Chinese technology stocks trading in the United States plunged sharply on Friday after President Donald Trump threatened to impose sweeping new tariffs on Chinese imports and accused Beijing of becoming “very hostile” in its economic dealings with Washington.
The remarks reignited fears of another trade war between the world’s two largest economies and rattled markets that had been climbing earlier in the day.
Shares of major Chinese firms listed in New York were among the hardest hit. Alibaba and Baidu each dropped about 8 percent, while JD.com fell 6.6 percent and PDD Holdings slipped 5.2 percent. The iShares MSCI China ETF (MCHI), which tracks leading Chinese companies trading in the U.S., sank 5.2 percent. Even after the selloff, the ETF remains up 32 percent year-to-date, having rebounded earlier this year on signs of economic stabilization and renewed investor optimism.
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Trump’s comments came in a post on Truth Social, where he revealed he no longer plans to meet Chinese President Xi Jinping at the upcoming Asia-Pacific Economic Cooperation (APEC) summit in South Korea.
“I was to meet President Xi in two weeks, at APEC, in South Korea, but now there seems to be no reason to do so,” Trump wrote. “One of the policies that we are calculating at this moment is a massive increase of tariffs on Chinese products coming into the United States of America.”
The president accused Beijing of holding the world “captive” through its control of rare earth metals, materials essential for the production of advanced technologies ranging from electric vehicles to defense equipment. Earlier this week, China tightened export controls on rare earth elements, mandating that foreign companies obtain licenses from the government to export any goods containing more than 0.1 percent of the minerals’ total value.
Trump’s warning triggered a broad selloff across U.S. markets. The Dow Jones Industrial Average fell 649 points, or 1.4 percent, while the S&P 500 dropped 2 percent and the Nasdaq Composite slid 2.7 percent. Before Trump’s statement, stocks had been rising strongly, with the Nasdaq reaching a new all-time intraday high, per CNBC.
“Friday served as a reminder of how emotion and uncertainty can drive markets,” said Mark Hackett, chief market strategist at Nationwide. “It is too early to say with confidence if the comments will trigger the next phase of the trade conflict between the U.S. and China or more negotiating in public, but investors have chosen a wait-and-see tactic.”
The renewed tension comes at a time when both countries are tightening restrictions on sensitive sectors such as technology and semiconductors. Washington has limited U.S. exports of advanced chips to China, while Beijing has responded with measures targeting American firms and curbing the export of critical materials used in chipmaking and green technologies.
“Expectations for a China trade deal just got swept off the table,” said Jeff Kilburg, founder of KKM Financial. “Profit takers are out in full force.”
The fallout extended to American technology firms with deep ties to China. Nvidia shares fell more than 2 percent, AMD dropped over 5 percent, and Tesla declined by 4 percent, as investors worried that renewed trade barriers could hit production lines, sales, and global supply chains.
“It’s not surprising to see technology-related stocks down the most today as they have significant exposure to China in both manufacturing and as a large customer,” said Art Hogan, chief market strategist at B. Riley Wealth. “Clearly, our relationship with the second largest economy in the world just got more difficult.”
The market turmoil was compounded by domestic political uncertainty as the U.S. government shutdown entered its 10th day on Friday. The Senate on Thursday failed for the seventh time to pass competing funding proposals, leaving federal agencies shuttered and negotiations between Republicans and Democrats at a standstill.
With no breakthrough in sight, Trump administration budget chief Russell Vought confirmed on social media that layoffs of federal workers “have begun.”
Friday’s declines erased the S&P 500’s gains for the week, with the benchmark now on track to lose more than 1 percent over the period. The Nasdaq and Dow Jones Industrial Average were also pacing for weekly losses of more than 1 percent and over 2 percent, respectively.
Analysts say the combination of Trump’s tariff warning, Beijing’s tightening export controls, and Washington’s ongoing political paralysis has rekindled investor fears reminiscent of the 2018–2019 trade war — a period marked by sharp market volatility, disrupted supply chains, and tit-for-tat tariff escalations.
The return of such rhetoric, analysts warn, could again test the resilience of global markets already grappling with inflation, high interest rates, and slowing growth.