European stock markets rose on Monday as investors reacted to Friday’s news that President Donald Trump’s administration will exempt smartphones, computers and other electronics from tariffs.
Both the Morningstar Europe Index and the Stoxx Europe 600 rose 2.6%, pushed higher in particular by financial, energy and tech sector stocks.
German, Italian, French and UK stock markets closed all between 2% and 3% higher.
US stock markets also kicked off Monday’s session higher then changed direction: the S&P 500 rose as much as 1.5% in early trading but trimmed these gains in a couple of hours. By European market close, the US benchmark was up just 0.30%. The same trajectory has been experienced by the the Nasdaq composite, which was just in positive territory after surging 2.5% earlier in the day.
US Treasury yields dipped slightly, with the 10-year bond yield at 4.42%, from 4.46% on Friday. Eurozone bond yields also softened, with the 10-year German bund easing to 2.51%, from 2.56% on Friday and 10-Year Italian BTP at 3.68% from 3.81%.
In currency markets, the euro remained around its three-year high of $1.135 against the dollar.
Is the Stock Market Relief Temporary?
The Trump administration said the exemption was only “temporary” and China responded that “the US had taken a very small step” in rectifying its “mistake”.
“What we’ve realized over the last few weeks is the capricious nature of the US trade policy,” Morningstar chief European market strategist Michael Field says.
Before European markets opened, Japan’s Nikkei 225 closed 1.2% higher, after a significant drop last Friday. At the same time, the Hang Seng Index closed up 2.4%, its best one-day performance since March 18.
Are Tariff Exemptions the First Step in Trade Talks?
There are 20 product categories listed in the US Custom and Border Protection guidelines that are apparently exempt from the 145% tariff imposed by Trump on Chinese imports and the 10% baseline tariff on imports from other countries. A 20% tariff on all Chinese goods remains in effect.
Beyond smartphones and computers, the guidance includes exclusions for other electronic devices and components, including semiconductors, solar cells, flat-panel TV displays, flash drives, and memory cards.
Officially, the White House stated that exemptions were made because Trump wants to ensure that companies have time to move production to the US.
Trump also added to the confusion on Sunday, with a social-media post saying that “nobody is getting off the hook.” He added: “There was no tariff exception announced Friday… they are just moving to a different Tariff bucket.”
Bernstein Research analyst Stacy Rasgon wrote in a note published on Sunday that while it’s not clear what Trump’s ultimate plan is, these exclusions might provide an opening for negotiations.
The biggest category related to China is smartphones. The US imported smartphones valued at more than $41 billion from China in 2024. Apple shares have lost 11% between Trump’s tariff announcement on April 2 and Friday’s close, given its heavy manufacturing footprint in China.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.
