Hong Kong stocks closed lower after the US sought to impose a 34 per cent reciprocal tariff on China and a levy of at least 10 per cent on all of its trading partners, a move that is likely to stoke inflation and cloud the outlook of global growth.

The Hang Seng Index fell 1.5%, and the Hang Seng Tech Index declined 2.1%.

Xiaomi rose 3%; SMCI rose 1%; Alibaba, JD.com fell 5%; Li Auto, Nio fell 3%; XPeng fell 2%; Tencent fell 1%.

The 34 per cent reciprocal tariff on Chinese imports came on top of an additional 20 per cent levy that was put in place after Trump was inaugurated this year. The cumulative 54 per cent tariff is close to the 60 per cent that he threatened during his campaign, raising fears of derailing a fragile economic recovery in China where exports were a bright spot last year.

“This policy announcement is likely to dampen risk sentiment in the short term,” said Tai Hui, a strategist at JPMorgan Asset Management in Hong Kong. “Risk assets, including US and Asian equities, may face pressure. The fear of weaker growth currently outweighs inflation concerns, potentially driving safe-haven flows into government bonds.”