HONG KONG: China and Hong Kong stocks fell on Wednesday after US President Donald Trump hinted at new tariffs on Chinese imports, ending a brief reprieve for the markets.
China’s blue-chip CSI 300 Index and the Shanghai Composite Index both declined 0.9% at close, marking their biggest single-day retreat in nearly two weeks.
Hong Kong’s benchmark Hang Seng Index fell 1.6%, pulling back from a five-week high. The onshore yuan weakened around 0.2%, despite the midpoint being fixed at over a two-month high by the central bank.
Trump said on Tuesday that his administration was discussing imposing a 10% punitive duty on Chinese imports as early as next month because fentanyl is still being sent from China to the US via Mexico and Canada.
That put an end to short-lived relief in Tuesday’s Asian trading hours, after Trump held off announcing any China-specific tariffs on his first day in office on Monday.
“His comments were made in passing. Overall, he tends to be cautious, influenced by various factors such as high inflation in the United States, the fentanyl, and issues surrounding TikTok, etc,” said Liang Ding, an analyst at research firm Macro Hive.
Trump probably will wait for the results of the Phase I trade deal review to buy some time for dialogue with China, he added.
During his election campaign, Trump vowed to impose steep tariffs of 60% on goods from China to help reduce a trade deficit that now tops $1 trillion annually.
If tariffs are raised eventually, it could deal a heavy blow to the world’s second-largest economy, which has been struggling with a protracted property crisis and weak consumer demand weighing heavily on economic activity.
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