The US tech stock market has experienced a significant rebound following the joint announcement made during the US-China economic and trade meeting that took place on May 12 in Geneva. The meeting was to address the trade tensions between both countries that started on April 2, following Trump’s Liberation Day tariff announcements.
The aftermath of the liberation day tariffs was followed by a volatile stock market due to investors and businesses hesitating to pursue new endeavors or continue existing ones.
The tariff hike was particularly aggressive to China, as a tariff of 145% was placed on imports from China by the US, to which China retaliated by placing a 125% retaliatory tariff on US imports.
The tech sector in particular was affected by the trade tensions resulting between the two countries from the tariff hike due to its interdependence and reliance on China and the significance China held in the global supply chain.
During the tariff hike, many tech companies, without exception to the Big 7—Amazon, Microsoft, Meta, Nvidia, Google, Apple, and Tesla—experienced losses in the stock markets for days. The Big Seven experienced a significant loss in market value after collectively losing $1 trillion in a single day.
On April 9, Trump called for a 90-day pause on tariffs for all countries except China, then a tariff relief on computers, smartphones, and other tech devices imported from all countries, especially China, on April 12, which provided a momentary relief for tech shares.
The recent meeting between the US and China was in regard to the 90-day pause from which China was previously exempt.
The meeting yielded the results by the inclusion of China in the 90-day pause, which included the suspension of 24 percentage points of the 34% additional ad valorem rate of duty imposed by Trump’s executive order 14257 previously set on April 2 for 90 days, effectively reducing the tariff to 10%.
Reversal of additional tariffs imposed by executive orders 14259 and 14266 made on April 8 to increase the tariff on Chinese goods from 34% to 84% as a retaliatory response to China and on April 9 to modify reciprocal tariff rates to reflect trading partner retaliation and alignment.
China, on the other hand, agreed to suspend 24 percentage points of the 34% ad valorem tariff it had placed on US imports, reducing the tariff rate to 10% during the 90-day time frame and removing other additional tariffs. China also agreed to the suspension/removal of non-tariff countermeasures against the US.
The agreement ended with the creation of a bilateral discussion mechanism between both countries, with He Lifeng, Vice Premier of the State Council, representing China, and Scott Bessent, Secretary of the Treasury, and Jamieson Greer representing the US to continue discussions on economic and trade relations.
Shortly after news spread about the successful trade negotiations with China, stock prices surged, reflecting investor optimism. The S&P 500, a stock market index tracking the 500 largest publicly traded companies in the US, which had plummeted by 12% since April 2, rose by over 3% after announcements of the trade progress.
Apple, which had previously predicted a $900 million loss due to tariffs, experienced a 12.3% increase in stock price barely a week after the announcement, bringing its stock value back to its 50-day moving average, a key technical indicator.
Amazon surged by nearly 8% in stock price hours following the announcements. Meta also surged by 7% in stock price shortly after the announcements. Further into the week, Meta’s stock price grew by 12%.
Tesla, despite its underperformance this year, also had a positive outlook, as its stock value grew by 7% on May 12, and Microsoft had an 11% stock value increase. Nvidia, however, experienced a 25% surge over a five-day period following the announcement, making it the top gainer among the group. Alphabet (GOOGL) stock index daily figures are not specified.
