The iShares China Large-Cap ETF ( FXI ) rebounded Wednesday afternoon, rising in the wake of President Donald Trump's announcement of a 90-day suspension of additional tariffs on countries that have not retaliated against U.S. trade actions.

Trump's announcement of a 125% tariff on Chinese imports meanwhile heightened investor fears over U.S.-China tensions, causing large-cap Chinese stocks to lag major U.S. benchmarks.

What To Know: FXI, which provides exposure to large-cap Chinese equities—including Alibaba Group Holding Ltd ( BABA ) – ADR , JD.Com Inc ( JD ) and Trip.com Group Ltd ( TCOM ) —benefited Wednesday afternoon and moved higher from improved sentiment around global trade.

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However, the ETF's upward move was tempered by the fact that China remains a direct target of the administration's escalating trade measures. Trump's simultaneous declaration of a 125% tariff increase on Chinese imports reinforced investor concerns about continued U.S.-China tensions.

Moreover, structural challenges within China's economy continue to weigh on the outlook for Chinese equities. Sluggish domestic growth, ongoing regulatory scrutiny of major technology firms, and currency volatility have all contributed to a more cautious stance among global investors.

While the tariff pause offers some near-term relief, FXI's underperformance relative to the broader market underscores persistent concerns about China's economic trajectory and its strained relationship with the United States.

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