If there was any doubt about technology’s leading role in the continuing trade war between the U.S. and China, Tuesday’s trading cast it aside.
Technology stocks surged on the U.S. government’s decision Tuesday to postpone tariffs on some products imported from China.
UBS economist Seth Carpenter noted cellphones and laptop computers, which are included in the tariff delay to Dec. 15, are the two largest categories in this tranche of tariffs and represents nearly $80 billion of China imports. Those categories had been planned to be part of a Sept. 1 tariff increase.
But on Tuesday the United States Trade Representative (USTR) said it would delay implementation of the 10% tariff until Dec. 15 from Sept. 1 for a list of products that includes “cellphones, laptop computers, videogame consoles, certain toys, computer monitors, and certain items of footwear and clothing.” The USTR also said it would remove the 10% tariff on certain products “due to “health, safety, national security and other factors.”
“More than half of the tariff [is] delayed,” Carpenter wrote on Tuesday. “The delay effectively puts tariffs on those items out beyond the Christmas season.”
It was a reversal for tech stocks, which had been down 4.1% in August following President Donald Trump’s tariff escalation at the beginning of the month. In the same period, the general market dropped 3.3%.
On Aug. 1, Trump announced plans to impose a 10% tariff beginning Sept. 1 covering $300 billion worth of imports from China. That led to volatility in both the equity and bond markets.
Tuesday’s stock moves are a litmus test for the companies that investors see as most exposed to trade. Best Buy (BBY), the electronics retailer that sells many of the end products where tariffs were delayed, rose 6.5%, while memory-maker Micron Technology (MU) and Apple (AAPL) rallied 4.8% and 4.2%, respectively. Memory chips are found in most consumer gadgets.
Apple may be the tech giant with the largest exposure to the trade war. Before Tuesday’s rally, its stock had been down 5.9% this month.
The company did not immediately respond to a request for comment on the latest tariff developments.
The USTR’s new tariff lists revealed Apple’s laptops and iPhones won’t be levied tariffs until Dec. 15. But the company won’t fully avoid an earlier tariff hit. AirPods and the Apple Watch, key to Apple’s recent strong quarter, are still subject to the 10% tariff beginning Sept. 1, according to product category codes in the USTR document.
If history is any guide, investors could be dealing with a trade war selloff sometime soon. The Trump administration has repeatedly re-escalated the trade conflict with China after other big stock market rallies this year.
Write to Tae Kim at firstname.lastname@example.org