US tariff exemption on smartphones and electronics sets stage for tech market rally

Computers, chips, semiconductors, solar cells and flat panel TV displays among the goods excluded from hefty levy

An Apple store in New York. The exemptions indicate an awareness in the Trump administration of the pain the measures could inflict on inflation-weary consumers. AFP

US President Donald Trump's administration issued an exemption from so-called reciprocal tariffs on electronic goods including smartphones and computers, prompting relief for tech companies such as Apple and Nvidia.

The exceptions also cover other electronic devices and components, including semiconductors, solar cells, flat panel TV displays, flash drives, memory cards and solid-state drives used for storing data, in a nod to consumer concerns about a jump in prices of iPhones and other devices. Most of the exempt electronic items are not made in the US and many are imported from China.

These US tariff exclusions are "a big deal and look like a significant US retreat in the US-China trade war", Gerard DiPippo, associate director of the Rand China Research Centre, said in a LinkedIn post.

"The exclusions have reduced the risk of imports collapsing for some of the largest categories of imports from China that the US relies upon," he said. "Most non-excluded but China-reliant goods are consumer goods. The big exception is lithium-ion batteries."

The exemptions, published late on Friday by US Customs and Border Protection, reduce the scope of the tariffs by excluding the products from Mr Trump’s 125 per cent China levy and his baseline 10 per cent global charge on nearly all other countries.

The move also sets the stage for a rally on tech stocks on Monday.

"There is still clear uncertainty and volatility ahead with these China negotiations ... Big Tech firms like Apple, Nvidia, Microsoft and the broader tech industry can breathe a huge sigh of relief this weekend into Monday," Dan Ives, analyst at Wedbush Securities, said on X. "A big step forward for US tech to get these exemptions and the most bullish news we could have heard this weekend.

"Big Tech is back off the cliff with these exemptions and this changes the entire situation for tech stocks, with this black swan event for the industry removed."

Some analysts interpreted the exemptions as a de-escalation in the US-China trade war.

"We might read these exemptions in part as backing down. Certainly it’s a shift in tactics," Josef Gregory Mahoney, professor of Politics and International Relations and director of the International Graduate Programme in Politics at East China Normal University, told Beijing-based news media CGTN.

"However, the White House is spinning it differently, indicating the overall aggressiveness of Trump’s policies was a taste of what’s to come, that companies are now being granted what they should understand are short-term exemptions, and therefore they should feel the pressure to speed up reshoring efforts."

Asked on Saturday about his reasons for the exemptions, Mr Trump told reporters on Air Force One: "I'll give you that answer on Monday. We'll be very specific on Monday ... we're taking in a lot of money, as a country, we're taking in a lot of money."