In a recent interview in Madrid, U.S. Treasury Secretary Scott Bessent emphasized that China’s yuan valuation poses a more significant challenge for Europe than for the United States. Bessent noted that while the yuan has strengthened against the U.S. dollar this year, it has reached record lows against the euro, exacerbating trade imbalances between China and the European Union. Speaking to Reuters and Bloomberg following U.S.-China trade discussions, Bessent highlighted that U.S. tariffs on Chinese imports have effectively reduced the U.S. trade deficit, with U.S.-China trade declining by 14% this year. In contrast, Chinese trade with Europe has surged by 6.9%. The yuan, also referred to as the renminbi (RMB), has weakened to over 8.4 against the euro, compared to 7.5 at the start of 2025. This depreciation has facilitated a surge in Chinese exports to Europe, intensifying the EU’s trade deficit with China and escalating trade tensions between Brussels and Beijing. Meanwhile, the yuan has appreciated slightly against the dollar, moving from 7.3 in January to 7.1 currently. When questioned about potential currency manipulation, Bessent remarked that the yuan is a ‘closed currency,’ implying that its value is managed by Chinese authorities. The ongoing dynamics underscore the complex interplay between global currencies and trade relationships, with Europe bearing the brunt of the yuan’s recent fluctuations.