Unlocking Value in Global Supply Chains: Why the US-China Trade Pact Signals a Bull Market for Strategic Rebalancing

The signing of the US-China Geneva Pact in May 2025 has sparked a seismic shift in global trade dynamics, reducing tariffs and establishing a formal trade negotiation mechanism between the world’s two largest economies. For investors, this marks a pivotal moment to capitalize on sector-specific opportunities in manufacturing, technology, and commodities. With trade uncertainties easing, industries like semiconductors, automotive parts, and base metals are primed for growth, while lingering risks like intellectual property (IP) disputes demand strategic caution.

1. Semiconductors: A Tariff-Free Fast Track to Profitability

The April 2025 exemption of semiconductors, integrated circuits, and SSDs from the 125% U.S. tariff (retroactive to April 5) has unlocked immediate upside for the sector. Companies like Intel (INTC) and Taiwan Semiconductor (TSM), which rely heavily on China for manufacturing and sales, now face reduced headwinds.

Analysts project a 15–20% revenue boost for semiconductor firms by Q4 2025 as cross-border supply chains normalize. Investors should prioritize companies with exposure to advanced process nodes (e.g., 3nm chips) and those positioned to benefit from U.S. subsidies under the CHIPS Act.

2. Automotive: Tariff Reductions Clear the Road for Growth

The U.S. automotive sector faces a critical inflection point. While the 25% auto import tariff remains in place, negotiations to exempt car parts from China’s 125% retaliatory tariffs could slash production costs for U.S. manufacturers. Ford (F) and General Motors (GM), which source Chinese-made batteries and components, stand to gain significantly.

The establishment of a joint trade consultation mechanism also reduces the risk of further escalation. However, U.S. restrictions on Chinese vessel docking fees (peaking at $140/ton by 2028) may complicate trans-Pacific logistics. Investors should favor automakers with dual-sourcing strategies for critical parts.

3. Base Metals: Strategic Reshoring Fuels Demand

The U.S. push to “bring back” strategic manufacturing—including steel and aluminum—creates a tailwind for base metals. While the pact hasn’t explicitly reduced tariffs on base metals, the focus on domestic production underpins demand for commodities like copper and nickel.

Companies like Freeport-McMoRan (FCX), a major copper producer, and BHP Group (BHP), which supplies aluminum, are well-positioned to benefit. The U.S. Infrastructure Investment and Jobs Act (2021) further supports demand for materials used in energy transition projects.

Caution: IP Disputes Remain a Thorn in the Side of Tech

While tariffs ease, unresolved IP disputes continue to plague sectors like AI and biotechnology. China’s addition of 12 U.S. firms to its “unreliable entities list” (April 2025) underscores the fragility of trust. Investors in tech should avoid firms with heavy reliance on Chinese IP collaboration and instead focus on companies with U.S.-centric R&D ecosystems, such as Microsoft (MSFT) or Dow Chemical (DOW).

Investment Strategy: Overweight Export-Oriented Firms

The path forward is clear: overweight companies with exposure to China-U.S. trade corridors while hedging against IP risks. Key recommendations:

• Buy:
• Export-heavy manufacturers like Textron (TXT) (aerospace parts) and PACCAR (PCAR) (truck components).
• Semiconductor leaders with advanced node capabilities (e.g., ASML (ASML)).
• Avoid:
• Firms dependent on Chinese IP or subject to export controls (e.g., Micron Technology (MU)).

Conclusion: The Trade War Isn’t Over, but the Bull Market Is Here

The Geneva Pact has dismantled a major barrier to global supply chain efficiency, but investors must navigate lingering risks like IP disputes and non-tariff barriers. For those willing to act decisively, the reallocation of manufacturing, tech, and commodity production presents a once-in-a-decade opportunity. Act now—before the reshoring rally leaves you in the dust.

The time to rebalance your portfolio is now.