Sentiment appeared to have gotten a boost after U.S. President Joe Biden said he was considering cutting U.S. tariffs on Chinese goods
Chinese stocks fell sharply Tuesday afternoon, as investors weighed a possible thawing of U.S.-China trade relations after U.S. President Joe Biden floated the idea of tariff cuts on Chinese goods.
Hong Kong’s Hang Seng index dropped 2.27% and the Hang Seng Tech index fell more than 4%. Alibaba was down 2.17% while Tencent declined 2.6%.
Shares of electric vehicle maker Xpeng plummeted more than 8%, after it reported on Monday that its first-quarter net loss widened to 1.7 billion yuan ($25 million), from 786.6 million yuan ($117 million) a year earlier.
U.S. markets offered some relief for investors as stocks rallied following a week of sharp losses. During Monday’s regular trading session, the Dow jumped 618 points, or nearly 2%, the S&P 500 rose 1.9% and the Nasdaq Composite gained 1.6%.
Sentiment appeared to have gotten a boost after U.S. President Joe Biden said he was considering cutting U.S. tariffs on Chinese goods, at a press confidence during his trip in Japan as part of his first Asia tour.
As consumer prices heated up, the White House had said last month that it was looking at how those tariffs have contributed to inflation.
Those tariffs took effect in 2018 when the Trump administration imposed tariffs on billions of dollars worth of Chinese goods and Beijing retaliated with similar punitive measures, drawing both sides into a protracted trade war.
Markets seemed to take the news as indicative of a potential thawing of US-China trade tensions, though it isn’t the first time tariff reductions have been floated, wrote Taylor Nugent, an economist at the National Australia Bank. While a cut to tariffs would help soften US inflation at the margin, reports suggest administration officials are concerned about appearing soft on China ahead of November congressional elections.