In Depth: China’s Export Machine Stalls Under Trump’s New Trade Blitz

Tariff escalation: China vowed Tuesday to again retaliate if U.S. President Donald Trump goes through with his threat to impose an extra 50% tariff on Chinese imports, illustrating just how fast a trade war can escalate. The Ministry of Commerce promised countermeasures against what it called “bullying” by the United States. Trump’s tariff threat was in response to the additional 34% tariff that China imposed on all U.S. imports, which was a response to the 34% “reciprocal tariff” that the U.S. hit China with last week. Those tariffs came on top of two separate 10% additional levies that the U.S. imposed on Chinese imports since Trump took office in January.

Raising research walls: Chinese researchers have confirmed that they have lost access to certain restricted U.S. National Institute of Health’s (NIH) biomedical databases in light of a recent U.S. ban. A biomedical researcher said that while many of their peers had anticipated the restrictions, they still arrived “unexpectedly.” On Friday, the NIH prohibited institutions located in “countries of concern” from accessing restricted data repositories that contain sensitive information such as human genome research data. The situation offers an example of how tensions between countries can hinder the openness and collaboration necessary for scientific advancement.

Shoring up stocks: China’s top insurance regulator on Tuesday gave insurers more room to invest in stocks as it moved to bolster markets in the wake of the sell-offs some described as China’s “Black Monday.” The National Financial Regulatory Administration announced it would raise equity investment caps by 5 percentage points for well-capitalized insurers, allowing up to 50% of total assets to be invested in stocks for the strongest firms. The measure’s goal is to channel more of China’s roughly 33.3 trillion yuan ($4.6 trillion) in insurance funds into shares. China’s stock markets nosedived Monday as concerns mounted about U.S. President Donald Trump’s tariff onslaught, with Shanghai’s benchmark index plunging more than 7% and Hong Kong’s more than 13%.

Central bank backstop: Amid the tariff tumult, China’s central bank voiced its support for the stock-supporting investments made by a subsidiary of the country’s sovereign wealth fund. In a Tuesday statement, the People’s Bank of China promised relending support to Central Huijin Investment Ltd. in an effort to stabilize the capital markets. China stocks tumbled on Monday, but in the last hour of trading, Chinese mainland shares recovered some of their losses after Huijin announced that it had increased its holdings of exchange-traded funds. Chinese stocks recovered further Tuesday, with the mainland’s benchmark CSI 300 Index closing up 1.7%, while Hong Kong’s Hang Seng Index rose 1.5%.

Crypto encouragement: Hong Kong’s securities regulator has announced plans to permit licensed cryptocurrency trading platforms to offer staking services. The regulatory change will enable crypto investors, including exchange-traded funds backed by spot ether, to earn rewards by locking up their digital assets. Platforms must maintain custody of staked assets, ensure client protection and provide comprehensive risk disclosures. This initiative is part of Hong Kong’s virtual asset roadmap, which aims to create a pro-growth regulatory environment. Experts believe the move will boost interest in Hong Kong’s crypto ecosystem.