By Samuel Shen and Jiaxing Li
SHANGHAI/HONG KONG (Reuters) – Chinese stocks opened higher and the yuan strengthened early on Tuesday, as U.S. President Donald Trump’s initial remarks suggested he would negotiate rather than immediately impose tariffs on his trading partners.
Trump returned to the White House on Monday with an ambitious agenda that includes trade reform, immigration, tax cuts and deregulation.
Trump did not target China in his opening speech and did not move ahead with the tariffs as he had previously promised, causing a rally in global stocks and a drop in the dollar.
Trump ordered federal agencies to “investigate and correct” the ongoing US trade deficit and unfair trade practices and spending by other countries.
But he said he may impose 25% tariffs on imports from Canada and Mexico on Feb.1.
Trump also signed an executive order delaying enforcement of a ban on the short-form video app TikTok, but said he may impose tariffs on China if Beijing does not approve a potential US deal with TikTok.
China’s Blue-chip Index rose about 0.8% at the open, but traded early. The yuan was about 0.3% higher against a much weaker dollar.
“Previously, Trump was considered scary. So if you see the policies are more difficult than expected, it is good news for Chinese assets,” said Yuan Yuwei, founder and CIO of Water Wisdom Asset Management, calling Trump’s return “a little better “.
Yuan also expects Trump to be less aggressive in his attacks on China than his predecessor Joe Biden, who “wanted to strangle China to death.”
The CSI300 Index has fallen about 5% since Trump won the election on November 5 by threatening to impose 60% higher tariffs on Chinese goods, but has already rebounded last week amid friendly relations between Beijing and Washington.
The yuan has weakened about 3% against the dollar since Trump’s victory but is trading near its strongest level in two weeks, boosted by a friendly phone call between Trump and Chinese President Xi Jinping.
Kenny Wen, head of investment strategy at KGI Asia, said “the relief may not last long because no one knows if Trump will play any more wild cards. People don’t know if they should trust him or not.”
