CNBC·2025-10-10 16:59Market Reaction - Chinese stocks listed in the U.S. experienced significant declines, with Alibaba and Baidu each falling approximately 8%, JD.com down 6.6%, and PDD Holdings decreasing by 5.2% [1] - The iShares MSCI China ETF, which tracks major Chinese companies in the U.S., dropped by 5.2% [1] Political Context - Former President Donald Trump threatened to increase tariffs on Chinese imports if he returns to office, citing China's "very hostile" stance [1] - Trump accused China of dominating the rare earth metals market, claiming it holds the world "captive" [2] - Beijing has recently tightened regulations on rare earth exports, requiring foreign companies to obtain government licenses for products containing 0.1% or more of rare earth elements [2] Investor Sentiment - The market reaction reflects heightened investor anxiety regarding escalating U.S.-China tensions, which have been characterized by disputes over trade, technology, and national security [1] - Mark Hackett, chief market strategist at Nationwide, noted that the market is currently driven by emotion and uncertainty, with investors adopting a wait-and-see approach [3] - Despite the recent pullback, the iShares MSCI China ETF remains up 32% for the year, indicating a strong rebound in Chinese stocks driven by signs of economic stabilization and renewed investor optimism [3]