Trump’s Tariff Exemptions: Market Relief Amid Rising Tensions
Markets Rally on Tariff Exemptions, But Global Trade Tensions Simmer
A fresh wave of optimism swept across global markets—from Asia to Wall Street—after the U.S. announced temporary tariff exemptions for key electronics. However, the move did little to ease the broader anxiety surrounding the ongoing trade standoff. Chinese President Xi Jinping reiterated Monday that no side would benefit from a trade war.
On Wall Street, investor sentiment was upbeat, with the Dow Jones gaining 1% shortly after trading opened, while the S&P 500 advanced by 1.45%, echoing the earlier momentum seen across European and Asian exchanges.
Traders appeared encouraged by what looked like a softening in President Donald Trump’s aggressive trade agenda, which aims to push global manufacturers to shift operations to the U.S. through steep tariffs.
The trade spat has seen tit-for-tat measures: Washington’s tariffs on Chinese imports have surged to 145%, prompting Beijing to counter with its own 125% duties on U.S. goods.
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Despite the positive market reaction to the U.S. announcing late Friday that it would exclude certain high-tech products—like smartphones, chips, and computers—from the latest tariff wave, fresh concerns emerged.
Speaking Sunday, Trump hinted the relief might be short-term. “Nobody is getting a free pass,” he posted on Truth Social. “We’re reviewing the entire electronics supply chain, including semiconductors.”
On Monday, addressing reporters at the White House, Trump struck a more conciliatory tone, suggesting he may offer relief to some automakers hit by the 25% import duties on vehicles. “I’m not trying to hurt anyone,” he said.
China Calls for Complete Tariff Rollback
Reacting to the exemptions, China’s Ministry of Commerce described them as only a “minor adjustment,” insisting that all punitive tariffs be revoked. While visiting Vietnam, President Xi Jinping warned that economic nationalism was a dead end and reiterated that trade wars yield “no winners.”
Temporary Calm?
The current relief traces back to Trump’s early April tariff announcement, which initially applied to multiple countries. Days later, he narrowed the focus to China, giving others a 90-day window under a reduced 10% tariff.
Concerns over a potential recession continue to grow as investors flee U.S. bonds—traditionally considered a safe haven—and the dollar faces downward pressure.
The latest developments involving electronics—a sector where China is particularly strong—have added more unpredictability. U.S. tech giants like Apple, Dell, and Nvidia, which manufacture or source products from China, stand to benefit from the exemptions.
However, this respite may be fleeting. Many of the excluded electronics are expected to be targeted again soon under national security-related tariffs.
Speaking aboard Air Force One, Trump said new semiconductor tariffs—which would impact products ranging from electric cars and smartphones to defense systems—will be unveiled “soon.”
Commerce Secretary Howard Lutnick indicated the duties would likely take effect “within a month or two.”
No Formal Talks Yet
While the White House maintains that a deal with China is still possible, officials say any progress hinges on Beijing making the first move.
In an interview with CBS’s Face the Nation, U.S. Trade Representative Jamieson Greer said there were currently no plans for direct talks between Trump and Xi.
Meanwhile, multiple nations are scrambling to begin negotiations before the 90-day grace period ends. Japan’s Economic Minister Ryosei Akazawa is expected in Washington this week to address the impact of U.S. auto tariffs, which have started eating into Japanese company earnings.
“I’ll negotiate with our national interest in mind,” Akazawa assured lawmakers in Tokyo. “Every day, our companies are taking hits.”
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