The News
US President Donald Trump’s decision to exempt some electronics from steep tariffs on Chinese imports offered a reprieve for some of America’s biggest tech companies and signaled a further softening of the president’s aggressive trade agenda.
The Trump administration, which paused its heightened “Liberation Day” tariffs for 90 days last week — except those on China — remains unpredictable, however. US Commerce Secretary Howard Lutnick on Sunday said the electronics exception — which covers smartphones, laptops and other products — was temporary, and that new “semiconductor tariffs” could come in “a month or two,” without offering specifics.
SIGNALS
Trump’s reversal undercuts tariff strategy, adds to uncertainty
The tech reprieve is “an astonishing U-turn” on principles that Donald Trump has championed throughout the entire tariff saga — reshoring American manufacturing and addressing trade imbalances, the BBC’s economics editor wrote. While global markets could bounce back up on Monday as a result, Trump has only added to the overarching chaos and uncertainty, weakening the US’ position in any new trade deal negotiations. The various delays and exemptions also undercut companies’ abilities to make investments and even short-term business decisions. “Every 48 hours, the White House is announcing, or un-announcing, or re-announcing, or creating massive carve outs to, a new trade rule,” The Atlantic’s Derek Thompson wrote. “Why would anyone anywhere build a new factory under these conditions?”
US-China trade war still on
While the tech exemption represents a deescalation in Donald Trump’s trade war with China, tensions will persist: The US still has 145% duties on all other Chinese goods, while Beijing has raised tariffs on American imports to 125%. China’s Commerce Ministry on Sunday said the electronics carveout marked a “small step” to, as Beijing sees it, correcting the situation, and called on Washington to eliminate all of its higher duties. Trump has yet to request a phone call with Chinese leader Xi Jinping, saying Beijing has to ask first — leaving analysts to wonder whether Trump will blink once more, or whether trade talks are even plausible at this point. “It is hard to envisage a meaningful reset in the U.S.-China relationship,” one China economist said.
Apple has dodged a bullet, for now
Tech giant Apple is particularly vulnerable to the China duties, and has been working to diversify its supply chain for years. But the iPhone maker still remains deeply reliant on Chinese factories, and it is highly unlikely to move its manufacturing to the US, experts said: “There is a better chance of me playing in the Masters this weekend [than] Apple making iPhones in the U.S. the next few years; the math and complexity makes it impossible,” one tech stock analyst said. Prior to the walk back, Apple was on the “brink of crisis,” Bloomberg reported: It faced the task of quickly shifting more of its production to India or elsewhere, and the growing likelihood of having to raise prices. “The feeling of uncertainty remains,” but Apple executives are for now “breathing a sigh of relief.”