Asia-Pacific stocks slide as US-China tariffs rattle markets

[WORLD] Hong Kong and other Asia-Pacific stock markets fell on Wednesday after recovering the day before, as US President Donald Trump's steep tariffs on China were poised to take effect later in the day.

The tariffs, targeting $200 billion worth of Chinese goods, mark a significant escalation in the long-standing trade tensions between the world’s two largest economies. Analysts warn that the move could further disrupt global supply chains and dampen investor sentiment across emerging markets. The uncertainty has already led to heightened volatility in currency markets, with the offshore yuan weakening against the US dollar.

The Hang Seng Index fell 1.7 percent to 19,784.21 at 10.45 a.m. local time, its lowest level since mid-January. The Hang Seng Tech Index dropped 1.2 percent. On the mainland, the CSI 300 Index, which measures the 300 largest equities in Shanghai and Shenzhen, fell 0.2%.

The tech sector’s decline reflects growing concerns over potential restrictions on semiconductor exports to China, a key issue in the US-China trade negotiations. Companies reliant on advanced chip imports, such as electric vehicle manufacturers and AI developers, have been particularly vulnerable to policy shifts. Meanwhile, domestic semiconductor firms like SMIC have benefited from increased investor interest in self-sufficiency initiatives.

Other major Asia-Pacific markets weakened: Japan's Nikkei 225 Index sank 2.6%, South Korea's Kospi fell 0.5%, and Australia's S&P/ASX 200 fell 1.1%.

South Korea’s market performance was weighed down by declines in major exporters like Samsung Electronics and Hyundai Motor, both of which rely heavily on Chinese demand. In Australia, mining stocks dipped as iron ore prices softened amid fears of slowing Chinese industrial activity. The broader sell-off underscores the region’s interconnectedness with China’s economy and its exposure to trade policy risks.

All but three members of the Hang Seng Index fell, with exporters like PC maker Lenovo Group and clothing manufacturer Shenzhou International bearing the brunt.

Li Auto, an electric car manufacturer, down 4.2 percent to HK$77.85, Trip.com, a trip booking site, fell 3.4 percent to HK$418.60, and e-commerce behemoth JD.com fell 2.8 percent to HK$133.70.

The slump in consumer-focused stocks highlights growing caution among investors about weakening discretionary spending in China. Recent economic data, including softer retail sales and manufacturing figures, have fueled concerns that the trade tensions could exacerbate a broader slowdown in the region. Travel-related stocks, in particular, face additional pressure from rising oil prices and reduced business travel demand.

On the positive side, Semiconductor Manufacturing International Corporation jumped 6.9 percent to HK$41.85, Xiaomi, a smartphone and automobile manufacturer, increased 3.7% to HK$40.35, and China Unicom, a telecommunications business, rose 2% to HK$8.46.