Chinese stocks cut Trump's losses after tariffs, hope not to stimulate

Chinese stocks fell after the Trump administration raised tariffs on the country to more than 50% on Wednesday, but saw a glimmer of optimism. Some investors hope further stimulus in Beijing will offset U.S. trade headwinds

Although major Asian markets have collapsed due to President Donald Trump’s tariff announcement, including a baseline 10% tariff along with other taxes, depending on the tariffs of countries and other obstacles to U.S. imports, Chinese stocks have cut earlier losses. As of 2:15 pm, the CSI 300 index removed its 1.1% drop to half of its 0.5%. The Hans Index fell by 1.5% earlier in the day.

Despite Treasury Secretary Scott Bessent's urge for retaliation, Beijing vowed to impose unspecified countermeasures on the same day. Under Trump's new tariff regime, which will reach 54% of its duty on China's imports, will reach 60% of what he promised on the campaign, making the country one of the hardest targets the United States is trying to reshape global trade. Trump also announced the end of the “minimum” rule, which allows parcels worth $800 or insufficient to enter the United States with tax exemption.

“I think people have been imposing tariffs and think there might be some intervention from more fiscal stimulus to offsetting headwinds.” He added that some of the components of the China index are concentrated in the domestic service sector, which could save them from tariff hiking.

Xin-yao Ng, director of Asian equity investment at Aberdeen, said via email that he was “not that pessimistic” about the higher tariffs. Many public companies have been limiting their access to the United States, and Beijing’s leadership may do more to stimulate the economy. Despite growing headwinds, China is still growing “about 5%” in 2025, and domestic consumption is now under pressure.

“I have been shifting my contacts in China to domestic consumption since the beginning of the year, which further enhances the effectiveness of my direction,” Ng said.

However, for some Chinese stocks, the U.S. tariff situation is difficult. Shenzhou International, a Hong Kong-listed apparel maker led by billionaire Ma Jianrong, shares were as high as 17.5% on Wednesday. According to Morningstar, the company offers sportswear brands with sales of 17%.

In a research note issued on Wednesday, Kai Wang advised investors to stick to the use of stocks that will stimulate China's future.

“In terms of direct exposure in the United States – commodity manufacturing, automotive batteries, appliances – these industries are not affected given that more than 95% of revenue comes from China.” “However, some apparel manufacturers may perform worse than previously expected because they have supply chains in Vietnam and Cambodia,” avoiding tariff pressures.