Chip Tariff Exemptions Lift the Market and These Holdings
Here's how stocks are reacting to Trump saying there will be 100% tariffs on imported chips, but not for companies that are 'building in the United States.'
You're reading 0 of 1 free page.
Register to read more or Unlock Pro — 50% Off Ends Soon
The market is moving higher this morning, lifted by shares of Apple AAPL, Nvidia NVDA, Taiwan Semiconductor TSM, and others following word from President Trump that there will be 100% tariffs on imported chips, but not for companies that are “building in the United States.” As we’ve seen recently with similar proclamations, details like how much U.S. manufacturing a company needs to do in order to qualify for the exemption were not clear.
Recognizing that TSM manufactures chips for fab-less semiconductor companies, such as Pro Portfolio holdings Marvell MRVL and Qualcomm QCOM, we are seeing those shares rise as well.
Signs of Pushback
We are, however, seeing some signs of pushback to Trump’s chip tariffs as well as others. The European Union is already indicating that EU companies that export chips to the U.S. will only face a 15% tariff, in line with the 15% tariff for the majority of EU exports. Following the lack of successful tariff negotiations to lower the 39% tariff rate Trump slapped on Switzerland, Swiss politicians are aiming to cancel an order of three dozen F-35A fighter jets, a ~$9.1 billion order, with Lockheed Martin LMT. Also, Prime Minister Narendra Modi indicated India won't compromise on the interests of its farmers, fishermen, and livestock rearers, a day after Trump said he was doubling tariffs on Indian goods to 50%.
It's to be determined as to how all of this plays out and what its role will be as trade conversations with Mexico, Canada, and China, the three largest U.S. trading partners, continue, and other aspects of trade deals are codified.
Corporate Pledges, Manufacturing Reality
The question we keep asking is to what degree corporate pledges to sidestep Trump tariffs will turn into actual U.S. manufacturing and production capabilities. While we are supportive of re-shoring efforts, we understand that building a semiconductor fab typically takes two to three years from start to finish, while a steel mill can take anywhere from two to 10 years, depending on its size and complexity. We’ve seen past corporate announcements move to completion, while others languished or were abandoned. Time will tell how many of these announcements land in the former camp or not.
In the near term, we’ll continue to monitor the flow-through of tariffs on inflation pressures and the impact on corporate margins, consumer spending, and the aggregate impact on EPS expectations.
Coming Up
Coming up, we’ll discuss the implications of Costco's COST July retail sales, and dig into the beat-and-raise June quarter results that are driving shares of Dutch Bros BROS higher this morning.
We’ll also dive into quarterly results from SuRo Capital SSSS, which, in our view, contained few surprises given the company’s preliminary read-through for the quarter in early July.
At the time of publication, TheStreet Pro Portfolio was long AAPL, NVDA, MRVL, QCOM, COST, BROS and SSSS.
