China and Hong Kong Stocks Plunge as US-China Trade War Escalates

Chinese and Hong Kong stocks suffered steep losses on Monday as U.S.-China trade tensions intensified, sparking fears of a prolonged economic conflict. The Shanghai Shenzhen CSI 300 index fell nearly 6%, while the Shanghai Composite dropped 6%, both hitting their lowest levels since September 2024. Hong Kong’s Hang Seng Index plunged 8.8%, marking its worst day since February, with tech and export-driven stocks leading the decline.

The market sell-off followed fresh U.S. tariff hikes. President Donald Trump announced a new 34% tariff on Chinese goods, in addition to the existing 20% duties, and confirmed a 25% tariff on imported vehicles and auto parts effective April 9. In retaliation, Beijing imposed a 34% tariff on a broad range of U.S. imports, including agricultural products, energy resources, and tech components.

Global markets reacted sharply to the escalating tariff battle, which analysts say signals the beginning of a second, more severe trade war. "Earlier responses to fentanyl-related tariffs left room for negotiation, but this latest move shuts that window," ING analysts noted.

Hong Kong-listed tech giants took a major hit. Alibaba (HK:9988) shares sank 12%, while Baidu (HK:9888) dropped over 10%. Auto and semiconductor stocks also tumbled. BYD Co (HK:1211), Geely Automobile (HK:0175), Xpeng Inc (HK:9868), Semiconductor Manufacturing International Corp (HK:0981), and SAIC Motor (SS:600104) all saw declines ranging from 6% to 11%.

The latest round of tit-for-tat tariffs has heightened concerns over a deeper global trade slowdown, casting a shadow over the Asian markets and investor sentiment.