US-China tariff deal helps tech firms but they ‘remain in Trump’s crosshairs’

The US and China have agreed to cut the over 120% tariffs they have on each other’s imports.

The new deal on cutting tariffs between the US and China has removed economic “uncertainty” for tech firms and their supply chains, but the sector is not “out of the crosshairs” yet, one expert has said.

The two countries have agreed to cut most reciprocal tariffs for 90 days after negotiations in Switzerland over the weekend.

Before the deal, each country had tariffs in excess of 120% placed on the import of the other’s goods, with US tech giants particularly exposed to those tariffs given that many of the biggest firms have their manufacturing base in China.

It has led to reports and concerns that the price of many key electronic gadgets would go up – with gaming firms Sony and Microsoft already confirming price rises for their consoles – and questions raised about what the tariffs could mean for smartphone and other gadget prices in the months to come.

Ben Barringer, global technology analyst at investment firm Quilter Cheviot, said news of a deal between the US and China was good news broadly for the global economy, as well as for the tech sector.

“Today’s announcement of a US-China deal on tariffs is positive on a number of fronts. Firstly, it is a de-escalation of the trade war which had got to the point of effectively ceasing any meaningful trade between the US and China,” he told the PA news agency.

“Secondly, this has been a very professional and well managed announcement – it highlights the seriousness of things and ensures markets and companies can respond accordingly.

“The terms of the deal also show the two sides are working to prevent any decoupling of the world’s two largest economies. And finally, we now have a high and low watermark for tariffs following the UK and China deals, meaning investors now know the playing field and allowing it to articulate the problem and as such the appropriate response.

“This is why we have seen share prices react positively. Within the tech sector specifically, we are essentially seeing a reversal of the losers when the tariffs were first announced, with Apple rebounding strongly. It has the largest exposure to goods being imported from China so it is natural that it is the big beneficiary here.

“However, the removal of the uncertainty also allows the economic picture to improve somewhat – although worth noting these are still harsh tariffs and we don’t know what awaits at the end of the 90 days.

“As a result, IT and advertising spend can be properly planned, and consequently pre-market share prices in the likes of Meta have risen sharply too. Everything will benefit as a result of a brighter economic environment compared to yesterday.”

But the industry expert warned that all the tariff issues facing the tech sector were not yet solved, as the US president is still to announce specific plans around tariffs on some electronics and semiconductors which were previously given a tariff exemption by Mr Trump.

The White House has said those exemptions would only be temporary while more permanent rates were worked out.

“It is worth noting that tech is not out of the crosshairs of Donald Trump yet, however. We await his plans for the semiconductor industry, with reforms already being trailed,” Mr Barringer said.

“Trump will want chips being made in the US for the US, so there may be a bit of divergence here compared to the overall deal announced.

“This is expected in the coming days, so as ever it is rarely boring when trying to assess Donald Trump’s policy decisions on listed companies.”

By Press Association