SHANGHAI, Nov 26 Reuters The yuan fell against the U.S. dollar to its weakest in nearly four months after U.S. Presidentelect Donald Trump said he would impose a 25 tariff on all products from Mexico and Canada, and an additional 10 tariff on goods from China.

Offshore yuan dropped roughly 0.3 on the news to 7.2730 per dollar, its lowest since July 30, while onshore yuan also fell after the market opening.

The directional impact is clear for the yuan weaker but Chinese authorities will be nervous about devaluing too much and encouraging outflows, said Ben Bennett, head of investment strategy for Asia at LGIM.

Prior to the market opening, the People39;s Bank of China PBOC set the midpoint rate , around which the yuan is allowed to trade in a 2 band, at 7.1910 per dollar, which was 450 pips firmer than the Reuters39; estimate.

The effectiveness of the fixing as a tool to manage yuan depreciation expectations is limited, said analysts at Nomura in a note.

We believe that, if onshore spot USDCNY rises above the 7.30 level, market activity will shift where USD demand strengthens versus sellers, the Nomura analysts said, adding that this will present a challenge to authorities if they don39;t allow the yuan fixing to get weaker.

Nomura suggested to go long dollar against the offshore yuan.

The spot yuan opened at 7.2524 per dollar and was last trading 105 pips lower than the previous late session close at 7.2553 as of 0239 GMT.

Actual tariff announcements and…