Bridgewater founder Ray Dalio ( recently met with high-level Chinese leaders, and during the tariff escalation tsunami on Trump’s "Liberation Day," he believes that the United States and China can reach an agreement through negotiation, exchanging the appreciation of the Renminbi for a drop in tariffs. Taiwan, which has been on the watch list of currency manipulators for five consecutive times, will it follow suit and allow the TWD to appreciate?
The Consequences of Liberation Day
Following up on my post below from earlier this week, now that we see yesterday’s tariff announcements, it appears to me that the first order consequences of them will be significantly stagflationary in the U.S. and significantly…
— Ray Dalio )@RayDalio( April 4, 2025
Trump's radical tariffs, China decides to retaliate
After Trump announced radical tariff policies on April 2, 2025, the US stock market recorded consecutive days of historic crashes.
)Global stock crash is coming! The US-China trade war is escalating, and the US stock market has seen its largest drop in years(
After the United States announced a 34% tariff on China, China also responded by announcing a 34% tariff on all products imported from the United States. U.S. President Trump harshly criticized China's retaliation against its comprehensive tariff plan and vowed that his economic policies "will never change." A U.S.-China trade war is on the brink of erupting.
Dalio believes that the renminbi will strengthen.
Dalio recently visited China and met with officials such as Vice Premier He Lifeng, central bank governor Pan Gongsheng, and Minister of Commerce Wang Wentao, and made the following remarks:
I can imagine that China and the United States will negotiate a protocol to strengthen the Exchange Rate of the Renminbi against the US dollar in exchange for some trade relief.
He also believes that if such a situation occurs, the phenomenon of deflation and economic recession will become more severe for China, which in turn will necessitate more accommodative monetary and/or fiscal policies.
After the People's Bank of China set a stronger than expected daily reference Exchange Rate to support the renminbi exchange rate, the renminbi has hardly changed this week.
Chinese officials have historically been unwilling to allow the renminbi to appreciate excessively. They believe that the appreciation of the yen after the Plaza Accord in the 1980s was one of the reasons that led Japan into the so-called "Lost Decade." Whether Dalio's remarks will come true is also worth observing in the future.
Will Taiwan, which is also considered a currency manipulation country, follow suit?
Due to recent mentions of the exchange rate manipulation issue by U.S. President Trump and Treasury Secretary Mnuchin, the exchange rate controversy may become an important bargaining chip in trade negotiations. As Taiwan has already been on the general observation list of currency manipulators for five consecutive times, is it possible for the NTD to appreciate?
According to the chart from Finance M Square, the New Taiwan Dollar has depreciated by 2.63% against the US Dollar in the past year, compared to the 0.64% depreciation of the Chinese Yuan and the 3.21% appreciation of the Japanese Yen, indicating a consistently weak exchange rate for the New Taiwan Dollar. This is related to Taiwan's export-oriented economy and the central bank's long-term attitude of not intervening in depreciation.
The U.S. Treasury's semi-annual Exchange Rate report will be released this month. Will the high tariffs of 32% imposed by the Trump administration force the Central Bank of Taiwan to take any action?
Typically, the trend of the Exchange Rate is positively correlated with the stock market of the country, but the Taiwan Weighted Index has risen by 119% over the past five years, while the New Taiwan Dollar has depreciated by nearly 10% in the same period.
This article discusses Ray Dalio's view on the US-China tariff war: China may allow the yuan to appreciate, should the Taiwan dollar follow suit? First appeared in Chain News ABMedia.
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Ray Dalio on the US-China tariff war: China may allow the yuan to appreciate, should the Taiwan dollar follow?
Bridgewater founder Ray Dalio ( recently met with high-level Chinese leaders, and during the tariff escalation tsunami on Trump’s "Liberation Day," he believes that the United States and China can reach an agreement through negotiation, exchanging the appreciation of the Renminbi for a drop in tariffs. Taiwan, which has been on the watch list of currency manipulators for five consecutive times, will it follow suit and allow the TWD to appreciate?
The Consequences of Liberation Day
Following up on my post below from earlier this week, now that we see yesterday’s tariff announcements, it appears to me that the first order consequences of them will be significantly stagflationary in the U.S. and significantly…
— Ray Dalio )@RayDalio( April 4, 2025
Trump's radical tariffs, China decides to retaliate
After Trump announced radical tariff policies on April 2, 2025, the US stock market recorded consecutive days of historic crashes.
)Global stock crash is coming! The US-China trade war is escalating, and the US stock market has seen its largest drop in years(
After the United States announced a 34% tariff on China, China also responded by announcing a 34% tariff on all products imported from the United States. U.S. President Trump harshly criticized China's retaliation against its comprehensive tariff plan and vowed that his economic policies "will never change." A U.S.-China trade war is on the brink of erupting.
Dalio believes that the renminbi will strengthen.
Dalio recently visited China and met with officials such as Vice Premier He Lifeng, central bank governor Pan Gongsheng, and Minister of Commerce Wang Wentao, and made the following remarks:
I can imagine that China and the United States will negotiate a protocol to strengthen the Exchange Rate of the Renminbi against the US dollar in exchange for some trade relief.
He also believes that if such a situation occurs, the phenomenon of deflation and economic recession will become more severe for China, which in turn will necessitate more accommodative monetary and/or fiscal policies.
After the People's Bank of China set a stronger than expected daily reference Exchange Rate to support the renminbi exchange rate, the renminbi has hardly changed this week.
Chinese officials have historically been unwilling to allow the renminbi to appreciate excessively. They believe that the appreciation of the yen after the Plaza Accord in the 1980s was one of the reasons that led Japan into the so-called "Lost Decade." Whether Dalio's remarks will come true is also worth observing in the future.
Will Taiwan, which is also considered a currency manipulation country, follow suit?
Due to recent mentions of the exchange rate manipulation issue by U.S. President Trump and Treasury Secretary Mnuchin, the exchange rate controversy may become an important bargaining chip in trade negotiations. As Taiwan has already been on the general observation list of currency manipulators for five consecutive times, is it possible for the NTD to appreciate?
According to the chart from Finance M Square, the New Taiwan Dollar has depreciated by 2.63% against the US Dollar in the past year, compared to the 0.64% depreciation of the Chinese Yuan and the 3.21% appreciation of the Japanese Yen, indicating a consistently weak exchange rate for the New Taiwan Dollar. This is related to Taiwan's export-oriented economy and the central bank's long-term attitude of not intervening in depreciation.
The U.S. Treasury's semi-annual Exchange Rate report will be released this month. Will the high tariffs of 32% imposed by the Trump administration force the Central Bank of Taiwan to take any action?
Typically, the trend of the Exchange Rate is positively correlated with the stock market of the country, but the Taiwan Weighted Index has risen by 119% over the past five years, while the New Taiwan Dollar has depreciated by nearly 10% in the same period.
This article discusses Ray Dalio's view on the US-China tariff war: China may allow the yuan to appreciate, should the Taiwan dollar follow suit? First appeared in Chain News ABMedia.