China’s yuan slipped against the dollar on Wednesday, as worries over worsening trade relations between the world’s two largest economies outweighed better-than-expected first-quarter economic growth data.

China’s gross domestic product (GDP) grew 5.4% in the first quarter, beating expectations, underpinned by solid consumption and industrial output even as policymakers brace for the impact of U.S. tariffs that analysts say pose the biggest risk to the Asian powerhouse in decades.

However, the data was yet to capture the impact of tit-for-tat duties kicked off by U.S. President Donald Trump on April 2 as many exporters might have front-loaded their orders, traders and analysts said.

“The damage from the trade war will show up in the macro data next month,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management.

“Supply chains are disrupted, and ripple effect will likely show up in many countries. The uncertainty is extremely high for corporates and investors.”

Some global investment banks also lowered their projections for China’s economic growth this year, in anticipation that Trump’s aggressive tariffs are expected to take a toll on the Chinese economy.

On Tuesday said the U.S. government limited its H20 artificial intelligence chip sales to China, with many market participants viewing it as a fresh sign of escalation in trade tensions between Washington and Beijing. Prior to market opening, the People’s Bank of China (PBOC) set the rate <CNY=PBOC>, around which the yuan is allowed to trade in a 2% band, at 7.2133 per dollar, the weakest since September 11, 2023.

Source: Zawya