San Francisco Frontiers - Trump's tariff exemptions give markets relief, but tensions loom

Wall Street was buoyant, with the Dow Jones index rising one percent shortly after the opening and the S&P 500 up 1.45 percent. This followed boosts on Asian and European markets.

Investors are relieved at the apparent easing of pressure in President Donald Trump's wide-ranging but often chaotic attempt to reorder the world economy by using tariffs to force manufacturers to relocate to the United States.

Tit-for-tat exchanges have seen US levies imposed on China this year rise to 145 percent, and Beijing setting a retaliatory 125 percent barrier on US imports.

But even the electronics tariff reprieve -- that US officials late Friday said would mean exemptions from the latest 125 percent duties against China for a range of high-end tech goods such as smartphones, semiconductors and computers -- brought new uncertainty.

Trump suggested Sunday that the exemption would be only temporary and said he still planned to put barriers up on imported semiconductors and much else.

"NOBODY is getting 'off the hook' for the unfair Trade Balances," Trump blasted on his Truth Social platform. "We are taking a look at Semiconductors and THE WHOLE ELECTRONICS SUPPLY CHAIN."

The Chinese commerce ministry said Friday's move was only "a small step" and all tariffs should be cancelled.

China's Xi warned Monday -- as he kicked off a Southeast Asia tour with a visit to Vietnam -- that protectionism "will lead nowhere" and a trade war would "produce no winner."

- Short-lived relief? -

Trump initially unveiled huge tariffs on countries around the world on April 2.

He then made an about-face a week later when he said only China would face the heaviest duties, while other countries got a global 10 percent tariff for a 90-day period.

The trade war is raising fears of an economic downturn as the dollar tumbles and investors dump US government bonds, normally considered a safe haven investment.

And the latest wrangling over high-tech products -- an area where China is a powerhouse -- illustrates the uncertainty plaguing investors.

Washington's new exemptions will benefit US tech companies such as Nvidia and Dell as well as Apple, which makes iPhones and other premium products in China.

But the relief could be short-lived, with some of the exempted consumer electronics targeted for upcoming sector-specific tariffs on goods deemed key to US national defense networks.

On Air Force One Sunday, Trump said tariffs on semiconductors -- which power any major technology from e-vehicles and iPhones to missile systems -- "will be in place in the not distant future."

"Like we did with steel, like we did with automobiles, like we did with aluminum... we'll be doing that with semiconductors, with chips and numerous other things," he said.

"We want to make our chips and semiconductors and other things in our country," Trump reiterated, adding that he would do the same with "drugs and pharmaceuticals."

The US president said he would announce tariffs rates for semiconductors "over the next week" and Commerce Secretary Howard Lutnick said they would likely be in place "in a month or two."

- Negotiations -

The White House says Trump remains optimistic about securing a trade deal with China, although administration officials have made it clear they expect Beijing to reach out first.

US Trade Representative Jamieson Greer told CBS's "Face the Nation" on Sunday that "we don't have any plans" for talks between Trump and Xi.

The Trump administration also says that dozens of countries have already opened trade negotiations to secure deals before the 90-day pause ends.

"We're working around the clock, day and night, sharing paper, receiving offers and giving feedback to these countries," Greer told CBS.

Japanese Economic Revitalization Minister Ryosei Akazawa will visit Washington for negotiations this week, with his country's automakers hit by Trump's 25 percent tariff on the auto sector.

He warned that Japanese company profits are already "being cut day by day."

"I will do my best, bearing in mind what's best for our national interests and what is most effective," Akazawa said in parliament.

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Q.Taylor--SFF