President Donald Trump ignited a fresh wave of investor anxiety over U.S.-China trade tensions late last week, fueling a sharp selloff across stock markets and other risk assets. The trigger: a fiery rebuke of Beijing’s decision to tighten export controls on rare earths, followed by a threat to impose a sweeping 100% tariff on all Chinese imports.
Markets regained some semblance of stability this week after Trump softened his tone toward Beijing over the weekend. But the sudden spell of volatility has unraveled an interesting pattern: that of Wall Street being more resilient to flare-ups in U.S.-China tensions than Chinese equities—especially in the tech sector.
On Friday, the Invesco China Technology ETF (CQQQ) plunged 7.8%, a brutal drop that dwarfed the 3.5% decline in the Invesco QQQ ETF, which tracks the Nasdaq-100. While both funds staged partial recoveries on Monday, the divergence remains stark. Since October 3, QQQ has gained almost 10% against CQQQ, extending a trend that suggests U.S. tech is increasingly seen as a safer bet than its Chinese counterparts.
Macro strategist Andreas Steno Larsen summed it up bluntly, in an X.com post:
“Judging from Equity Markets, China is currently worse off than the US in this little stand-off.”
The numbers back him up. Chinese tech stocks—already under pressure from domestic regulatory crackdowns and slowing growth—are now absorbing the brunt of geopolitical risk. Trump’s tariff threat amplified concerns about supply chain disruptions and export restrictions, sending investors fleeing from Chinese names.
Meanwhile, U.S. tech firms, despite their own exposure to China, continue to benefit from relative insulation. The Nasdaq’s relative resilience appears to reflect investor confidence that U.S. tech firms are structurally better positioned to absorb trade-related shocks, while China’s policy shifts are adding layers of uncertainty for its domestic tech sector.
The asymmetric impact of Trump’s rhetoric is telling. While his comments sparked global jitters, the deepest pain landed in China’s tech sector—a signal that Washington’s leverage may still outweigh Beijing’s in the short term.
Whether Trump follows through on his tariff threat remains uncertain. But for now, the scoreboard is clear: Wall Street is holding up. Beijing’s tech titans are stumbling. And in this round of Trump vs. China, investors are voting with their feet.
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