Zhongjin: IEEPA tariff ruling may have a somewhat positive impact on the renminbi, and a neutral impact on the euro and yen.

Zhongjin believes that the US Supreme Court ruling that the tariffs imposed under the IEEPA are illegal, the US government subsequently announced that it will invoke other laws to impose additional tariffs. In terms of the impact on different currencies, we believe that the relevant ruling may have a positive impact on the Renminbi, while it may have a neutral impact on the Euro and the Yen. Specifically, the tariffs imposed by the US on China based on the IEEPA include a 10% "fentanyl tariff" and a 10% retaliatory tariff. With the IEEPA tariffs ruled illegal and President Trump announcing the imposition of 15% tariffs on 122 items, the overall tariff on Chinese goods may be reduced by 5%. In addition, the punitive 40% transshipment tariff may also be invalidated, which could bring certain benefits to China's exports. For the European Union and Japan, as they are already facing retaliatory tariffs at a 15% level, and the remaining export tariffs are based on Section 232, the overall impact is relatively limited. Therefore, we believe that the ruling on the IEEPA tariffs being illegal is more favorable for reducing tariffs on China and may boost the Renminbi exchange rate, while the impact on the EU and Japan is relatively neutral.