Calm Before the Storm? Chinese Markets Slip Even Before US Trade War Flares Anew

China's Shanghai Composite Index on Friday retreated below its decade-high record exceeding 3,900 points, but that may be just a minor blip compared with trading on Monday, after US President Trump announced he is imposing new 100 percent tariffs on China imports and tightening export controls over critical software.

Trump's announcement, after markets in Asia closed, sent Chinese stocks trading in the US plunging on Friday, with Alibaba and Baidu both sliding about 8 percent. JD.com was down 6.6 percent and PDD Holdings lost 5.2 percent.

New York stocks markets posted their biggest one-day declines since Trump first announced global tariffs in April. The broad S&P 500 index tumbled 2.7 percent and the Nasdaq plunged 3.6 percent.

The sudden flare-up in China-US trade tensions came after both nations announced new trade barriers and sanctions this week. A temporary truce in their trade war to allow time for talks on a trade deal is due to expire next month.

"Expectations for a China trade deal just got swept off the table," Jeff Kilburg, founder of KKM Financial, told CNBC. "Profit takers are out in full force."

In a two-day trading week abbreviated by a long Chinese holiday, the benchmark Shanghai index fell 0.94 percent on Friday, before Trump's announcement and after a rally on Thursday. The decline was led by shares in semiconductor and lithium companies.

The smaller Shenzhen bourse performed worse, with its composite index losing 2.7 percent and tech-heavy ChiNext slumping 4.55 percent on Friday.

Shares in ASR Microelectronics and Dosilicon both contracted nearly 13 percent, while Huahong Semiconductor and Nexchip Semiconductor lost more than 11 percent. Semiconductor Manufacturing International Corp fell 7.9 percent.

Chinese sentiment was buoyed earlier in the week by the World Bank raising its 2025 growth forecast for China to 4.8 percent this year from an earlier prediction of 4 percent.

The bank noted that China's economy has benefited from government support.

The just-concluded eight-day National Day holiday also was seen as proof of China's resilient economy, with 2.4 billion people traveling and consumer spending up almost 3 percent.

Outside the Chinese mainland, Hong Kong's Hang Seng Index decreased 1.7 percent on Friday, while Japan's Nikkei also lost 1 percent. South Korea's Kospi bucked the Asian trend with a 1.7-percent rise.