At the summit in Argentina’s capital earlier on Saturday, the G20 US President Donald Trump met his Chinese counterpart Xi Jinping to discuss tariffs. It was the first face-to-face meeting between the two leaders since a trade war erupted earlier this year. Presidents have agreed to halt new trade tariffs for 90 days to allow for talks. Trump agreed not to boost tariffs on $200B of Chinese goods from 10 percent to 25 percent on 1 January. Both leaders also agreed to a joint declaration that notes divisions over trade but does not criticize protectionism.It says the US tariffs on Chinese goods will remain unchanged for 90 days but warns: “If at the end of this period of time, the parties are unable to reach an agreement, the 10 percent tariffs will be increased to 25 percent.”
The US is the biggest export market for Chinese goods. Both sides also pledged to “immediately begin negotiations on structural changes with respect to forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions, and cyber theft”, the White House says.
After that, Apple $AAPL was expected to drop, but in return, Apple shares gained 1.8 percent on Monday after the U.S. and China reached a trade cease-fire, just as concern was ratcheting up that the iPhone maker would be next to be entangled in the trade dispute. Apple decided to climb 3.5 percent.
So far, iPhones have been saved from tariffs, but the U.S. has said it would apply the taxes on the rest of Chinese exports to the U.S., which would include the iPhone and other tech products. Fears of tariffs had helped send Apple shares lower by more than 20 percent since the start of October, causing it last week to give up its position of a market leader to Microsoft.
“Under this hypothetical ‘third round’ of tariffs, a majority of all U.S. hardware revenue today – including smartphones, laptops, servers, etc. – would become subject to a 10 percent import duty, due to the China-centric nature of modern tech hardware supply chains,” wrote Toni Sacconaghi, Bernstein technology analyst. “Within our coverage, Apple and HPQ are most exposed; we estimate that such wide-ranging tariffs on Chinese exports to the U.S. would impact 28 percent of Apple’s revenues today, and 25 percent of HPQ’s revenues.”
Shares of chipmakers including Nvidia and Micron also jumped in premarket trading Monday on relief from the pause in the trade war. Nasdaq 100 futures rose 2 percent.