US-listed Chinese Stocks Rally on Tariff Relief Agreement with US

US-listed Chinese stocks rallied as Beijing and Washington agreed to lower tariffs on each other's products temporarily. The agreement will reduce US levies of 145% to 30% and China's 125% duties to 10% for a 90-day period. Alibaba Group Holding, PDD Holdings, Baidu, and Chinese electric vehicle companies like NIO, Li Auto, and XPeng noted strong upward momentum.

Title: US-China Trade Tension Eases as Tariffs Are Temporarily Lowered

US-listed Chinese stocks rallied on Monday as Beijing and Washington agreed to lower tariffs on each other's products temporarily. The agreement will reduce US levies of 145% to 30% and China's 125% duties to 10% for a 90-day period. Alibaba Group Holding (NYSE: BABA), PDD Holdings (NASDAQ: PDD), Baidu (NASDAQ: BIDU), and Chinese electric vehicle companies like NIO (NYSE: NIO), Li Auto (NASDAQ: LI), and XPeng (NYSE: XPEV) noted strong upward momentum.

President Donald Trump announced the reduction in tariffs on small parcels worth up to $800 (£606) sent from mainland China and Hong Kong to the US. The new tariffs on small packages have been cut from 120% to 54% [1]. The flat fee per item will remain at $100 for shipments sent after May 2, while a $200 charge due to apply from June 1 has been cancelled [1].

The agreement follows a joint statement released by the US and China announcing they would temporarily reduce their tit-for-tat tariffs and start a new round of trade negotiations [1]. Trump stated that the levies might rise again in three months if no further progress is made, but he does not expect them to return to the previous 145% peak [1].

Chinese exports showed strong resilience in April, growing by 8.1% year-on-year to US$315.69 billion, despite US tariffs [2]. Exports to the US, however, fell by 21%, the sharpest drop in 21 months [2]. This indicates that while the US tariffs may have been expected to put pressure on Chinese production, they have actually created a short-term boost in demand for Chinese intermediate goods [2].

Alibaba Group Holding is expected to report its fourth-quarter results next week, with estimates predicting a year-over-year increase in revenue and net profit [3]. The company's stock has significantly improved, recovering from a prolonged downturn and growing by 60% in the past year [3]. Alibaba’s performance has been driven by its strategic positioning in the AI boom and its e-commerce business [3].

In the Chinese NEV market, Tesla dropped from No. 3 in March to No. 8 in April, while BYD maintained its position as the top NEV maker [4]. BYD's share of the China NEV market was 29.0% in January-April, with Tesla's share at 4.9% [4].

CATL, a leading battery manufacturer, is planning an initial public offering (IPO) in Hong Kong, aiming to raise up to $5.3 billion [5]. The company submitted a preliminary listing review application to the Hong Kong Stock Exchange on May 12, 2025 [5].

The temporary reduction in tariffs is expected to boost trade between the US and China, potentially benefiting Chinese stocks listed on US exchanges. However, the long-term impact remains uncertain and will depend on the progress made in the upcoming trade negotiations.

References

[1] https://www.bbc.com/news/articles/c308pg239n1o
[2] https://www.scmp.com/economy/china-economy/article/3309656/chinese-exports-show-strong-resilience-april-despite-us-tariff-war?utm_source=rss_feed
[3] https://news.alphastreet.com/earnings-preview-alibaba-baba-likely-to-report-higher-q4-sales-profit/
[4] https://cnevpost.com/2025/05/12/automakers-share-china-nev-market-apr-2025/
[5] https://www.mk.co.kr/en/world/11314749