'40% Cheaper In China': What The Big Mac Index Says About Trump's Tariff Plans

President Donald Trump‘s latest trade policy memo could find unexpected support from an unlikely source—McDonald’s MCD hamburger prices.

The Economist’s Big Mac Index, a longstanding measure of currency values, shows China’s yuan may be substantially undervalued against the dollar—exactly the kind of disparity that has caught the president’s attention.

A Big Mac costs $5.79 in the U.S. but only $3.52 when converted from yuan in China, according to the latest data. The 40% price gap suggests China’s currency could be undervalued, lending credence to Trump’s accusations of currency manipulation.

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The administration recently directed the Treasury Department to identify currency misalignments that create trade imbalances. 

While such gaps often reflect complex supply chain dynamics rather than unfair practices, the price differences across major trading partners—including a 21% discount in Mexico and 6% in Canada—could influence policy decisions.

“These surpluses often reflect a country’s place in the global supply chain rather than any unfair competitive edge,” The Economist said. “A country that assembles electronics might have a large surplus with America but a big deficit with countries from which it imports expensive components.”

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Most nations running trade surpluses with the U.S. have become more competitive over the past year as their currencies weakened against the dollar. In South Korea, Big Mac prices remained static while U.S. prices rose $0.10.

Economic experts warn that responding with tariffs could backfire. Import taxes typically raise domestic prices while reducing foreign currency demand, potentially making American goods less competitive globally.

The risks of tariffs came to center in Trump’s recent trade standoff with Mexico and Canada. After threatening new levies on both nations, the administration quickly reached agreements to pause the tariffs for 30 days. 

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The deals, announced Monday, included commitments from both countries to boost border security and combat drug trafficking, with Canada pledging a $1.3 billion border initiative and Mexico promising to deploy 10,000 troops to its northern border.

Back to the Big Mac Index, the eurozone presents an exception to the pattern, with its currency now approximately 3% overvalued against the dollar based on burger prices.

Created in 1986, the index was designed as an accessible way to understand purchasing power parity between currencies. While not intended for precise policy decisions, it has become widely referenced in economic analysis.

For a president who once declared “tariff” the most beautiful word in the dictionary, the price disparities could prove difficult to ignore.

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