Trump Wants a Weaker Dollar. Some Chinese Say He Has a Point.
The notion of a significantly weaker U.S. dollar against China's Renminbi (RMB or yuan) didn't materialize throughout 2025, much to the surprise of some market watchers. Yet, as we step into the new year, this very scenario is resurfacing as a potent "wild card," particularly given the looming U.S. presidential election and the potential return of Donald Trump to the White House. What's truly intriguing, however, is that some voices within China's economic circles aren't entirely opposed to the idea, suggesting a complex interplay of geopolitical and economic dynamics at play.
Indeed, Trump has long championed a weaker dollar, famously accusing countries, including China, of currency manipulation to gain an unfair trade advantage. His argument is simple: a stronger dollar makes American exports more expensive and imports cheaper, thereby widening the U.S. trade deficit and undermining domestic manufacturing. "We're letting other countries eat our lunch," he's often declared, advocating for policies that would theoretically depress the dollar's value. In his view, a depreciated dollar would level the playing field, making U.S. goods more competitive globally and bringing jobs back home.
An Unexpected Alignment of Interests?
While Beijing has historically been wary of direct interventionist rhetoric from Washington, a segment of Chinese economists and policy advisors now see potential benefits in a managed depreciation of the yuan against the dollar. This isn't merely academic. China's economy has been navigating headwinds, including a property sector slump, hesitant consumer spending, and intensified geopolitical competition. A weaker yuan could offer a much-needed boost to its vast export engine, making Chinese goods more attractive in international markets.
"For too long, the People's Bank of China has grappled with the delicate balance of maintaining currency stability while supporting growth," explains Dr. Li Wei, a senior researcher at the Chinese Academy of Social Sciences. "A gradual, controlled depreciation, even if partially spurred by U.S. policy shifts, could alleviate some pressure on our exporters and provide a soft landing for certain industries still struggling with demand."
This perspective marks a subtle but significant shift. Traditionally, China has been accused by the U.S. of keeping its currency artificially low. If a future Trump administration were to actively pursue policies—such as tariffs or verbal interventions—that put downward pressure on the dollar, it could inadvertently create an environment where China's own economic goals align, at least temporarily, with Washington's.
The 2025 Anomaly and What's Ahead
The 2025 currency landscape saw the dollar remain stubbornly strong, largely supported by resilient U.S. economic growth, a relatively hawkish Federal Reserve maintaining higher interest rates than many global counterparts, and continued geopolitical uncertainties driving safe-haven demand. Analysts at JPMorgan Chase and Goldman Sachs had largely predicted a stable USD/CNY exchange rate, hovering around the 7.20 mark, with only minor fluctuations. This stability, while predictable, did little to address the underlying trade imbalances that Trump and his allies frequently highlight.
However, the outlook for 2026 introduces several variables that could dramatically alter this trajectory. A potential shift in U.S. monetary policy, perhaps driven by easing inflation and subsequent rate cuts, could erode the dollar's yield advantage. What's more, a renewed focus on "America First" trade policies under a new administration could involve direct pressure on trading partners, including China, to adjust their currency valuations or face punitive tariffs. Such measures could lead to a more significant, albeit potentially volatile, weakening of the dollar.
Business Implications and Market Watch
For multinational corporations, particularly those with significant exposure to both U.S. and Chinese markets, this potential currency volatility is a critical risk factor. A weaker dollar makes repatriating profits from overseas operations more lucrative for U.S.-based companies, but it also increases the cost of imported raw materials and components. Conversely, for Chinese exporters, a weaker yuan directly boosts their competitiveness, potentially expanding market share in price-sensitive sectors.
"Companies need to stress-test their supply chains and financial models against various currency scenarios for 2026," advises Sarah Chen, a currency strategist at HSBC. "The historical playbook of dollar strength might not hold if political rhetoric translates into aggressive policy action, especially concerning trade and currency valuation."
Ultimately, the prospect of a weaker dollar, once a purely American policy aspiration, is now viewed through a more nuanced lens in Beijing. While the motivations differ, the convergence of interests on this front—even if temporary and circumstantial—makes the USD/CNY exchange rate a pivotal and unpredictable factor for global trade and finance in the coming year. Businesses, investors, and policymakers alike will be watching closely as this wild card begins to play out.
