President Donald Trump’s unpredictable trade policy continues to rattle financial markets, eroding business and consumer confidence. While exemptions for consumer electronics over the weekend provided brief relief, looming tariffs on critical sectors like semiconductors and pharmaceuticals have kept investors wary.
Market rally
Markets closed higher Monday after a volatile session driven by rebounds in technology and auto shares. The Dow Jones Industrial Average climbed 312 points, or 0.8%, while the S&P 500 rose 0.8%, and the Nasdaq also advanced over 0.5%. Apple gained 2.2% following a sharp two-week decline, while HP and Dell rose 2.6% and 4%, respectively. General Motors and Ford rallied 3.5% and 4.1% as the White House hinted at delaying planned auto tariff hikes.
Meanwhile, Asian stocks were poised for a cautious open on Tuesday after renewed tariff threats from the White House unsettled US markets. S&P 500 futures dipped 0.4% in early trading, following a nearly 1% rise on Monday. The rally was fuelled by the Trump administration’s decision to temporarily exempt smartphones, computers, and memory chips from sweeping tariffs, offering a reprieve to Big Tech and automakers.
Semiconductor and pharma tariffs loom
Despite the temporary relief, concerns lingered after the White House launched trade probes into semiconductor and pharmaceutical imports, citing national security risks. These investigations, a likely precursor to broader tariffs, could take months but have reignited fears of a widening US-China trade conflict. Strategists from Barclays and JPMorgan warned that markets remain highly vulnerable to abrupt policy shifts.
In bond markets, Treasuries snapped a five-day losing streak, with 10-year yields falling sharply. Treasury Secretary Scott Bessent dismissed fears of a foreign selloff, citing strong demand at recent auctions. Meanwhile, Fed Governor Christopher Waller flagged that Trump’s tariff policy might briefly fuel inflation, but any monetary policy response would hinge on its lasting impact — leaving the door open for potential rate cuts in late 2025.
Global markets
International markets reflected the uncertainty. Hang Seng futures gained 0.8%, Nikkei 225 futures rose 0.4%, and Australian futures added 0.2%. Asian suppliers to Apple and Nvidia also advanced, with Foxconn up 3%, Quanta Computer surging 5.8%, and Inventec rising 4.1%. Analysts caution that despite easing some trade tensions, market volatility remains elevated.