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Help me understand the next upcoming 90 days for the tarrif negotiation and market reaction

4/17/2025 09:42am

Aime

The deep research logic is organized as follows: 

Okay, let's tackle this question about the next 90 days of tariff negotiations and market reactions. The user is interested in the NASDAQ Composite, which is tech-heavy, so I need to focus on sectors like tech, semiconductors, and how they might be affected. 

First, I'll start by looking at the references provided. The EU, US, and other countries like Japan are entering a 90-day pause on tariffs. The EU's suspension is a strategic move to negotiate, but they're keeping options open. The US is using this pause to push for deals, especially with Japan and others. China isn't included in the pause, so tensions there remain high.

The market reactions so far have been mixed. The initial tariff announcements caused a drop in the S&P 500, but after the 90-day pause was announced, there was a rebound, especially in tech stocks like Apple and Nvidia, which got temporary exemptions. However, the Treasury Secretary mentioned that these exemptions are temporary, and more tariffs, especially on semiconductors, are coming soon. That's a risk for tech companies.

Looking at the sectors, semiconductors and automotive are key. The US is planning to announce semiconductor tariffs over the next week, which could impact companies like Nvidia and AMD. The automotive sector is also affected by tariffs on steel and aluminum, which are part of the initial tariffs. The EU's countermeasures, if not resolved, could hit US exports like bourbon and yachts, affecting related companies.

Supply chains are a big concern. The GEP index shows that North American manufacturers are cutting back due to tariffs, while Asian suppliers are ramping up. This could lead to a shift in global supply chains, with companies trying to diversify their suppliers to avoid tariffs. The payments industry might benefit from cross-border solutions, but e-commerce could suffer if consumers shift to domestic markets.

Institutional investors are adjusting their positions. The NASDAQ's tech-heavy composition means they're sensitive to tariff changes, especially in sectors like semiconductors. The recent market rebound post-April 16 might indicate some optimism, but the 90-day window is crucial. If negotiations fail, markets could face another downturn.

I need to structure the answer to cover the key points: the 90-day timeline for negotiations, sector-specific impacts (tech, semiconductors, automotive, steel/aluminum), supply chain vulnerabilities, and institutional reactions. Also, highlight the NASDAQ's exposure to tech and how the upcoming semiconductor tariffs could affect it.

Make sure to cite the references properly. For example, the EU's suspension is from references 1-5, the US-Japan talks from 9, the tech exemptions from 16-17, and the semiconductor tariffs from 19. The supply chain analysis from 26-29 and institutional positioning from 35.

Conclude with a summary that ties everything together, emphasizing the risks and opportunities for the NASDAQ, especially tech stocks, and the importance of the next 90 days in shaping global trade and market sentiment.

Concluding Statement:
The next 90 days will be pivotal for resolving global trade tensions, with critical deadlines for U.S.-EU, U.S.-China, and U.S.-Japan negotiations. Market reactions will hinge on progress in these talks, sector-specific tariff impacts, and institutional positioning. Below is a detailed breakdown:

1. Key Negotiation Deadlines & Geopolitical Dynamics

U.S.-EU Talks: The EU suspended retaliatory tariffs on $23 billion of U.S. goods for 90 days, conditional on "satisfactory" negotiations ¹². The EU seeks a "zero-for-zero" tariff deal on industrial goods, while the U.S. aims to address trade imbalances in steel/aluminum and autos ²⁴.
U.S.-Japan Talks: Japan faces a 10% baseline tariff plus steep levies on autos (24%) and steel/aluminum. Treasury Secretary Scott Bessent emphasized a goal of finalizing a deal within the 90-day window ⁵.
U.S.-China Escalation: China remains excluded from the 90-day pause, with U.S. tariffs rising to 145% (up from 84%) and China retaliating with 125% tariffs on U.S. goods ⁶. Both sides have signaled a willingness to negotiate but demand mutual respect and reciprocity ⁶.

2. Sector-Specific Market Impacts

Tech/Semiconductors

Temporary Relief: The U.S. exempted consumer electronics, servers, and GPUs from tariffs, benefiting Apple (+6.3% premarket) and Nvidia (+3%) ⁷⁸. However, Treasury Secretary Bessent clarified these exemptions are temporary, with semiconductor tariffs likely announced "over the next week" ⁹.
Long-Term Risks: U.S. plans to impose tariffs on semiconductor imports (e.g., from Taiwan/China) could disrupt global supply chains and raise costs for companies like AMD, Qualcomm, and ASML ⁷⁹.

Automotive/Steel/Aluminum

U.S. Tariffs: The 10% baseline tariff applies to all countries, with autos facing additional 24% levies ⁵¹⁰. This pressures manufacturers like Toyota (Japan) and Volkswagen (EU) to adjust production chains.
EU Countermeasures: If negotiations fail, the EU will reimpose tariffs on U.S. exports like bourbon, yachts, and industrial machinery ¹².

Global Supply Chain Vulnerabilities

North American Pullback: U.S. manufacturers reduced purchasing activity by 8% in March due to tariff uncertainty, while Asian suppliers operated at near-full capacity ¹¹.
Friendshoring/Nearshoring: Companies are accelerating moves to diversify suppliers outside high-tariff regions (e.g., Vietnam/Taiwan) ¹²¹³.

3. Institutional Investor Positioning

Tech Sector Focus: The NASDAQ Composite’s tech-heavy composition (e.g., Apple, Nvidia) aligns with the temporary exemptions, but investors remain cautious about looming semiconductor tariffs ⁷⁸.
Buybacks & Liquidity: Companies like JPMorgan Chase and Adobe increased treasury stock purchases (+6.44B and +3.24B, respectively) to capitalize on market volatility ¹⁴.
Post-April 16 Rebound: The S&P 500 rose 9.5% on April 8 after the 90-day pause announcement, but institutional investors are likely hedging against a potential "cliff" if negotiations fail ¹⁵¹⁶.

4. Critical Risks & Opportunities

Tariff-Induced Deflation/Recession: U.S. retail sales surged 1.4% in March as consumers front-loaded purchases ahead of tariffs, but sustained inflation pressures could emerge if deals collapse ¹⁶.
Geopolitical Alliances: The U.S. and EU may form a "tariff alliance" against China, leveraging their combined economic power to influence global trade rules ¹⁷.
Supply Chain Resilience: Firms investing in agile global mobility (e.g., immigration flexibility, localized production) are better positioned to navigate tariff volatility ¹².

Conclusion

The next 90 days will test the resilience of global supply chains and the effectiveness of U.S. trade policy. For NASDAQ-focused investors, the tech sector’s exposure to semiconductor tariffs and cross-border payment solutions (e.g., Stripe, PayPal) presents both risks and opportunities. A failure to resolve U.S.-China tensions could trigger a broader market sell-off, while successful deals could reignite growth in manufacturing and tech. Monitor the April 15 U.S.-Japan talks and the April 22 semiconductor tariff announcement for critical inflection points.

Key Watchpoints:

U.S.-China tariff rates post-90 days (current: 145% U.S. → 125% China).
EU progress on a "zero-for-zero" deal.
Semiconductor tariff implementation timeline.

This period demands a balanced approach: capitalize on short-term tech rebounds but hedge against systemic trade risks.

Source:

1. The EU will put tariff retaliation on hold for 90 days to match Trump's pause