Gaotu Techedu Inc. (GOTU) shares plummeted 7.36% in pre-market trading on Friday, as escalating trade tensions between China and the United States sent shockwaves through Chinese ADRs and the broader market. The sharp decline comes as investors react to China's announcement of new tariffs and export restrictions on rare earth elements.

China's Finance Ministry declared it would impose additional tariffs of 34% on all U.S. goods starting April 10, in retaliation to sweeping tariffs imposed by the U.S. Furthermore, Beijing announced export controls on medium and heavy rare-earth elements to the United States, effective immediately. These moves have significantly heightened concerns about the economic impact of the ongoing trade dispute between the world's two largest economies.

The news has triggered a broad sell-off in Chinese ADRs, with education technology companies like Gaotu Techedu particularly vulnerable. Other Chinese stocks trading on U.S. exchanges also experienced significant declines, with some falling as much as 17% in pre-market trading. The negative sentiment has spilled over to the broader market, with major U.S. stock index futures extending losses and big tech stocks facing substantial pressure.