"The real risk is that we have broad-based unravelling of global trade and currency cooperation, and that is not going to be pretty", said Jens Nordvig, Wall Street's top-ranked currency strategist for five years running before founding Exante Data LLC in 2016.
The Chinese yuan weakened by almost 1% against the dollar yesterday and continued its slide today, hitting its lowest level in over a year.
"Analysts said the yuan's latest dip came after China's central bank indicated that it was willing to accept a weaker currency", CNN reports, as it will help China's huge export industry cope with new United States tariffs.
He says ECB President Mario Draghi may elect to step into the fray at the central bank's July 26 policy meeting, given American attempts to talk the dollar down in January were extremely unpopular in Frankfurt.
"Our currency is going up", Trump said.
Responding to the president's latest comments, the White House economic adviser Larry Kudlow told the news website Axios that provoking Trump would be a mistake for China.
What is a currency war?
Currency wars occur when a number of countries seek to depreciate the value of their own currencies in order to stimulate their economies, Investopedia writes.
Although devaluations are not unusual, most do not lead to currency wars - which begin only when several countries all try to push down the value of their currencies at once.
"More expensive soy can mean that China will look to other sources for the bulk of its imports", the cartoon continues, adding, "As two of the top soybean suppliers to China, Brazil and Argentina could pick up the slack. That hurts consumers and adds to inflation". "We have been ripped off by China for a long time", he said.
What is China doing now?
China accused the United States of starting the "largest trade war in economic history".
The CNBC report noted that while China can not match U.S. tariffs because of the trade imbalance, it had other options too: "China holds $1 trillion worth of USA treasury bonds". The administration has also released a list of 10-per-cent tariffs on an additional US$200 billion of Chinese goods, which could take effect as early as next month.
However, it is a high-risk strategy.
The Chinese yuan fell to its weakest level against the U.S. dollar in a year on Thursday. In his interview, President Trump railed against the "deficits" that we have with our trading partners.
America's central bank has twice increased benchmark lending rates this year, following three raises last year.
After weeks of apparently fruitless negotiations, the United States early this month imposed 25% tariffs on approximately US$34 billion (RM138 billion) of Chinese mechanical and technological products, sparking an immediate response from Beijing, which said it would hit back dollar for dollar.
Business Insider points to a report from Chinese publication Global Times claiming that Chinese textile manufacturers that produce Trump gear are having greater trouble getting their goods into the United States thanks to the current trade war between the US and China.