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The renminbi weakened and Chinese stocks fell after US President Donald Trump said he may impose 10 percent tariffs against China from next month.
The CSI 300 index of Shanghai- and Shenzhen-listed companies was down a percentage point on Wednesday afternoon. Hong Kong's Hang Seng index shed 1.8 percent, led lower by Chinese companies listed in the region.
The offshore renminbi, which trades outside limits set by China's monetary authorities, fell 0.3 percent on Wednesday to $7.29.
The dollar strengthened by 0.15 percent against a basket of currencies including the pound and the yen. The price of gold rose to an 11-week high of $2,758.
China had largely avoided attention from Trump during his first term in office, where he proposed a 25 percent tariff on the US's biggest trading partners Canada and Mexico, leading traders to reduce their bets on the restart. The trade war started in his first term.
Trump said the 10 percent tariff was considered punitive to China over the flow of electricity the opiate fentanyl to Mexico and Canada. The US has accused China of sending chemicals used to make fentanyl to Mexico where the vehicles use it to make the drug.
It was a repeat of a threat the new president made during his campaign.
Traders generally expect the US dollar to continue to strengthen against the currencies of major trading partners, including China, as higher taxes and lower interest rates in China weigh on renminbi.
Another 27 percent of fund managers polled in a Bank of America survey said “long the U.S. dollar” was the most crowded trade in January.
Stocks across Asia rose on Wednesday. Korea's Kospi index was up 1.3 percent and Japan's broader Topix rose 0.9 percent. Taiwan's benchmark index advanced 1 percent while India's Sensex rose 0.2 percent.
During the presidential campaign, Trump threatened to impose a separate tariff of 60 percent on Chinese exports.