Yuan vs. U.S. Dollar

Posted on: August 2, 2019 at 09:41:13 CT

China's policies are devaluing its currency, especially compared to the dollar. So when U.S. companies buy Chinese goods they have more purchasing power and can better absorb any tariffs that might be applied.

Then the companies are less likely to increase the price of the goods when they're put on the U.S. market. Watch the rate of inflation to see if the tariffs are having an effect and so far they haven't.

So China isn't literally paying the tariffs, but it could be argued that they are making them far less hurtful to U.S. companies and then U.S. consumers with their monetary policy.