Tariff Turbulence: Tech Exemptions Spark Relief Rally but Leave Markets Dazed

Equities are kicking off the week with a relief rally, powered by the Trump administration’s Friday night announcement that a swath of electronics—including smartphones, personal computers, and key semiconductor components—would be temporarily exempted from the most draconian round of tariffs. The U.S. Customs and Border Protection's late-night notice carved out exemptions from the 145% tariff on Chinese goods and the 10% global reciprocal levy, sparking cheers across Wall Street and sending U.S. futures and global markets higher. However, the initial optimism has since been clouded by conflicting statements from administration officials, with President Trump himself posting on Truth Social that "nobody is getting off the hook", and reiterating that these measures are temporary.

The move follows April 9’s 90-day pause on reciprocal tariffs, making this the second major tariff reversal in less than a week—a sequence that analysts say highlights the White House’s sensitivity to market volatility. Tech giants stand to benefit the most: Apple, Nvidia, Dell, HP, and Super Micro Computer all rallied in premarket trade, with Apple gaining further relief from the 145% potential hit to its iPhone supply chain. The tariff rollback also includes exemptions for semiconductor manufacturing equipment, which supports U.S. chip players like Intel, Texas Instruments, and GlobalFoundries, along with foreign suppliers like ASML.

Yet, the policy whiplash is proving dizzying for corporate America. Wedbush analyst Dan Ives likened the on-again-off-again strategy to "changing the hole locations for the pros at Augusta during the final round of the Masters", noting that the inconsistency makes it virtually impossible for companies to plan inventories, supply chains, or earnings guidance. “We are in a better spot than we were last Friday,” Ives added, “but the uncertainty around the tech tariff path remains a major overhang for the sector.”

From a market perspective, the short-term reaction has been bullish, as traders interpret the exemptions as a tacit admission that the administration may not follow through with the most extreme aspects of its initial plan. The electronics exemption covers roughly $385 billion worth of goods, including $100 billion in imports from China. According to Barron’s, the average tariff rate for smartphones drops from 119% to 16%, and for PCs and servers from 45% to 5%, significantly softening the economic blow.

Still, risks abound. Commerce Secretary Howard Lutnick and U.S. Trade Representative Jamieson Greer clarified on Sunday that the exemptions are not permanent; instead, products like semiconductors are being shifted to a different category tied to national security, where they remain subject to future tariffs. Additionally, the 20% fentanyl-related China tariffs remain in effect, and many smaller sectors—including apparel and footwear—continue to face the full 145% tariff rate.

Bridgewater founder Ray Dalio added to the unease, warning Sunday that the U.S. is “very close” to a recession due to the trade war’s cumulative effects. Citi strategists echoed the concern in a Monday note, downgrading U.S. equities to Neutral and urging investors to diversify into undervalued overseas markets like Japan and the U.K., which they say are less exposed to U.S. tariff risks.

Bulls argue that the White House’s rapid de-escalation shows a willingness to avoid collateral damage in the stock market, particularly ahead of the Q1 earnings season. Analysts note that tech management teams can now deliver guidance without accounting for punitive new tariffs, providing some breathing room. The SPX appears to have found support around the 5100 level, though many strategists caution against chasing rallies above 5400, citing unresolved geopolitical risks and the lingering threat of sector-specific tariffs.

Bears, on the other hand, see the about-faces as indicative of a chaotic and uncoordinated policy approach. Critics argue that Trump’s retreat from initial tariff threats weakens the U.S. negotiating stance with allies and rivals alike, making it increasingly unlikely that meaningful trade deals can be reached within the 90-day window. Furthermore, while major corporations may be spared for now, the long tail of small- and mid-sized businesses remains exposed to steep import taxes, with little clarity on what comes next.

In short, the electronics exemption has provided markets with a short-term reprieve, helping stave off fears of an immediate demand shock to the tech sector. But the lack of a cohesive long-term trade strategy continues to cloud the outlook for equities and global growth. More details are expected from the White House later this week, and attention will turn to upcoming earnings from companies like Goldman Sachs, Bank of America, and Netflix for further clues on how businesses are navigating the storm. Until then, investors are left navigating a market where policy can change as fast as a tweet—and where certainty remains in short supply.