Tariff relief gave the U.S. tech sector a brief boost, but fresh semiconductor tariffs, policy whiplash, and weak trade signals have revived market volatility. With inflation risks mounting and no formal China talks in sight, investors are bracing for a bumpy road into 2025.
US Tech Stocks Get Tariff Relief
Just when it looked like the U.S. tech sector might buckle under the weight of sweeping new tariffs, Washington blinked. A temporary exemption for key electronics has thrown a lifeline to firms like Apple and Nvidia, offering short-term relief in an increasingly hostile trade environment. The question is whether this is a genuine policy rethink or just a pause before the next punch.
$100 Billion in Chinese Imports Exempted
In a move that briefly steadied nerves in Silicon Valley, U.S. Customs and Border Protection, under guidance shaped by Trump’s tariff policy, announced it would exempt 20 categories of electronics from the recently unveiled tariff blitz. The exclusions cover an estimated $100 billion worth of products, or about 23% of U.S. imports from China in 2024, including smartphones, laptops, flash drives, and semiconductors, as detailed in an official White House clarification published on 5 April 2025.
For now, these products will dodge the worst of the new measures: the headline-grabbing 125% “reciprocal tariff” and the blanket 10% levy slapped on all imports. A separate 20% tariff, ostensibly tied to China’s role in fentanyl trafficking, still applies. Trade policy now comes with a side of narcotics enforcement, apparently. Crucially, the exemption is retroactive for shipments departing by 5 April, softening the blow for major players like Apple, which had already seen over $640 billion wiped off its market cap after Wall Street’s sharp reaction to the 2 April tariff announcement.
Tech Sector Braces for Next Tariff Hit
Without the exemption, analysts warned, the price tag on high-end iPhones could have leapt from $1,599 to something closer to $2,300, assuming consumers didn’t blink first. So, the policy shift was met with visible relief. Major tech names like Apple, Nvidia, and Microsoft were among the immediate beneficiaries, though few in the industry are under any illusions about the fragility of that relief. With 80% of iPhones assembled in China by Foxconn, unease still lingers across Chinese manufacturing hubs. Workers there are reportedly growing nervous about what’s coming next.
Dan Ives at Wedbush Securities called the exemption a “game changer” for tech investors wrestling with spiralling production costs. Citigroup, taking a broader macro view, estimated it could reduce the damage to China’s economy by 0.4 percentage points, preserving Beijing’s 2025 growth forecast of 4.2% and keeping around 9 million export-linked jobs on the books. China’s Ministry of Commerce offered a predictably measured response, calling it a “small step” in rebalancing trade relations.
Chad Bown, a trade specialist with a long memory, was quick to point out the déjà vu. Trump’s 2018–2019 exemptions promised similar relief. Then they disappeared.
US Tariffs Target Semiconductors
Just when tech stocks were beginning to recover their footing, semiconductors found themselves back in the firing line. A fresh round of tariff warnings rattled markets, reviving fears of prolonged trade disruption and renewed pressure on supply chains.
Speaking from Air Force One, Donald Trump confirmed that new import tariffs on semiconductors would be rolled out within the week. “No one’s off the hook,” he said, framing the move as a push to reduce reliance on foreign suppliers and prioritise domestic production. The message was unmistakable: Washington is still very much in trade war mode.
Commerce Secretary Howard Lutnick added fuel to the fire during an interview on This Week, outlining a plan to target both tech hardware and semiconductors under a Section 232 national security probe. He stressed the need for a robust domestic semiconductor industry, characterising it as essential to U.S. national interests and economic resilience. The administration’s reshoring agenda was on full display, though it’s likely to rattle global tech firms heavily tied to Chinese production.
Deputy Press Secretary Kush Desai told reporters that companies were already “hustling” to reconfigure their supply chains. Meanwhile, Peter Navarro, a familiar hawk in Trump’s trade circle, ruled out the possibility of long-term exemptions. The tone from the White House left little doubt: flexibility isn’t part of the current playbook.
Tariff Whiplash Triggers Market Volatility
Traders barely had time to exhale. Just as markets began pricing in a brief respite, Washington’s policy whiplash reignited the very volatility investors hoped had passed. Equities tumbled, bond yields surged, and sentiment took a nosedive. Again.
The S&P 500, already down 10% since Trump’s 20 January return to office, buckled under renewed selling pressure despite an initial lift in Asian equities. Meanwhile, the yield on the U.S. 10-year Treasury jumped 50 basis points last week. While not extreme in absolute terms, the sharpness of the move underscored growing market unease. Behind the numbers: a wave of investor anxiety that shows no sign of retreat.
Warnings from big names followed. Ray Dalio, founder of Bridgewater, flagged growing recession risks. Minneapolis Fed President Neel Kashkari echoed the concern, citing a collapse in consumer confidence now hovering near COVID-era lows. Over at the New York Fed, John Williams projected inflation could hit 4% in the coming months, citing tariff-related price pressures, according to The New York Times on 11 April 2025. That marked a sobering shift in tone.
Politicians, too, weighed in. Senator Elizabeth Warren described the White House’s approach as “chaos,” arguing that tariff pivots stifle long-term investment and erode business certainty, as reported by CNN on 13 April 2025. From a policy perspective, her assessment wasn’t wildly out of step with market sentiment.
Adam Thierer at the R Street Institute warned that the administration’s tech tariffs could undermine U.S. competitiveness in AI and advanced manufacturing. For businesses already navigating inflation and supply constraints, the added policy volatility is proving harder to hedge than the tariffs themselves.
Trade Tensions Persist as 2025 Outlook Darkens
Any relief the tariff exemptions offered has proved fleeting, and it hasn’t shifted the broader picture. The U.S.–China trade relationship remains stuck in a familiar cycle: politically tense, economically fraught, and structurally unstable. Few market watchers are betting on a rebound any time soon.
Doubt is mounting over the durability of Trump’s manufacturing push. For all the slogans about bringing jobs home, the structural fundamentals haven’t budged. Labour in the U.S. is expensive, and China’s supply chains are deep-rooted, brutally efficient, and not easily replaced. Tommy Xie of Oversea-Chinese Banking Corp suggested Beijing’s muted response may have influenced the exemptions, shielding roughly 20% of its exports from immediate tariffs.
Even Trump’s vague references to “talks” with Xi Jinping haven’t led anywhere meaningful. There are no formal negotiations on the calendar. The semiconductor probe remains active, leaving the fate of the exemptions hanging in the balance.
In the meantime, consumers are bracing for price hikes, firms are scrambling to rejig supply lines, and investor patience is wearing thin. The broader fallout includes fractured supply chains, delayed reshoring plans, and lingering geopolitical uncertainty. All of it is already bleeding into the 2025 outlook. That shadow shows no sign of lifting.
