The impact of US-Sino trade war on commodity-currency nexus

You-How Go and Ken-Soon Yong

Journal of the Asia Pacific Economy, 2025, vol. 30, issue 3, 829-861

Abstract: This study attempts to assess the impact of US-China bilateral trade tension on commodity-currency nexus. Eleven exported commodities and two foreign currencies are selected for this purpose. With the application of cross-correlation functions, our results provide two notable findings. First, the return spillovers from the foreign exchange markets to most metal commodity markets are much more striking since the trade war began in 2018 under the former US President Donald Trump. Second, China’s rubber and the US soybean markets during the trade war are found to be dominant sources of volatilities in the USDCNY and CNYUSD exchange markets, respectively. Besides, the effect of shocks in the US soybean return during the trade war seems more measurable for CNYUSD exchange rate risk. To this end, our findings provide insights into the national level of investment and trade policy.

Date: 2025
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DOI: 10.1080/13547860.2024.2358604

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