Adria Cimino, The Motley Fool

Sun, May 18, 2025, 3:10 PM5 min read

• The U.S. and China struck a deal to lower import tariffs significantly from levels that had surpassed 100%.

• Tech stocks have been center stage as tariff concerns mounted because they heavily rely on manufacturing abroad.

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Things were looking extremely difficult for technology companies just a few weeks ago. President Donald Trump announced tariffs on imports from countries around the world -- and an especially high tariff of 145% on imports from China. The move could have been disastrous for tech stocks in two ways: Higher prices in general would reduce demand for their products and services, and the higher prices on their imported parts and finished goods would increase their costs.

Wedbush analyst Dan Ives even called the scenario "Armageddon" for technology companies. But, luckily for these players and for investors, the situation has greatly improved. Since Trump's first announcement, he followed up by temporarily exempting electronics from tariffs. That was a first win for the industry. Then, just last week, the U.S. and China reached an initial trade agreement, dropping the level on imports from China to 30%.

Now, Ives says the bull case is "back on the table" for tech stocks such as Apple (NASDAQ: AAPL), Microsoft, and Palantir Technologies. Let's take a closer look at the situation and consider whether now is a good time to get in on these growth players.

First, let's consider the recent agreement between the U.S. and China. The two countries, involved in a mounting trade war that included mutual tariffs of more than 100%, concluded initial discussions with a deal that involves a 10% import tax on the U.S. and a total tariff of 30% on China. This deal is in place for 90 days while the U.S. and China continue discussions, but it's reason to be optimistic about what's ahead.

Meanwhile, considering the level of this tariff, it's reasonable to expect any future tariff specifically for electronics to land at a manageable level, too -- and this would make it possible for these tech giants to continue manufacturing abroad, a key to their current cost and pricing structure.

In a Bloomberg interview last week, Ives said that for Apple, which was preparing to shift U.S. iPhone production to India, the news could "slow down significantly that shift." This is positive for the smartphone giant that now makes about 90% of its iPhones in China -- even if the company goes ahead with the move, it can do so more slowly, making the transition less of a weight on near-term costs.