China and Hong Kong Indexes Turned Lower Following U.S.-China Tariff War

Li Chen
05 Feb, 2025
Hong Kong

Stock market indexes in China and Hong Kong traded down amid ongoing international trade uncertainties and domestic economic growth worries. 

The Hang Seng index decreased 1%, and the mainland-focused CSI 300 index declined 0.6%. 

Market indexes declined in Shanghai and Shenzhen after investors returned from a weeklong holiday and reviewed the new trade restrictions announced by the U.S. 

China imposed retaliatory tariffs of 15% on the U.S. certain types of coal and natural gas, and 10% on oil, farm equipment, and select automobile imports effective February 10.

China's countermeasures appear to be not as strong as expected, suggesting that policymakers in Beijing are less worried about the new tariffs and trade barriers. 

The 10% tariffs imposed by the U.S. are likely to have a short-term impact on shipments of lithium batteries, home appliances, and electric vehicles to the U.S. 

E-commerce companies traded down after the U.S. Postal Service temporarily blocked parcels from China and Hong Kong after the announcements of new tariffs. 

Despite the tit-for-tat tariffs, the U.S. presidential administration is struggling to stem the rising flow of manufactured goods from China, Asia, and Europe. 

The U.S. international trade balance has generated annual deficits for seven decades, and tariffs are not likely to change the long-term trend. 

U.S. politicians and economists have long promoted free trade, and adherence to that trade policy has saddled the world's largest economy with an annual trade deficit, which has now reached $1.1 trillion. 

 

China Stock Movers 

The Hang Seng index declined 1.1% to 20,556.82, and the mainland-focused CSI 300 index dropped 0.6% to 3,795.73.

JD.com declined 3.8% to HK $155.90, Alibaba Group Holding decreased 0.3% to HK $97.40, and Trip.com Group fell 5.6% to HK $537.50.

Shipping carriers advanced, despite the announcements of tariffs by the U.S. and China. 

Orient Overseas International rose 2.7% to HK $105.50, COSCO Shipping Holdings gained 2.5% to HK $11.68, and Pacific Basin Shipping gained 1.9% to HK $1.66.

Electric vehicle makers declined amid worries that large investments in factories in Mexico designed to deliver products in the U.S. may not deliver intended results. 

BYD decreased 1.7% to HK $281.40, Li Auto fell 4.2% to HK $90.25, and Xpeng Inc. dropped 1.7% to HK $64.55.