GDANSK/BENGALURU: Big Tech and auto shares rose after the US removed smartphones and other electronics from its tariffs on China over the weekend, and after President Donald Trump added new wrinkles into his vacillating trade policy on Monday by suggesting he might grant exemptions on auto-related levies already in place.
Trump’s aggressive tariffs, which would have raised the rate consumers and businesses would have to pay for imported goods by roughly 25 percent, sparked a selloff in US assets, including stocks, the dollar and Treasury bonds. The market rebounded on Monday, but the broad-market S&P 500 index is still down about 8 percent so far this year.
The shifting stances caused investors to question the safe-haven status that America has long enjoyed and sapped both business and consumer confidence. The shock response forced the White House to backtrack, but Trump over the weekend insisted more levies were in store.
Speaking on Monday at the White House, Trump said he was considering a modification to the 25 percent tariffs imposed on foreign auto and auto parts imports from Mexico, Canada and other places. Those tariffs could raise the costs of a car by thousands of dollars, and Trump said car companies “need a little bit of time because they’re going to make ‘em here.”
US automakers developed a highly integrated supply chain that involves sending vehicles in various stages of completion across the borders several times after the passage of the North American Free Trade Agreement that was renegotiated during Trump’s first term. Shares of General Motors and Ford Motor closed 3.5 percent and 4.1 percent higher, respectively, on Monday.
“We share the President’s goal to increase American automotive production, and we appreciate the ongoing dialogue with the Administration. There is increasing awareness that broad tariffs on parts could undermine our shared goal of building a thriving and growing American auto industry, and that many of these supply chain transitions will take time,” said Matt Blunt, head of the American Automotive Policy Council representing Ford, GM and Stellantis, in a statement on Monday.
This weekend’s exemptions suggest the White House was becoming more aware of the pain that tariffs had in store for inflation-weary consumers, especially on popular products such as smartphones, laptops and other electronic devices. However, his promise of more tariffs on other key sectors like semiconductors as soon as next week leaves business in a state of flux. Monday afternoon, the White House said it had launched investigations into whether imports of pharmaceuticals and semiconductors threaten national security, which could be a precursor to slapping tariffs on those products.
“Not only is the scope of the tariff globally hard to grasp, but the uncertainty means businesses will have little confidence in their planning,” said economists at Morgan Stanley on Monday.
Trump and other administration officials, including Commerce Secretary Howard Lutnick, have said tariffs are necessary for boosting American manufacturing, and are critical to the White House's tax plans.
However, the tax on imports — which BlackRock estimated on Monday now comes to about 20 percent following the pullback on tariffs on tech imports — has undermined business and consumer confidence. Luxury goods maker LVMH reported a drop in US sales in the most recent quarter, while company executives said they may have “some capacity” to boost product — though its facilities in the US have faced notable problems.
“Prolonged uncertainty raises the risk of recession. It may drag on corporate investment and delay longer-term commitments,” BlackRock wrote, adding that the risk of a short-term accident had eased due to the pullback on tariffs.
Big Tech shares slumped in the past two weeks as tit-for-tat tariffs between Washington and Beijing stoked fears of higher costs, softer consumer demand and the worst supply-chain disruption since the COVID-19 pandemic. Apple rose 2.2 percent on Monday after a 9 percent drop in the past two weeks. Its flagship product, the iPhone — primarily made in China and imported into the US — was at risk of significant price hikes if substantial tariffs persisted, analysts warned.
Trump has maintained a hefty 145 percent tariff on China, including the 20 percent tariffs imposed in February related to fentanyl.
The exemptions cover 20 categories, including computers and laptops, as well as semiconductor devices, memory chips and flat panel displays. Analysts broadly said that the exemptions give companies more time to plan for where tariffs settle out.
“The removal of the worst-case scenario is an element of support (at least temporarily) for the sector,” analyst Alberto Gegra of Equita said.
Other consumer-facing companies including computer hardware makers HP and Dell Technologies rose 2.6 percent and 4 percent, respectively, while chip giant Nvidia edged lower. Nvidia on Monday said it would boost U.S. spending on facilities for AI development — which Trump attributed to the tariff threat.
European and Asian chip stocks also advanced, including major Asian suppliers to companies such as Apple. Foxconn, the largest iPhone assembler, gained 3%, contract laptop maker Quanta rose 5.8 percent and Inventec, which makes AI servers, rose 4.1 percent.
