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European stocks dipped on Tuesday as China announced tariffs on US goods in retaliation for import levies brought in by US President Donald Trump.
The Stoxx Europe 600 index fell 0.1 per cent, while the UK’s FTSE 100 dropped 0.2 per cent, with both having been down more in early trading. US futures indicated the S&P 500 and Nasdaq would open in the red.
Trump over the weekend imposed a 10 per cent rise in tariffs on China, which came into force on Tuesday. China retaliated with tariffs on US energy exports, further trade restrictions on critical minerals and an antitrust probe of Google.
However, analysts said markets were largely taking the new tariffs in their stride.
“It’s been a very measured reaction partly because China’s response has been perceived as being measured itself,” said Mitul Kotecha, head of emerging markets macro strategy at Barclays.
“The reaction in China-related markets has been nowhere near as negative as it could have been . . . 10 per cent is not 60 per cent,” he added, referring to the scale of Trump’s tariffs on China.
US levies on Canada and Mexico were halted following last-minute talks, with markets having initially sold off sharply on Monday over fears of a global trade contraction.
The US dollar weakened by 0.4 per cent against a basket of currencies including the euro and yen.
Asian stocks performed better than their European counterparts. Hong Kong’s Hang Seng index rose 2.8 per cent, led by Chinese tech companies. The offshore renminbi strengthened to Rmb7.29 a dollar. Mainland China’s markets were closed on Tuesday.
Chinese companies listed in Hong Kong rose. Technology stocks led gains, with Tencent, Alibaba, Xiaomi and JD.com among the best performers. State-owned Chinese chipmaker SMIC jumped 8.5 per cent.
“There is lots of optimism on local [Chinese] tech,” said Wee Khoon Chong, a senior markets strategist at BNY. “There’s a sense of optimism that if [Chinese AI company] DeepSeek can make it then maybe it’s not so bad after all.”
The surge in Chinese tech stocks came after Trump wrote on his Truth Social platform: “GREAT INTEREST IN TIKTOK! Would be wonderful for China, and all concerned.”
Trump has said that tariffs on China could hinge on a deal over TikTok’s ownership. Within hours of his inauguration last month, Trump postponed a deadline requiring the app’s Chinese owner ByteDance to sell its stake or face a ban in the US.
He is expected to speak to China’s President Xi Jinping in the coming days.
Other Asian markets also gained on Tuesday. Japan’s Topix closed up 0.7 per cent, while South Korea’s Kospi advanced 1.1 per cent. Taiwan’s benchmark Taiex rose 0.4 per cent, led by Taiwan Semiconductor Manufacturing Company, which gained 2.3 per cent.
Brent crude, the international oil benchmark, dropped 1 per cent on Tuesday to $75.23 a barrel. West Texas Intermediate, the US benchmark, fell 1.6 per cent to $72 a barrel.
European gas prices fell from their 15-month highs on the back of China’s tariffs on US liquefied natural gas imports. Traders are anticipating China will resell further cargoes it takes from the US into Europe, a step the country has already taken due to weak demand at home and high prices in Europe.
Additional reporting by Shotaro Tani
