Supply Chain

The Peso, the Yuan, and Your Sourcing Decision: A 5% Currency Move Can Beat a 25% Tariff

Buyers obsess over tariff percentages and wave off currency as noise. Over the life of a supply contract, that is backwards: the currency line often moves more money than the duty line, and it moves quietly.

Tariffs get the headlines because they arrive as policy, with a number attached and a date. Currency gets ignored because it arrives as drift, a fraction of a percent at a time. But over the life of a multi-year supply agreement, that drift compounds, and a sustained currency move can shift landed cost more than a headline tariff does. As of Aug 7, 2026, the peso trades at 17.1357 per dollar (with no prior-year reading archived yet), the yuan at 6.7474 (with no prior-year reading archived yet), and the Canadian dollar at 1.3933 (with no prior-year reading archived yet). Those three lines reprice North American and China sourcing every single day, tariff schedule unchanged.

Why currency can outweigh the tariff

A tariff is a one-time step change: it lands, you know its size, and you plan around it. A currency move is continuous and cumulative. If a sourcing currency strengthens 8% against the dollar over the two years of a contract, every unit costs 8% more in dollar terms, silently, with no policy announcement to trigger a review. That is often a larger cumulative effect than a tariff that looked more dramatic on the day it was announced. The buyer who models the duty to the decimal and treats the exchange rate as a constant has mismeasured the risk, usually by underweighting the larger of the two.

A tariff announces itself. A currency move just shows up in the numbers, contract after contract, until someone finally checks the exchange rate they assumed two years ago.

Stress-testing a quote against the currency

The discipline is simple and rarely practiced: before signing a cross-border supply agreement, run the landed cost at the current rate and then at plus and minus 10% on the sourcing currency. If a 10% adverse move erases the deal's advantage, the sourcing decision is really a currency bet in disguise, and it should either be hedged, priced with a currency-adjustment clause, or reconsidered in favor of a source in your own currency. The three series here are the live inputs for that stress test, and they update as the market does, so the test can be rerun whenever a decision comes back to life.

The yuan's six-year path

Over the five-year record the yuan has stayed inside a recognizable band, running 6.3084 in February 28, 2022 to 7.3499 in April 9, 2025 and sitting today the lowest since February 2, 2023 at 6.7474. The absence of a trend is itself the planning input: in a series this steady, a move that would be noise elsewhere is a real signal, because the base rate of movement is so low.

Use the nearshoring landed cost calculator to rerun a sourcing decision at today's exchange rates and a plus-or-minus currency band. Stress-test the source

Published 2026-08-05.