 7.10 and 7.20 since. At the moment of writing USD/CNH is trading at a level of 7.15. Given that since April this year Chinese goods are now subject to significantly higher US import tariffs, one could conclude that the yuan has held up quite well. But when one takes a look at the Bloomberg dollar spot index a different picture arises."

"While the Bloomberg dollar spot index dropped almost 8% this year, the USD/CNH exchange rate has ‘only’ dropped with approximately 2.5%. As such the US-dollar has held up well against the offshore yuan while it depreciated more significantly against other major currencies."