Sectors Gaining Momentum from the U.S.-China Tariff Truce

The recently announced 90-day tariff truce between the United States and China has sent ripples through global markets, offering a temporary sigh of relief from escalating trade tensions. Both nations agreed to significantly reduce reciprocal tariffs, with the U.S. cutting duties on Chinese imports from 145% to 30%, and China lowering tariffs on U.S. goods from 125% to 10%. This development has refueled investor optimism, spurring gains across various sectors.

Sectors Benefiting from the Tariff Truce – Footwear and Athletic Gear:

Companies in this sector, many of which have production facilities in China, experienced substantial stock gains:

• Nike (NKE): Shares rose by 6.7%, showing investor confidence in reduced production costs due to potentially lower tariffs.
• Foot Locker (FL): The stock increased by 10.1%, benefiting from anticipated cost savings and improved supply chain stability.
• Dick's Sporting Goods (DKS): Shares climbed 11.4%, as the company stands to gain from decreased import expenses.
• Under Armour (UAA): The stock saw a 6.9% uptick, with expectations of enhanced profit margins amid eased trade tensions.

Sectors Benefiting from the Tariff Truce – Apparel Companies:

Apparel brands, many of which source materials and manufacture products in China, also saw positive market reactions:

• Lululemon Athletica (LULU): Shares increased by 7.7%, as the company anticipates reduced costs and improved inventory flow.
• Gap (GPS): The stock rose 7.7%, reflecting optimism over decreased tariff-related expenses.
• Ralph Lauren (RL): Shares went up by 5.2%, benefiting from the potential for lower import duties.
• Abercrombie & Fitch (ANF): The stock gained 5.8%, as the company expects improved margins from reduced tariffs.

Sectors Benefiting from the Tariff Truce – Retail:

Retailers that offer a broad range of products, many of which are imported from China, experienced stock gains:

• Best Buy (BBY): Shares rose by 5.7%, as the company anticipates lower costs on electronics and appliances.
• Amazon (AMZN): The stock increased by 7.2%, benefiting from reduced tariffs on a wide array of imported goods.
• Target (TGT): Shares went up by 2.9%, reflecting expectations of improved profit margins due to decreased import costs.

Sectors Benefiting from the Tariff Truce – Travel Companies:

The travel industry, which had been affected by reduced consumer spending amid trade tensions, saw a resurgence:

• Carnival (CCL): Shares climbed 8.3%, as the company anticipates increased travel demand with improved economic sentiment.
• Norwegian Cruise Line (NCLH): The stock rose 6.6%, benefiting from expectations of higher bookings.
• Royal Caribbean Cruises (RCL): Shares increased by 3.4%, reflecting optimism over a rebound in the cruise industry.
• American Airlines Group (AAL): The stock gained 5.4%, as the airline expects a boost in travel demand.
• Delta Air Lines (DAL): Shares went up by 6%, benefiting from anticipated growth in both domestic and international travel.

Looking Ahead

While markets have welcomed the potential tariff truce as a win for global trade and inflation relief, the 90-day pause is more of a pressure valve than a peace treaty. Investors remain cautious, as the core disputes—intellectual property protections, subsidies, and technology transfers—are far from resolved. Any sign of stalled negotiations or renewed hostility could unwind gains just as quickly as they formed. In the short term, sectors with heavy China exposure may continue to ride the momentum, but sustainable growth will depend on meaningful diplomatic progress, and that remains an open question.