Good morning! We are entering yet another week of what’s sure to be non-stop tariff adjustments and market volatility — how the White House views tech assets could hold the key. Was this email forwarded to you? Join 190,000 self-directed investors and sign up here. 

Tariff carve-outs don’t mean reprieve

Investors should know by now that every new tariff update comes with a “wait-and-see” caveat.

While markets were closed this weekend, President Trump announced exemptions for smartphones, semiconductor chips and other electronics from his reciprocal levies. The White House said Saturday this is meant to give companies time to move production to the US.

That’s led some strategists to expect Apple, Nvidia and other tech stocks to enjoy a reprieve in trading this week, given their ties to China.

Indeed, markets turned green in overnight trading. Apple traded as much as 7% higher around 11 PM ET Sunday.

But any rally will rest upon shaky ground.

The latest maneuver should not be mistaken for mercy. Commerce Secretary Howard Lutnick made that clear on Sunday, telling ABC that “this is not a permanent sort of exemption.”

While some reporting on Lutnick’s comments suggested that he was “off message” from the rest of the cabinet, it seems true enough to say tech products are not in the clear just yet.

They are simply being shifted from one category of tariffs to another — namely, those tied to Section 232, a provision of the Trade Expansion Act of 1962 that allows presidents to restrict trade if it’s related to national security.

In a seemingly contradictory statement Sunday, though, Trump posted on Truth Social that there was no tariff “exception” announced on Friday, and that certain products would merely be moving into a different tariff “bucket.”

Translation: Uncertainty will still be the defining characteristic of markets for the foreseeable future.

“We are in a much better spot than Friday, and last week heading into this Sunday night,” wrote Wedbush’s Dan Ives after Lutnick’s interview. “But still there is mass uncertainty, chaos, and confusion about the next steps with all focus on China tariff negotiations…”

As far as investors are concerned, these exemptions might remove the immediate sting of a trade war.

But the longer-term threat to supply chains and pricing power remains unresolved.

If anything, you could argue the stakes are now higher. Reclassifying tech hardware as a national security asset opens the door to more severe, less negotiable restrictions.

This holds not only market implications, but military undertones.

It should go without saying that this does little for investors trying to model out earnings for a domestic market that’s underperformed its international peers to start 2025.

The S&P 500 ended Friday 5.7% higher on the week, though it’s still almost 13% lower from its February 19 record high.

Bond markets continue to flash warning signals and the VIX, too, remains elevated, suggesting traders aren’t buying any “crisis averted” story.

It’s important to remember that the Trump administration is not using tariffs as a tool to simply tweak trade imbalances. Markets could stomach that if it were true.

This brand of tariffs resembles a hammer with industrial and geopolitical power, which dramatically widens what markets have to predict.

In any case, the semiconductor carve-out is particularly worth paying attention to.

These chips form the backbone to our phones, computers, cars and defense systems. If the US locks down on chip trade or raises the cost of doing business in the name of security, scores of companies will have to reevaluate their standings.

It’s not the punch the White House paused that investors should sweat. It’s the next one, which could rewrite the rules for the most consequential industry in the world.

Market snapshot

Elsewhere:

🇨🇳China is calling on Trump to drop 145% tariffs. Beijing is also “evaluating the relevant impact” of the reciprocal tariff exemptions on some tech products, including iPhones. China’s Commerce Ministry called the latest carve-out a “small step” to resolving differences. (CNBC)

📊The US economic outlook is dampening. In the opening months of Trump 2.0, economists have dramatically slashed estimates for growth while raising them for inflation and unemployment, according to the WSJ’s quarterly survey. The main reason? Tariffs. (WSJ)

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Rapid-fire:

• A Russian missile strike on Sunday killed at least 34 people in Ukraine (WSJ)

• Bridgewater founder Ray Dalio says he’s watching for risks in the global monetary system and a fallout in the bond market (CNBC)

• Bank earnings began Friday, with JPMorgan reporting a 9% jump in profits and Morgan Stanley beating expectations across the board (Barron’s)

• Minneapolis Fed President Neel Kashkari said Sunday even low tariffs imposed by the US could hurt soybean and other farmers (WSJ)

• Thanks to tariffs, earnings outlooks are taking precedent over actual quarterly results (Opening Bell Daily)

• Why I use the open-source financial data platform that’s trying to out-Bloomberg, Bloomberg (Blog)

Last thing:

About me:

📰 I’m Phil Rosen, co-founder and editor-in-chief of Opening Bell Daily. I’ve published books, lived on three continents, and won awards for my journalism, which has appeared in Business Insider, Fortune, Yahoo Finance, Bloomberg and Inc. Magazine.

I write our flagship newsletter to prepare you for each trading day, unpacking markets, economic data and Wall Street with analysis you won’t find anywhere else. Feedback? Reply to this email, ping me on X @philrosenn, or write me directly at [email protected].