The Trump administration has pulled back from slapping tariffs on certain products from China such as laptops and mobile phones, providing relief for jittery global investors.
At the start of the month the US announced it would apply 10 per cent tariffs to $300bn of Chinese goods, meaning nearly all imports from China are levied following a ramping up of tariffs in May.
Yet the US trade representative’s office said today in a statement that tariffs would be delayed until mid-December for products such as “cell phones, laptop computers, video game consoles, certain toys, computer monitors, and certain items of footwear and clothing”.
“Certain products are being removed from the tariff list based on health, safety, national security and other factors and will not face additional tariffs of 10 percent,” it said.
The announcement sent US stocks rocketing after they opened lower. The tech-heavy Nasdaq index rose 2.5 per cent shortly after opening and the Dow Jones industrial average and S&P 500 both climbed 1.9 per cent.
European stock markets were dragged out of the red, where they had languished for most of the day. Germany’s Dax index rose 0.8 per cent, the FTSE 100 climbed 0.5 per cent, and the pan-European Euronext 100 rose 0.9 per cent.
Investors sold off safer assets and bought up stocks following the signal of a respite in the drawn-out trade war between the world’s two biggest economies.
The yields on 10-year US government Treasuries rose 5.7 basis points (0.057 percentage points) to 1.706 per cent. Yields move inversely to prices. The Japanese yen, a famous “safe haven” asset, fell 1.5 per cent against the dollar so $1 bought ¥106.69.
“The consumer facing piece of the tariff exemptions boosted the tech sector, specially companies like Apple which rose 4.75 percent after the news,” said Alfonso Esparza, senior market analyst at foreign exchange firm Oanda.
Neil Wilson, chief market analyst at trading website Markets.com, said Trump had acted “to grease the wheels of this market”.
“I buy the argument that Trump didn’t like the way markets have turned and thought he should do something about it,” he said.
“It has certainly has complicated things for the Fed [the US central bank], but ultimately it just looks like it was an easy win for Trump.”