U.S. Tech Stocks Surge as U.S. and China Agree to Temporary Tariff Cuts
U.S. tech stocks, along with the broader stock markets, seemed ready to start the day with a high, as the United States and China on Monday agreed to temporarily cut reciprocal tariffs for 90 days.
Per the deal, reached in Geneva, the U.S. would temporarily shelve the 145% reciprocal tariff on goods imported from China, taking the rate down to 30%; and Beijing would pause the 125% tax it had imposed on goods from the U.S., taking its rate down to 10%.
Tech stocks jumped before the bell, with Chinese exporters Temu and Alibaba’s stocks on the Nasdaq up nearly 9% in pre-market trading. Big U.S. tech firms that rely on China for sourcing and manufacturing, including Apple, Amazon, Tesla, Nvidia, AMD and Meta, were all up 5% to 6% pre-market. Nasdaq Futures rose around 3.8%.
Notably, the deal does not address the U.S.’ recent removal of the “de minimis” exemption, which waived duties on imports valued below $800.
Implications of the Tariff Cuts
The temporary tariff cuts between the U.S. and China have sparked optimism in the tech industry and the stock market as a whole. With reduced tariffs on imports from China, companies like Apple, Amazon, and Tesla stand to benefit from lower manufacturing costs and increased profitability.
Market Response
Following the announcement of the tariff cuts, tech stocks saw a significant surge in pre-market trading. Chinese exporters such as Temu and Alibaba experienced an almost 9% increase in their stock prices on the Nasdaq. Similarly, major U.S. tech companies like Nvidia, AMD, and Meta also saw a 5% to 6% rise in their stock prices.
The Nasdaq Futures market also reflected the positive sentiment, with a 3.8% increase. Investors are hopeful that the temporary tariff cuts will lead to increased trade between the U.S. and China, benefiting both economies in the long run.
Future Outlook
While the temporary tariff cuts are a step in the right direction, it is essential for both countries to work towards a more permanent solution to trade tensions. The tech industry, in particular, relies heavily on global supply chains and any disruptions can have a significant impact on businesses and consumers alike.
As the U.S. and China continue to negotiate trade agreements, investors will be closely monitoring developments to gauge the potential impact on tech stocks and the overall market. In the meantime, the temporary tariff cuts offer a glimmer of hope for a resolution to the ongoing trade dispute between the two economic giants.
