Summary of China Mainland Markets Reopen as Trade Ruling Roils U.S.

Author: Bob Mason

Published: February 24, 2026

Key Points

• The US Supreme Court's ruling on tariffs has positively impacted Chinese equities, particularly the CSI 300 and SSE indices.
• Lower US tariffs could enhance external demand and improve profit margins for Chinese manufacturers.
• The CSI 300 index is targeting levels of 4,837 and 5,000, supported by bullish technical indicators.

Market Context

China's equity markets have reopened following a significant ruling by the US Supreme Court, which deemed President Trump's use of the International Emergency Powers Act (IEEPA) to impose tariffs as illegal. This ruling is expected to lower tariffs on Chinese goods, potentially increasing US demand and alleviating margin pressures on Chinese producers.

Impact of Lower Tariffs

With reduced tariffs, Chinese manufacturers may experience wider profit margins, which could lead to increased earnings and stock valuations. The easing of shipping costs associated with transshipments is also anticipated to benefit manufacturers who have diversified their trade partnerships.

Consumer Sentiment and Domestic Demand

Improved external demand and higher margins could positively influence the labor market, potentially boosting consumer sentiment and domestic consumption. However, consumer confidence in China has been low, which poses challenges for aligning domestic and external demand crucial for GDP growth.

Policy Uncertainty Ahead of Xi-Trump Meeting

There remains uncertainty regarding President Trump's potential tariff increases ahead of his meeting with President Xi in April. The outcome of this meeting could significantly influence market sentiment and trade relations.

Economist Perspectives

Economists suggest that while a 15% tariff could reduce previous levies, caution is warranted due to the potential for Trump to utilize alternative executive powers to adjust tariffs. The US Treasury has indicated that the economic agenda remains focused on reducing the trade deficit and enhancing manufacturing capacity.

Risks to the Bullish Outlook

Despite the positive sentiment, several risks could undermine the bullish outlook, including:

• Escalation of US-China trade tensions.
• Imposition of tariffs by global trade partners on Chinese goods.
• Delays in fiscal and monetary policy measures from Beijing.
• Continued deterioration of domestic demand and challenges in the housing market.

Technical Outlook

The CSI 300 and SSE Composite indices are currently trading above their 50-day and 200-day EMAs, indicating a bullish trend. Key resistance levels to watch include 4,732 for the CSI 300 and 4,143 for the SSE Composite. A breakout above these levels could lead to further gains.

Conclusion

The short- and medium-term outlook for Chinese equities remains positive, supported by policy measures from Beijing, advancements in technology, and strong external demand. However, the effectiveness of these measures in boosting domestic consumption will be critical for sustaining growth. The upcoming meeting between Presidents Trump and Xi is expected to be pivotal for market trends in the second quarter of 2026.