Direxion Daily FTSE China Bull 3X Shares (YINN), a leveraged ETF tracking Chinese stocks, plunged 21.92% in pre-market trading on Friday. The sharp decline comes as investors react to China's announcement of retaliatory measures against the United States in the escalating trade war.

China's Finance Ministry declared it would impose additional tariffs of 34% on all U.S. goods starting April 10, 2025. Furthermore, Beijing announced new controls on exports of medium and heavy rare-earth elements to the United States, effective April 4. These actions are in direct response to the sweeping tariffs imposed by the Trump administration, which had already knocked $2.4 trillion off U.S. equities in the previous session.

The impact of this trade war escalation is reverberating across global markets. U.S. stock futures are falling sharply, with S&P 500 e-minis down 3.23%, Nasdaq 100 E-minis down 3.48%, and Dow e-minis dropping 3.19% in early trading. Chinese ADRs are particularly hard hit, with Alibaba and JD.com down 10%, XPeng falling 9%, and PDD Holdings, Baidu, and NIO all declining by 7% or more. The broader market turmoil and specific targeting of Chinese stocks explain the outsized movement in the leveraged YINN ETF, which amplifies the daily returns of the FTSE China 50 Index.