Chinese Tech Stocks Plunge as Trump Threatens 100% Tariffs

On Friday, Oct. 10, U.S.-listed Chinese technology giants Alibaba Group Holding Limited BABA, JD.com, Inc. JD and PDD Holdings Inc. PDD suffered a sharp selloff as renewed U.S.-China trade tensions reignited fears of an escalating economic clash.

BABA, JD and PDD fell 8.5%, 6.2% and 5.3%, respectively, marking one of their steepest declines in months. The downturn was triggered by comments from U.S. President Donald Trump, who vowed to implement a sweeping 100% tariff on all Chinese imports, alongside stricter restrictions on U.S. technology exports to China. BABA currently carries a Zacks #4 (Sell), JD a #3 (Hold) and PDD a #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Trump’s threat to impose this tariff on Chinese imports stems from Beijing’s recent export controls on rare earths, which the United States sees as a hostile move targeting critical mineral supply chains. The President claims the tariff would be a financial countermeasure to China’s aggressive trade posture, especially concerning tech and mineral exports, and aims to force Beijing to reverse its controls.

Trump’s statements sent shockwaves through global financial markets, spurring a broad retreat from risk assets and inflicting heavy losses on technology and export-oriented companies. Investors grew increasingly anxious that a renewed trade war could further disrupt supply chains, curb semiconductor and electronics exports, and weaken consumer demand across both economies. Already burdened by sluggish domestic growth and lingering regulatory challenges, Chinese tech stocks were hit particularly hard. Renewed tariff risks could drive up import costs and fuel inflationary pressures, potentially forcing central banks to delay rate cuts, a development that typically weighs on growth-oriented tech stocks.

The broader U.S. market was not spared from the fallout. The S&P 500 slid 2.7%, and the Nasdaq Composite fell 3.6%, as traders reacted to the prospect of a return to protectionist policies reminiscent of the 2018-2019 trade war era. Market sentiment turned defensive, with investors seeking safety amid rising geopolitical uncertainty. However, the slump may also act as a potential entry point for long-term investors, given the fact that the fundamentals of major Chinese Internet companies remain relatively sound.

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This article originally published on Zacks Investment Research (zacks.com).

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