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Published on
April 14, 2025
5 min read
US Temporarily Halts Tariffs on Electronics, Causes European Stock Market to Rally
The European stock market rallied on April 14 after Washington halted tariffs on computers, smartphones and other electronics imported from China, Reuters reported. This move by President Donald Trump offered a breather to the market after weeks of sharp fluctuations.
EU Tech Stock Boost
The STOXX 600 index rebounded 2.1% in early morning trading after recording drops for the last three weeks. Tariff wars between the US and its trading partners, global markets have experienced instability. This instability caused the EU benchmark index to lose close to 12% of its value.
On April 14, indexes in the EU region traded higher than last week as tech stocks boosted European markets. Stocks in Germany surged 2.5% while those in Spain, France, and the UK gained between 1.8% and 2.1%. Semiconductor stocks also rose significantly. EU-based chip making companies like ASML, Infineon, and BE Semiconductor gained between 3.3% and 4.2%. As EU tech stocks rose, banks that are highly sensitive to the economic situation in the region surged by 3.1%. Despite these gains, analysts doubt the situation will last.
“It’s perhaps a sign of the start of the negotiation phase. There’s still more than a little bit of uncertainty around how this will actually play out but investors perhaps see the signs of flexibility. It’s very difficult to take any particular announcement from the U.S. administration and really hang your hat on it and say this is where policy will be going forward. Investors are unlikely to take any particular comment and ascribe too much significance to it,” Moneyfarm Chief Investment Officer Richard Flax said.
Although Trump eased China tariffs on electronics, he announced that duties on semiconductors will be announced later this week. The US is also expected to make a decision about smartphones soon.
A Small Step
The Ministry of Commerce in China reacted to the move to nullify tariffs on electronics, terming it a small step towards correcting the wrongful tariffs imposed by the US.
“We urge the US side to heed the rational voices of the international community and various domestic sectors, to take a major step toward correcting its mistakes, to completely abandon the erroneous practice of ‘reciprocal tariffs’, and to return to the right path of mutual respect and resolving differences through equal dialogue,” A spokesperson from China’s Commerce Ministry said.
The US said the tariff exemption was temporary. As the world absorbed the stock gains that chipmakers in Europe made at the beginning of the week, Goldman Sachs lowered its annual price forecast for STOXX 600 index from 570 to 520. This is the second time that a leading Wall Street investment bank has trimmed its forecast this month. The bank attributed its forecast adjustment to the uncertainty in Trump’s import duty policies.
The EU Central Bank will be holding a policy meeting on April 17 as markets expect a 25-basis-rate cut. Investors will be following policy assessments on how Trump tariffs affect the economic outlook in the region as traders raise predictions of rate cuts. EU traders are hopeful that the deposit rate will hit the 1.63% market by the end of this year, down from 1.94% a month ago.
Country Reactions
In France, the French bank dropped its forecast on invested capital returns for its $5.8 billion acquisition of AXA asset management unit. The revised forecast pushed BNP Paribas stocks to 4.1%. Additionally, stocks in Vallourec surged 5.1% after the metallurgical group announced that it was holding talks with Aldebaran, an investment firm to sell Serimax.
The UK’s FTSE 100 index rose by 1.8% on Monday, April 14 after the uncertainty associated with Trump tariffs caused the index to dip 9% in previous weeks. The Midcap index also surged by 1.7%. Stocks of tech and electronic firms in the Midcap index rose by more than 2%. Raspberry PI, Allianz Technology, and Kainos Group gained between 5% and 7%. Stocks for UK banks also opened the week with a strong performance after they gained 3%.
Even with these stock gains, the UK says it’s still not clear how US tariffs will affect inflation in the country. According to the interest rate setter at the Bank of England, Megan Greene, the situation is complicated by the unpredictable behavior of the US dollar.
