Semiconductor stocks surge on US-China trade reset

Chip stocks are leading the SPDR S&P 500 Trust higher in premarket trading after the US and China agreed to slash sky-high tariffs to more manageable levels for 90 days, with the VanEck Semiconductor ETF up more than 5%.

While bellwether Nvidia and fellow AI leader Broadcom are surging, the gains are being led by smaller stocks in the space like Microchip Technology.

Semis had a carve-out from tariffs to begin with, but this was with the understanding that the industry would face different, sector-specific levies pending the outcome of a Department of Commerce investigation. More to the point, chips go into pretty much everything — if wide-ranging tariffs were going to raise the price of imports and dent demand, semiconductors wouldn’t be immune. Any countervailing tariffs would also pose a risk to US firms’ ability to sell abroad.

In the interim, the Trump administration has done the opposite of restricting exports by signaling that it will rescind a Biden-era regulation that curbed sales of high-powered chips to nations deemed to be geopolitical adversaries of the US, which was slated to go into effect this week.

All future risks related to trade seem to be getting priced out of the market given the direction of travel regarding tariff talks since April 9, when President Donald Trump announced a 90-day pause to reciprocal tariffs for most countries, following a sharp sell-off of US assets.