Stocks Plunge as Tariff Threats Loom Large

China and Hong Kong stocks experienced a decline after U.S. President Donald Trump hinted at imposing new tariffs on Chinese imports. This led to significant drops in major indices and affected investor sentiment. Analysts anticipate a turbulent negotiation process as the trade tension escalates.

On Wednesday, stock markets in China and Hong Kong saw significant declines following a statement from U.S. President Donald Trump regarding potential new tariffs on Chinese imports, signaling the end of a brief market reprieve.

China's blue-chip CSI 300 Index dropped 0.9% by midday, edging towards its most significant single-day retreat in nearly two weeks, while the Shanghai Composite Index fell 0.8%. Meanwhile, Hong Kong's Hang Seng Index decreased by 1.3%, pulling back from a one-month high.

The yuan weakened slightly by 0.2%, despite being fixed at a two-month high by the central bank. Trump suggested the potential imposition of a 10% tariff on Chinese goods in response to ongoing fentanyl shipments from China to the U.S. Although initial announcements were withheld, Trump maintains the option of leveraging tariffs for political gains, foretold a turbulent negotiation process.

(With inputs from agencies.)