China and Hong Kong stocks fall as US set to slap US$200 billion in tariffs on Chinese goods

China and Hong Kong stocks fell on expectations that the administration of US President Donald Trump will follow through with its proposed tariffs on US$200 billion worth of Chinese imports early this week.

The Shanghai Composite Index slid 1.1 per cent on Monday, reflecting a more than three year low on a closing basis. Hong Kong’s Hang Seng Index slumped 1.3 per cent. Trading was not disrupted by Typhoon Mangkhut, which was downgraded to a No 3 signal by the city’s observatory from Sunday’s No 10 level.

In a tweet late Monday in Hong Kong, Trump repeated his view that countries which were not making fair deals with the US should be “tariffed”. “Tariffs have put the U.S. was in a very strong bargaining position, with Billions of Dollars, and Jobs, flowing into our Country – and yet cost increases have thus far been almost unnoticeable. If countries will not make fair deals with us, they will be ‘Tariffed!’,” he said.

News reports and market reactions indicated that the White House will impose the tariffs after a public-comment period concluded early this month. CNBC said in a tweet, citing a senior administration official, that the announcement might come Monday or Tuesday, and Bloomberg News reported that Trump instructed his aides last week to proceed with the proposal.

“Everyone is waiting for the boot to drop,” said Wei Wei, a trader with Huaxi Securities in Shanghai. “Before the official announcement on the tariffs, the market will remain pretty cautious and be set for some sell-off.”

The Shanghai Composite sank 29.85 points to 2,651.79, which reflected a poor start for mainland China-based foreigners who are allowed to trade in yuan-denominated A shares from Monday, after regulators revised trading rules to prop up the stock market.

The Hang Seng Index shed 353.56 points to 26,932.85. The Hang Seng China Enterprises Index, or the H share gauge, sank 1.1 per cent, or 113.08 points to 10,462.09.