On Wednesday of last week, President Trump announced a 90-day pause on all reciprocal tariffs enforced on our nation’s trading partners (excluding China), meaning all other countries will see hefty levies diminished to the universal 10% rate. Wall Street cheered the news, with the S&P 500, Dow Jones, and Nasdaq all popping more than 2% since.
Then this weekend, the White House went even bigger… but the move received far less attention.
That is, late Friday night, in a quiet yet seismic shift within the ongoing trade war, the U.S. announced a reciprocal tariff exemption for electronics exported from China – a category that includes computers, smartphones, and semiconductors.
It’s easy to miss among the headlines, but make no mistake: This is the most significant trade war development since “Liberation Day” – even more than the 90-day pause announced last week…
And we think it could mark the beginning of a 20% meltup in stocks.
Why?
Because China exports over $100 billion worth of electronics to the U.S. every year, making it a cornerstone of global commerce.
And now those exports are no longer being hit with the full force of “Liberation Day’s” 145% tariffs. Instead, they’re back to just 20% (at least for now); and the impact on the U.S. tariff picture is huge.
There are four reasons why this electronics exemption could light a fire under the market – and why we think stocks are setting up for a monster rally into summer…
How the $100 Billion Electronics Tariff Exemption Changes Everything
The 90-day tariff pause that triggered last week’s epic relief rally was widely covered by the media and celebrated by investors. But if you look under the hood, it only shaved less than one percentage point off the average U.S. tariff rate – from just under 27% to just over 26%.
But the subsequent electronics exemption slashed the average U.S. tariff rate from just over 26% to around 23%.
That’s more than three times the impact of last week’s sweeping pause.
It’s all about volume.
Electronics represent over 20% of total Chinese exports to the U.S. By reducing tariffs on that major sector, the U.S. essentially cut a massive weight off the global trade system.
And Federal Reserve research shows that each one-point rise in the average U.S. tariff rate cuts GDP by 0.14 percentage points. So, before the exemption, we were looking at a -3.3% drag on U.S. GDP. Now that drag is down to -2.9%.
That’s a big deal.
Especially when you’re trying to steer a slowing economy away from recession.
From 27% to 20% in Two Weeks: A Clear Trend
For weeks, we’ve been advising folks to forget the noise, and watch the numbers.
And here’s what the numbers say:
- After the “Liberation Day” tariffs were announced, the average U.S. tariff rate skyrocketed from 2.5% to nearly 27%.
- The 90-day pause trimmed it down to 26%.
- Friday’s electronics exemption pulled it further down to 23%.
- Reports are now circulating that auto parts may be next. And if those are exempted too, we’ll be looking at a 20% average tariff rate by week’s end.
From 27% to 20% in two weeks…
That’s not just a dip. That’s a trend.
Now, of course, the administration’s rhetoric remains confusing. This past Sunday, April 13, Commerce Secretary Howard Lutnick said the electronics weren’t truly exempt but rather delayed. Trump himself doubled down, saying sectoral semiconductor tariffs were still coming.
But we think that’s
all part of the game.
These walk-backs are calculated. This White House wants to look tough while cutting deals behind the scenes. They’re keeping trading partners guessing; but the tariff rate keeps drifting lower.
And we think it’ll keep on that path, moving toward 10% or less by early summer.
This Tariff Delay Might Just Become Permanent
Trump’s recent 90-day pause applies to reciprocal tariffs. But Lutnick said sectoral tariffs, specifically on semiconductors, will be enacted within the next 30 to 60 days.
That means we now have a one- to two-month window to reach trade deals with China, the EU, and other trading partners before the pause ends and the sectoral tariffs begin.
If deals are struck – and we believe they will be – then the White House’s proposed electronics tariffs may never actually come to pass.
They’ll join the long list of policy threats that never made it to the finish line.
And that’s the point: Timing is everything.
We think the White House is using this window to deescalate quietly and land a few high-profile trade wins, creating a “winning” moment for Trump before tariffs inflict real economic damage.
Why the Latest Tariff Rollbacks Could Fuel a 20% Stock Market Rally
Let’s not overcomplicate this.
Since “Liberation Day,” stocks have moved in lockstep with the average U.S. tariff rate. When the rate spiked from 2.5% to 27%, stocks tanked. Last week, as the rate slid from 27% to 26%, stocks staged their best weekly rally since 2023.And when the average tariff rate fell again to 23% early this week, stocks jumped once more.
There’s now a clear, powerful inverse correlation between tariff pressure and equity performance.
We think that if the tariff rate keeps falling – perhaps toward 20% after auto exemptions, then toward 10% if a deal with China is made – stocks could surge 20%-plus.
That’s the roadmap. And the White House seems to be following it… if not in word, then at least in action.
What the 90-Day Pause Means for Investors
Yes, the commentary from Washington is confusing at best, contradictory at worst.
But look past the bluster to the numbers:
- Reciprocal tariff pause = 90 days of breathing room.
- Electronics exemption = $100 billion of breathing room.
- Average U.S. tariff rate = down four full percentage points from the peak.
- Stock market reaction = clear and bullish.
Now, we’re not calling a straight line up for the markets. Volatility will persist. There will be more reversals and threats.
But the trajectory is what matters. And right now, the tariff trajectory is lower…
Which means stocks should be following a path higher.
In fact, we believe stocks are preparing for a massive rebound into summer.
If you’re looking to make the most of it, consider buying AI 2.0 stocks on this recent dip.
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After all, there’s a reason why every tech titan is suddenly obsessed with humanoid robots.
That’s where we believe the next trillion-dollar investment opportunities will be found. And we’ve found a compelling way to play that next phase of the AI Boom.
Uncover the details on our favorite AI 2.0 pick.
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Questions or comments about this issue? Drop us a line at [email protected].
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