In the fast-paced world of markets and politics these days, the idea of a “trade war” seems to have been downgraded to a “trade skirmish.” And we may even be heading to just a “trade disagreement” next.

Here's where we're at right now: The Trump Administration has at least temporarily exempted 53 percent of its U.S. iron, steel and aluminum imports from the recently announced tariffs. There are various reasons why exemptions have been granted - and various negotiating stances for each country and region - but it stands to reason that the full picture is still emerging from this situation. Interestingly, the tariff announcements made big headlines but the exemptions were more likely to be reported as smaller stories in the financial press.

As the trade picture emerges, we will no doubt see more backroom horse trading as we move into a new global trade paradigm. In that context, there was an interesting side agreement that was entered into as part of this week's trade pact with South Korea.

The U.S. has been concerned about currency intervention from South Korea. As proof, the U.S. noted in the agreement that in addition to a large current account surplus, South Korea's reserves have quadrupled since 2000, and its GDP has nearly tripled. The significance of these stats is that they may result from large purchases of U.S. dollars made in order to weaken the Korean won.

In what could be a related note, a recent private survey of Chinese exporters showed they are feeling good about business, although a lot of that positive sentiment could be attributed to strong U.S. and global growth. However, one-third of those surveyed said the appreciation of the Chinese currency – the renminbi – was a problem for their businesses. That's the highest number reported since August 2014.

This is important as we move forward with trade negotiations – and struggles - with China. The Chinese government has for years tried to get its exporters to become accustomed to the concept of managing their own currency risk rather than rely on the government to weaken the currency. With the spotlight increasingly focused on China's trade practices, this effort will inevitably return as a focal point of tensions.

My View: In another place and time, currency agreements were addressed on a multilateral basis – witness the Bretton Woods system, Plaza Account, and other historical examples. But I doubt we will see a repeat of that dynamic in the near future. What could be interesting is whether or not we end up with a new global currency paradigm, but built by a series of bi-lateral agreements rather than a multi-lateral format.

For more City National commentary, subscribe to our newsletters.

If we can help you with any Foreign Exchange needs, please email foreignexchange@cnb.com or call (800) 447 4133.

The information in this report was compiled by the staff at City National Bank from data and sources believed to be reliable but City National Bank makes no representation as to the accuracy or completeness of the information. The opinions expressed, together with any estimate or projection given, constitute the judgment of the author as of the date of the report. City National Bank has no obligation to update, modify or amend this report or to otherwise notify a reader in the event any information stated, opinion expressed, matter discussed, estimate or projection changes or is determined to be inaccurate. This report is intended to be a source of general information. It is not to be construed as an offer, or solicitation of an offer, to buy or sell any financial instrument. It should not be relied upon as specific investment advice directed to the reader’s specific investment objectives. Any financial instrument discussed in this report may not be suitable for the reader. Each reader must make his or her own investment decision, using an independent advisor if prudent, based on his or her own investment objective and financial situation. Prices and availability of financial instruments are subject to change without notice. Financial instruments denominated in a foreign currency are subject to exchange rate risk in addition to the risk of the investment. City National Bank (and its clients or associated persons) may, at times, engage in transactions in a manner inconsistent with this report and, with respect to particular securities and financial instruments discussed, may buy from or sell to clients or others on a principal basis. Past performance is not necessarily an indication of future results. This report may not be reproduced, distributed or further published by any person without the written consent of City National Bank. Please cite source when quoting.