Chinese tech and EV stocks surged Wednesday after Washington and Beijing extended their trade truce by 90 days, averting a tariff escalation and fueling hopes for improved economic ties between the world’s two largest economies.
Shares of Alibaba Group (NYSE:BABA), Baidu (NASDAQ:BIDU), JD.com (NASDAQ:JD), PDD Holdings (NASDAQ:PDD), NIO (NYSE:NIO), Li Auto (NASDAQ:LI) and XPeng (NYSE:XPEV) all moved higher in premarket trading as investors welcomed the reprieve.
The gains came after the United States and China reached the extension agreement late Monday, just hours before a deadline that would have triggered higher tariffs.
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President Donald Trump signed an executive order maintaining the pause until November 10, while Beijing announced a matching extension. Under the current arrangement, Washington will keep its 30% levy on Chinese imports in place, and China will continue its 10% tariff on U.S. goods, the BBC reported Tuesday.
The truce marks a temporary halt in a trade dispute that earlier this year had seen both sides threaten duties exceeding 100%. Those threats were scaled back in May following trade talks in Geneva.
According to the White House, the additional three months will provide time to address “trade imbalances and unfair practices,” pointing to a U.S. trade deficit with China that neared $300 billion in 2024.
Negotiators will also focus on expanding U.S. export access, addressing national security issues, and reviewing technology restrictions.
China urged the U.S. to lift “unreasonable” trade curbs, stressing cooperation to benefit both economies and stabilize semiconductor supply chains.
The pause follows a recent partial easing of U.S. export restrictions, which allowed companies like Advanced Micro Devices (NASDAQ:AMD) and Nvidia (NASDAQ:NVDA) to sell certain chips to China in exchange for a revenue share with the U.S. government, a move that sparked criticism.
Despite the truce, U.S.-China trade volumes remain depressed. In the first half of 2025, U.S. imports from China fell 15% year-over-year to $165 billion, while American exports to China dropped 20%.
Chinese stocks have rallied in recent months, driven by abundant domestic liquidity and record household savings flowing into equities amid falling interest rates. Investors have boosted margin lending to the highest level since 2015, while onshore trading volumes have risen for three straight months.
The CSI 300 Index has climbed 16% from April lows as Beijing’s measures to curb price wars and overcapacity lifted sentiment, even without central stimulus or a U.S. trade deal, Bloomberg reported on Wednesday.
Analysts say improving trade ties with Washington, government development plans, and continued retail inflows could keep the rally going.
Price Actions: BABA stock is trading higher by 3.42% to $126.61 premarket at last check Wednesday. BIDU stock is up 2.37%, PDD 2.43%, JD 2.05%, NIO 2.68%, LI 3.96%, XPEV 1.59%.
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