On Monday, Jan. 20, President Donald Trump was sworn in for his second term at the US Capitol. Among the foreign dignitaries attending the inauguration was Chinese Vice President Han Zheng, who appeared as President Xi Jinping’s special envoy, accompanied by China’s ambassador to the US, Xie Feng. Just ahead of the ceremony, US Vice President J.D. Vance and Tesla CEO Elon Musk each held closed-door meetings with Han.
Then came Trump’s surprise announcement: he planned to visit China within his first 100 days in office. The signal was clear – many expected Trump’s second term to start with a softer stance on China.
They were wrong.
On April 2 – what Trump now calls “Liberation Day” – a new wave of tariffs dropped. The US slapped a sweeping 10% tariff on nearly all imports. He also announced “reciprocal tariffs” targeting key trade partners: Japan’s overall tariff rate surged to 24%, the EU’s to 20%. As for China? The effective tariff rate has now ballooned to 145%.
So what does this mean for China’s tech sector?
Stock markets
According to Bloomberg, Aberdeen Investments portfolio manager Bush Chu warned that recent US actions – including investment restrictions and possible sanctions – pose “serious risks” to Chinese tech firms. Rumors are also swirling that Chinese companies listed in the US could be forcibly delisted, sparking fears of tighter access restrictions on Chinese tech firms.
The global markets reacted immediately to Trump’s tariffs on April 3: Germany’s DAX and France’s CAC 40 each fell over 3%, while the UK’s FTSE 100 dropped 1.55%. In Asia, Japan’s Nikkei 225 slid 2.77%, and South Korea’s KOSPI lost 0.76%. China’s markets, however, showed remarkable resilience. The Shanghai Composite dipped just 0.24%.
To stabilize investor confidence, the Chinese government stepped in. According to estimates by Caijing, sovereign wealth fund Central Huijin purchased over RMB 100 billion (around $13.8 billion) worth of Chinese stocks and ETFs between April 7 and 8 alone. The result? A sharp rebound. From April 8 to 14, key indexes surged: the Beijing 50 jumped 21%, the STAR 200 rose 9%, and the CSI 300 climbed 4%.
What’s clear moving forward is this: the only certainty for China’s markets is volatility. As Trump’s trade and tech agenda continues to shift, expect the stock market to swing in step – with little predictability.
Investor confidence
On Sunday, Apr. 8, President Trump floated the idea of imposing new tariffs on high-performance computing chips used in smartphones and other tech products. The announcement came just two days after his administration had hurriedly announced it was excluding a wide range of electronics from the latest round of tariff hikes on Chinese imports.
Behind the scenes, Trump’s top economic advisers have been scrambling to clarify a fast-moving and often contradictory policy stance. For weeks, the administration insisted that no company or sector would be exempt from tariffs – claiming the hardline approach was key to resetting America’s trade relationship with China.
As of April 2, semiconductors remained exempt from reciprocal tariffs. But the whiplash-inducing shifts in tariff rules and exemptions have left companies heavily dependent on China trade increasingly uncertain. Some CEOs and investors welcomed the temporary exclusion of electronics – especially considering these products make up roughly a quarter of all US imports from China.
Still, Trump’s unpredictable tariff strategy is denting investor confidence and reinforcing a hawkish stance toward China.
Cross-border e-commerce
As the US-China trade war escalates, ultra-popular fast fashion platforms Shein and Temu are hitting turbulence in the American market.
Known for selling everything from clothing to furniture at rock-bottom prices – often with free shipping – these platforms have captured the attention of US consumers looking to place bulk orders on the cheap.
According to a Congressional Research Service report published in February, the rise of platforms like Shein and Temu is closely tied to the surge in low-value parcel exports from China, which skyrocketed to $66 billion in 2023 – up from just $5.3 billion in 2018. Much of that growth was US-bound. The report also noted that, combined, Shein and Temu accounted for 17% of the American discount retail market in 2023.
But with Washington sharpening its focus on Chinese e-commerce players and tightening scrutiny over tax, trade, and data practices, these platforms may face a tougher road ahead.
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