US' futile quest for a yuan Plaza Accord

The United States recently raised the tariffs on $200 billion of Chinese goods from 10 percent to 25 percent, while targeting another $300 billion worth of Chinese imports for potential punitive tariffs. As was to be expected, the yuan depreciated from 6.7 toward 6.9 against the US dollar, mainly on renewed trade tensions.

China responded by imposing duties on $60 billion of US goods, starting June 1. In other words, instead of retaliating hard, China chose a mild response that highlights the importance of talks.

The US administration may still be gloating over its misguided tariff stance. Yet the movement of the yuan may not be to the liking of the White House since it is likely to offset the tariff impact.