China Stocks Pare Losses After Trump Tariffs, Hopes For Government Stimulus

Chinese stocks declined after the Trump administration hiked tariffs on the country to well over 50% on Wednesday, but a glimmer of optimism was visible. Some investors are hoping that further stimulus measures from Beijing will offset trade headwinds from the U.S.

While major Asian markets fell on President Donald Trump’s tariff announcement, which include baseline 10% duties as well as additional ones depending on the countries’ tariffs and other barriers against U.S. imports, Chinese stocks pared earlier losses. The CSI 300 Index erased half of its 1.1% drop to end 0.5% lower as of 2:15 pm. The Hang Seng Index was down 1.5% mid-Thursday after declining as much as 2.2% earlier in the day.

Despite Treasury Secretary Scott Bessent’s urging against retaliation, Beijing vowed on the same day to impose unspecified countermeasures. Under Trump’s new tariff regime that will go into effect starting April 5, duties on Chinese imports will reach 54%—close to the 60% he promised on the campaign trail, making the country one of the hardest hit targets as the U.S. tries to reshape global trade. Trump also announced an end to the "de minimis" rule, which allowed parcels valued $800 or under to enter the U.S. duty-free.

“I think people have been bracing for tariffs and believe there could be some government intervention from more fiscal stimulus to offset headwinds,” Kai Wang, a Hong Kong-based senior equity analyst at Morningstar, says by email. He adds that some of the Chinese indexes’ constituent stocks are concentrated on the domestic service sector, which may shield them from tariff hikes.

Xin-Yao Ng, Singapore-based investment director of Asian equities at Aberdeen, says by email he is “not that pessimistic” over the higher tariffs. Many listed Chinese companies have been limiting their exposure to the U.S., while the leadership in Beijing is likely to roll out more measures to stimulate the economy. Despite mounting headwinds, China still aims for “around 5%” economic growth in 2025, with domestic consumption in focus now that the export sector has been placed under pressure.

“I have been shifting my exposure in China to domestic consumption since the start of year, and this further reinforces the validity of that direction for me,” Ng says.

But the U.S. tariff situation was tough for some Chinese stocks. Shenzhou International, a Hong Kong-listed clothing maker headed by billionaire Ma Jianrong, saw its shares plunge as much as 17.5% on Wednesday. The company, which supplies sportswear brands, generates 17% of its sales from the U.S., according to Morningstar.

In a Wednesday research note distributed earlier, Kai Wang suggests investors stick with stocks that benefit from any future stimulus from China.

“On the direct exposure side to the U.S.—outside of manufacturing of goods, car batteries, appliances—many of the industries are unaffected given over 95% of revenues come from within China,” he writes in the note. “However, some of the clothing manufacturers may perform worse than previously expected given that they have supply chains in Vietnam and Cambodia” that escaped tariff pressure previously.