The Trump administration announced tariff exemptions on smartphones, computers, and various electronics imported from China late Friday, leading to a rally in US stocks on Monday. The Dow rose 312 points, or 0.78%, while the S&P 500 increased by 0.79% and the Nasdaq Composite gained 0.64%. All three major indexes closed higher after a choppy day of trading.
The exemptions come after President Trump imposed a tariff rate of 145% on imports from China the previous Wednesday. However, the exemptions do not apply to the 20% tariff on imports from China over the country’s role in the fentanyl trade. Apple rallied 2.2% on Monday following the news.
Despite the gains, confusion lingers around the trade war with China. Commerce Secretary Howard Lutnick said on Sunday that the exemptions for electronics are only a temporary reprieve and those products will face separate levies in the near future. Trump also said on Monday he is considering a short-term tariff exemption for automakers.
trump’s tariff exemptions spur stock rally
Ford, Stellantis, and General Motors all surged more than 3% after Trump’s comments. The gains in US stocks followed rallies overseas, with Europe’s STOXX 600 gaining 2.7% and Japan’s Nikkei 225 rising 1.2%.
However, new survey data from the New York Federal Reserve showed mounting pessimism among consumers about the short-term outlook for the economy. Wall Street analysts remain cautious about the impact of tariffs on the economy. Goldman Sachs CEO David Solomon said the climate is a “markedly different operating environment than earlier this year” and the prospect of a recession has increased.
Billionaire Ray Dalio warned that Trump’s tariffs could lead to a recession or worse if not handled well. Analysts at Citi lowered their year-end target for the S&P 500 to 5,800 from 6,500, citing uncertainty surrounding tariffs. The Treasury market is also a major focus for investors this week after experiencing abnormal volatility last week.
The US dollar index slid 0.4% on Monday, while oil prices largely held steady. Gold was down 0.8% after surpassing a record high of $3,200 a troy ounce on Friday.
