Tariff Truce Brings Relief—Here’s Where to Invest in Trade-Sensitive Sectors

The 90-day US-China tariff truce, announced on May 12, 2025, marks a pivotal moment for global trade-sensitive sectors. By suspending 24% of punitive tariffs while retaining a 10% baseline, the agreement has injected optimism into industries like tech, automotive, and consumer goods—sectors that had been reeling from the escalating trade war. For investors, this truce presents a window of opportunity to capitalize on short-term earnings boosts and long-term geopolitical stability. But with risks lurking in the form of U.S. budget reliance on tariff revenue, the stakes are high. Here’s how to navigate the landscape.

The Immediate Winners: Tech, Automotive, and Consumer Goods

The tariff rollback has already sent shockwaves through markets, with key sectors poised to benefit from reduced costs and revived demand.

1. Technology: Supply Chain Relief Fuels Growth

Tech giants reliant on cross-border supply chains, such as Apple (AAPL) and Amazon (AMZN), stand to gain from lower tariffs on components and finished goods. With U.S. tariffs on Chinese imports dropping from 145% to 30%, companies can slash input costs and avoid passing inflationary pressures to consumers.

Apple’s shares surged 7.2% on the truce news, reflecting investor confidence in its ability to streamline supply chains. Similarly, Nvidia (NVDA) and Micron (MU)—both critical to semiconductor manufacturing—could see margin improvements as trade barriers ease.

2. Automotive: Cruise Lines and Airlines Lead the Charge

The automotive and travel sectors, which had faced steep tariff-driven headwinds, are now experiencing a revival. Carnival Cruise Line (CCL) and Delta Air Lines (DAL) jumped 8.3% and 6%, respectively, as reduced tariffs lower costs for imported parts and fuels.

For automakers like Tesla (TSLA) and Ford (F), the truce alleviates pressure on imported batteries and electric vehicle components, though note that strategic sectors like EVs were excluded from the tariff rollback.

3. Consumer Goods: Brands Breathe Easier

Footwear and apparel companies, which source 97% of their products from Asia, saw immediate gains. Nike (NKE) and Under Armour (UAA) rose 6.7% and 6.9%, respectively, as tariff reductions on materials like textiles and rubber ease production costs.

Retailers like Target (TGT) and Best Buy (BBY) also benefited, with Target’s shares up 2.9% as tariff-related profit warnings were withdrawn.

The Risks: U.S. Budget Reliance and Excluded Sectors

While the truce offers clear tailwinds, investors must remain vigilant about two critical risks:

1. Tariff Revenue’s Role in the U.S. Budget Surplus
   The U.S. Treasury had relied on tariffs as a temporary revenue source, with punitive levies contributing an estimated $30 billion annually to the budget. Reducing tariffs by 24% could strain fiscal plans, especially if Congress seeks to replace this revenue through other means, such as hiking corporate taxes.

2. Strategic Sectors Remain Excluded
   The truce explicitly excludes tariffs on pharmaceuticals, rare earth metals, and semiconductors—sectors deemed critical to national security. President Trump’s push to “bring pharma back to the U.S.” means Pfizer (PFE) and Merck (MRK) may face prolonged headwinds, while companies like CREE (CREE) in semiconductors remain exposed.

Actionable Investment Plays

To maximize gains while mitigating risks, focus on:

• Short-Term Earnings Boosts: Prioritize companies with China-U.S. supply chain exposure and immediate cost savings. Amazon (AMZN), Nike (NKE), and Carnival (CCL) are top picks.
• Long-Term Stability Plays: Invest in ETFs tracking trade-sensitive sectors, such as the Consumer Discretionary Select Sector SPDR Fund (XLY) or the Technology Select Sector SPDR Fund (XLK).
• Avoid the Excluded: Steer clear of pharmaceuticals and strategic industries until the 90-day truce evolves into a broader agreement.

Conclusion: Act Now, But Stay Alert

The tariff truce is a game-changer for trade-sensitive sectors, offering a rare alignment of short-term gains and long-term geopolitical hope. Investors who act swiftly to position in tech, automotive, and consumer goods stand to benefit from margin improvements and rising demand. However, the clock is ticking: the 90-day window demands vigilance. Monitor the U.S. budget debates closely and remain ready to pivot if excluded sectors are pulled into the next round of talks. This truce isn’t just about tariffs—it’s a chance to bet on the sectors that will drive global recovery.

The path forward is clear. Act now—before the window closes.