China's currency fell below the level of seven per U.S. dollar on Monday for the first time in 11 years.
This comes after threats last week from President Donald Trump to impose more tariffs on Chinese exports to the United States.
Kristin Dziczek is with the Center for Automotive Research. She says the weakening of Chinese currency makes Chinese exports – namely auto parts – cheaper.
She says the weakening of the Chinese yuan slightly offsets the up to 25% tariffs imposed by President Trump on Chinese goods.
“It does mean that U.S. consumers and U.S. producers aren't going to pay the full freight of that tariff, but they're going to pay some,” Dziczeck says.
She says there's no other supplier for after-market auto parts, like spark plugs and windshield wipers, as big as China.
“When we make China more expensive, the automakers and suppliers that have been relying on a Chinese supply chain don't have a lot of other options,” Dziczek says.
Dziczek says some automotive suppliers have turned to importing goods from countries like India, Thailand and South Korea.