Chinese stocks and renminbi hit by Trump’s 10% tariff threat.

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The renminbi weakened and Chinese stocks fell after US President Donald Trump said he may impose 10 percent tariffs on China starting next month.

The CSI 300 index of companies listed in Shanghai and Shenzhen was down 1 percent on Wednesday afternoon. Hong Kong’s Hang Seng Index retreated 1.8 percent, the lowest for Chinese companies listed in the territory.

The offshore renminbi, which trades free of restrictions imposed by Chinese financial authorities, weakened 0.3 percent to $7.29 on Wednesday.

The dollar strengthened by 0.15 percent against a basket of currencies including the pound and the yen.

China avoided a direct focus on the stormy first day of his presidency, where he proposed 25 percent tariffs on America’s biggest trading partners, prompting traders to rekindle a trade war he started. First time.

Trump said the 10 percent tariff was being considered to punish China’s export of the opiate fentanyl to Mexico and Canada. The US has accused China of sending chemicals used to make fentanyl to Mexico, where cartels use them to make the drug.

It was a repeat of a threat the new president made during the campaign.

Traders widely expect the U.S. dollar to remain strong against the currencies of major trading partners, including China, as China’s high tariffs and low interest rates weigh on the renminbi.

In a Bank of America survey, 27 percent of fund managers said “long the U.S. dollar” was the most crowded trade in January.

Shares in the rest of Asia were broadly higher on Wednesday. Korea’s Kospi index rose 1.3 percent and Japan’s broader index rose 0.9 percent. Taiwan’s benchmark index rose 1 percent, while India’s Sensex rose 0.2 percent.

During the presidential campaign, Trump also threatened to impose a separate 60 percent tariff on Chinese goods.