In a recent article published by Bloomberg, Stephen Jen, CEO of Eurizon SLJ Capital, offers perspective on the implications of the Chinese yuan’s depreciation to a decade low against the euro. The piece explores how currency shifts—amid escalating trade tensions—could influence global trade flows, particularly between China, Europe, and the United States.

Stephen highlights the potential for redirected trade to materially alter Europe’s balance with China. He notes that if a significant portion of China’s exports previously bound for the U.S. are instead sent to Europe, the resulting increase in China’s trade surplus with the region could prompt policy responses from Brussels.

“Europe could allow this deflationary shock to happen, or they could adopt temporary defensive manoeuvres by raising tariffs on Chinese imports,” he suggests. “This scenario could, in turn, trigger another round of reciprocal retaliatory measures from China against Europe.”

Link to article (Subscription may be required)

To read more of our latest macro and market insights, click here to start a free trial of our research.