February 12, 2025
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As the US and China squabbled over tariffs and increased the possibility of a broader, destructive trade war, Hong Kong shares sank from two-month highs while US stock futures and the currency declined on Tuesday.

As prices fluctuated on news stories, Shane Oliver, chief economist of AMP in Sydney, stated, “(The) trade war story remains alive and well and this has a lot more to play out.

The dollar index erased previous gains to trade 0.1% down at 108.86, while S&P 500 futures, which had jumped in relief that Mexico and Canada made last-minute deals to defer a US tariff blow, swung to a 0.2% loss. Following a 0.87% decline on Monday, European equities fell 0.1% in early trading. The DAX index for Germany was flat.

With the expectation that China would likewise negotiate a tariff exemption with US President Donald Trump, Hong Kong’s Hang Seng rose to its highest level in 2025. However, it later trimmed its gains to trade 2.8% higher, supported by expectations that Beijing would increase stimulus expenditure in response to US actions.

At 0501 GMT, a further 10% US duty on Chinese exports went into effect. A few minutes later, Beijing declared it was looking into Google and enacting tariffs on US imports of vehicles, agriculture equipment, coal, petrol and oil starting on February 10.

Ben Bennett, Asia-Pacific investment strategist at Legal & General Investment Management in Hong Kong, stated, “I would say that there is disappointment that the US tariffs will be implemented following the last-minute reprieve of both Mexico and Canada.

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