the geopolitically-fuelled shifts emerging in trade patterns post-pandemic as part of the US-China trade war .
The process of decoupling from China is hastening amid growing geopolitical tensions , something that is bound to have implications for USD / CNY exchange rates .
This could be further complicated , as Xi Jinping looks to diversify his country ’ s economy , a process that is expected to result in China generating more than onequarter of all global consumption growth – more than any other country .
How the Chinese Yuan will subsequently look against the US Dollar seems all the more uncertain .
Shifting trade conditions are not endemic to just China and the US , Europe has introduced the EU Carbon Border Adjustment Mechanism ( coming into force in 2026 ) to penalise high-carbon imports which , according to Energy Monitor , is likely to have the biggest impact on Russia . Over US $ 10bn of its largely iron and steel exports between 2015 and 2019 would have fallen under this new CBAM legislation .
Of course , the key driver in these shifting trade conditions is the result of geopolitical decisions and the key role politics plays in economic issues that affect FX rates . And in 2024 , some big political events could alter economic outlooks , thus fuelling exchange rate volatility .
No upcoming political event is perhaps as large as the impending 2024 US election , where it is expected that incumbent President Joe Biden will again face off with Donald Trump , the likely Republican candidate .
The outcome of this election could have vastly different geopolitical implications .
“ In the first six months of 2023 , Mexico overtook China as the largest overseas source market for US imports of goods . Trade disputes or diversification is having consequences for longer-term balance of trade and payments ”
STEVEN DOOLEY LEAD FX & MACRO STRATEGIST , APAC fintechmagazine . com 49