U.S. Donald Trump ratcheted up a trade war with China even as he did an about turn on steep new reciprocal tariffs on most trading partners on Wednesday.

Trump hiked the tariff on Chinese imports to 125% from the 104% level that kicked in on Wednesday.

Beijing may again respond in kind after slapping 84% tariffs on U.S. imports on Wednesday to match Trump's earlier tariff salvo. It has repeatedly vowed to "fight to the end" in the escalating trade war between the world's top two economies.

MARKET REACTION: The blue-chip CSI 300 Index and Hong Kong's Hang Seng Index both traded higher, in anticipation of domestic policy stimulus to offset tariffs and state-driven buying of stocks.

COMMENTS:

HONG HAO, CEO AT HUAFU INTERNATIONAL, HONG KONG

"Right now, it's mainly a technical rebound. Obviously, Trump backed down yesterday. At the same time, he also expressed openness to negotiate with China. On China's side, it's very clear that we have a lot of confidence this time. Whether it's the announcement of retaliation or the deployment of policies, it's actually all been well-prepared in advance.

"After seven years of experience since 2018, the proportion of U.S. in China's total exports has significantly decreased. So, we're no longer as passive as we were back then. I think this rebound will continue for a while."

SAT DUHRA, PORTFOLIO MANAGER AT JANUS HENDERSON INVESTORS, SINGAPORE

"The volatility is not over, the environment remains uncertain and some of the impacts are irreversible.

"The discussions with China now appear to be more protracted than initial expectations - we have not reduced China given that we are seeing a more fundamental improvement and there are many levers that China can use in mitigation.

"We are generally neutral weight. We only like two areas in China - cheap high growth China internet names and high yield state-owned enterprise (SOE) attractively valued names."

LIAM ZHOU, FOUNDER OF MINORITY ASSET MANAGEMENT, SHANGHAI

"Trump's wanton policies will inevitably face internal and external pressure, so they're not sustainable. Higher tariffs won't address issues such as the trade deficit, the manufacturing sector's hollowing out, and government debt problems. Instead, it will trigger U.S. economic recession, and dent U.S. sovereign creditability.

"China stocks have limited room to fall, as valuations are relatively low, and China has in recent years reduced economic reliance on the U.S., contained property risks, upgraded manufacturing and made technological breakthroughs."

JASON CHAN, SENIOR INVESTMENT STRATEGIST AT BANK OF EAST ASIA, HONG KONG

"Even though it's obvious that the tariffs are targeting China, there is still some room for manoeuvring and negotiations if they can pause tariffs on other countries. Markets still have some hope that at least some discussions could take place. China is also likely to roll out stimulus measures to support the economy and counter the impact of the tariffs in the near future.

"Will the tariffs be rolled back to the level before? The chances of that happening are quite slim. Therefore, even if the market sees some short-term gains, I don't think it will quickly return to previous levels or experience a significant rebound."

CHARU CHANANA, CHIEF INVESTMENT STRATEGIST, SAXO, SINGAPORE

"While this pause does not extend to China, the overall positive sentiment has had a spillover effect, boosting investor confidence in Asian markets, including Hong Kong.

"Investor optimism around a potential US-China deal has also resurfaced after President Trump suggested tariffs on China may have peaked ... Meanwhile, expectations remain high for continued domestic stimulus from Chinese authorities to support growth.

"However, several uncertainties remain and the trade-weighted effective tariff rate is still jumping higher. There is also likely to be plenty of volatility in the coming weeks as negotiation headlines take centre stage."