Today, the Trump administration announced it will delay the March 2 introduction of new tariffs on China imports citing 'substantial progress with trade talks'. If it went ahead, it would have seen an increase in tariffs from 10% to 25% on most imports making these Chinese goods very unattractive to US consumers, and could reduce China's trade surplus against the US.
The value of the Chinese renminbi is still largely controlled by its central bank but over the recent years of pressure from the US, China has reformed its policies and allowed it to become more flexible and subject to market forces.
Whilst the introduction of these tariffs have made Chinese imports less attractive to US consumers, the effect on China has been somewhat insulated by another consequence of these tariffs - a weaker renminbi.
Trump administration is now calling for the Chinese government to 'stabilise' its currency in order for the tariffs to have its desired effect. The Washington Post reported that this is confusing - on the one hand, the US advocates for China to allow its currency to be free-floating but on the other hand, more recently, it asks for China to 'stabilise' its currency to allow for the true impact of its tariffs to be felt.
It does beg the question - has substantial progress been made to trade talks or has the Trump administration now woken up to the fact that these tariffs would not have done as much to the trade imbalance as anticipated?