Chinese stocks and the yuan showed cautious gains on Tuesday as markets reacted to U.S. President Donald Trump’s delayed enforcement of hefty trade tariffs during his inauguration. Trump refrained from targeting China in his inaugural speech, triggering a global relief rally and weakening the dollar. However, he directed federal agencies to review U.S. trade deficits and hinted at potential 25% tariffs on imports from Canada and Mexico by February 1.
China’s blue-chip CSI300 Index opened 0.8% higher but soon leveled off, while the yuan strengthened by 0.3% against the dollar. Investors remained wary of Trump’s volatile approach and the unresolved tensions between the U.S. and China. While Trump’s initial stance was seen as more pragmatic than expected, analysts cautioned against overinterpreting the developments, noting that U.S.-China relations are unlikely to shift dramatically.
Despite signs of goodwill, such as a delayed TikTok ban and a positive phone call between Trump and Chinese President Xi Jinping, concerns lingered over Trump’s review of the Phase 1 trade deal and his earlier threats of steep tariffs on Chinese goods. Any eventual tariff hikes could strain China’s economy, already weighed down by a property crisis and weak consumer demand. Analysts warned that geopolitics and U.S. domestic policies will continue to pressure China-related assets.