U.S. stock market futures were sliding on Monday morning after China’s central bank set the yuan’s daily reference rate below 7 per dollar for the first time in over a decade. The Chinese government has also asked its state-owned firms to suspend imports of U.S. agricultural products, according to Bloomberg.
The People’s Bank of China (PBOC), which sets the daily exchange rate range of the yuan, released a statement attributing the currency’s current weakness to “unilateral and protectionist measures, as well as the expectation of additional tariffs on Chinese goods.”
It can be assumed that China’s move was in retaliation to the Trump administration threatening 10% tariffs on the remaining $300 billion of Chinese imports starting in September. Hopes that trade talks were progressing, albeit slowly, were dashed when the U.S. president complained on August 1 of Chinese leadership not delivering on promises it made during negotiations.