Tariff flip-flops and tech turnarounds: What's really driving wall street's wild ride

2 minutes read

17 April 2025

Tariff flip-flops and tech turnarounds: What's really driving wall street's wild ride

Following a topsy-turvy fortnight, U.S. markets have been on a rollercoaster—one minute shaken by tariff threats, the next lifted by unexpected reprieves. With tech and automobile stocks at the center of the action, and investors fixated on every White House development, let's dissect the true forces driving Wall Street this week.

Tariff relief sparks a tech and auto rally

On Monday, U.S. stocks made a dramatic turnaround. The trigger? The Trump administration's unexpected reversal to exclude smartphones, computers, and semiconductors from the latest tariffs on Chinese imports. This move came just days after a broad 145% tariff was announced, causing shockwaves in global supply chains and investor sentiment.

The market reaction was swift. The Dow Jones leapt 312 points (+0.78%), the S&P 500 increased 0.79%, and the Nasdaq increased 0.64%—all three indices rebounding after a run of losses. Apple, which relies on China for almost 90% of iPhone production, had its stock rise 2.2%, while Nvidia led the chipmakers higher following a White House about-turn on export curbs.

Auto stocks also surged. Trump hinted at a temporary pause on 25% tariffs for carmakers, giving Ford, GM, and Stellantis the breathing room they needed to adjust their supply chains. As the president put it, “I’m exploring options to assist some car companies as they transition to parts manufactured in Canada, Mexico, and other regions, and they require a bit more time”.

Volatility lingers as policy uncertainty bites

Even after the relief rally, market jitters continue to be on edge. The exemptions on electronics are temporary, and Commerce Secretary Howard Lutnick made it unequivocal: "Electronics are from the tariffs, they're in the semiconductor tariffs, which are likely to be implemented in about a month or two." That leaves the specter of increased costs—and reduced profits—over the tech industry.

Investors are also concerned about the wider trade war chess game. China has retaliated with its own tariffs, and the tit-for-tat have made it challenging for companies to make long-term plans. As one strategist put it, "With volatility driven largely by Trump's unpredictable tariff pivots, investors may need to brace for more policy swings.".

The CBOE Volatility Index (VIX) continues high, and sector performance is uneven. Utilities and tech are making small gains, but energy, communication services, and consumer discretionary stocks lag behind. Barely a few stocks are reaching new highs—a testament to just how fearful the market has grown. VIX Index (May '25) shows a recent decline of 4.26% from 27.5 to 26.45 over the past few days, indicating decreasing market volatility.

Global growth slows, but relief rallies hold out hope

The larger picture? Global growth projections are being reduced. S&P Global has just downgraded its 2025 global GDP projection from 2.5% to 2.2% due to "chronic issues of U.S. policy uncertainty, related uncertainties and negative economic spillovers". Inflation expectations are increasing as tariffs drive up the cost of imports, and the Federal Reserve will likely stay cautious with only one rate cut likely this year.

But for all the chaos, times of relief—such as recent tariff waivers—have revealed just how fast attitudes can change. As Allianz's chief economic advisor, Mohamed El-Erian, noted, "Fundamentally, issues remain unresolved… While we can appreciate the calm, we should not grow accustomed to it, as I anticipate volatility is on the horizon”.

For the time being, investors are stuck glued to every headline and deciding whether to view each policy shift as a tactical maneuver or the beginning of a more predictable regime. The one thing for sure? Prepare for more swings to come.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Winvesta. We advise investors to check with certified experts before making any investment decisions.