Will Chinese-Made Goods Get More Affordable?

China's yuan (also known as the renminbi) lost over 2% of its value in a couple days in mid-August, and has continued a drastic fall this week, with further decreases likely ahead. While this is a global economic issue, it also hits home for the average American consumer, who relies on affordable Chinese imports for many products.

Cheaper But Fewer Chinese Imports — For Now

One impact is reduced wholesale prices for any Chinese suppliers who trade in yuan. Home Depot's finance chief Carol Tomé has announced that the store will be passing those savings along to customers in order to stay competitive, and you can expect other businesses to follow suit.

In general, US consumers can expect a slight decrease in goods imported from China. Since Chinese goods make up over 20% of US imports, these goods span a variety of categories, including electronics, furniture, toys, footwear, and clothing. However, many Chinese companies fix wholesale prices in dollars, so not all Chinese products will grow cheaper immediately.

Of course, with only a 3% drop in the yuan, any changes to product prices will be modest for now. It may be confusing why a 3% drop is noteworthy at all: One reason is the sheer volume of trade between the US and China, but another is the strong possibility that the yuan will drop further. Some experts have speculated that China is seeking as much as 10% depreciation, which would be very helpful to improve China's exports, which in July had declined over 8% compared to the previous year.

What does this mean to US shoppers now? Not much. But if trends continue, you could see more Chinese goods at even lower prices.