US-China Trade Deal: Which Stocks to Buy Following the Trade Agreement

The US-China trade war, one of the most talked-about economic conflicts of the 21st century, saw a significant shift in 2025 with the announcement of a trade deal aimed at reducing tariffs. The agreement, which lasts for 90 days, could reshape global markets, impacting sectors from technology to consumer goods. As investors closely monitor the situation, the question arises: which stocks stand to benefit the most from this trade agreement?

 

Understanding the US-China Trade Agreement

The US-China trade deal, signed on 12 May 2025, marks a significant step forward in de-escalating the ongoing economic tensions between the world’s two largest economies. The agreement is a temporary 90-day truce, during which both parties have agreed to reduce tariffs on a range of goods.

Key Aspects of the Trade Deal

US Tariffs on Chinese Goods: The US has agreed to reduce tariffs on Chinese goods from 145% to 30%. This reduction is seen as a temporary measure aimed at reducing costs for US consumers and businesses reliant on Chinese imports. The reduction should make Chinese products more affordable in the US market, driving up demand.

China’s Tariffs on US Goods: Similarly, China has agreed to reduce tariffs on US goods from 125% to 10%. This tariff reduction will benefit US exporters, particularly in agriculture, automobiles, and technology, who were previously burdened with hefty tariffs. This change is expected to boost exports and make US goods more competitive in the Chinese market.

De Minimis Shipments: The deal also includes provisions to lower tariffs on low-value shipments (under $800). This is especially beneficial for e-commerce platforms, where small shipments from China are a significant part of business operations. Companies like Amazon and eBay, which rely heavily on Chinese-made products, are expected to see a reduction in shipping costs.

Sector-Specific Tariffs: Some industries, including steel and pharmaceuticals, will continue to face higher tariffs due to specific concerns and national security considerations. This sector-specific approach aims to protect sensitive industries while still providing relief to other sectors.

These changes are expected to have immediate and far-reaching effects on various industries, impacting everything from consumer goods to high-tech sectors. But how are these changes reflected in the markets?

 

Market Reactions and Investor Sentiment

The announcement of the 90-day trade truce has had an immediate and profound impact on global financial markets, with stocks soaring across multiple sectors. The reduction in tariffs has sparked renewed optimism, pushing stock prices higher as investors anticipate a boost in global trade and economic growth.

US Stock Market Response

Following the announcement of the trade deal, the US stock market reacted positively. The S&P 500 rose by 0.7%, the Nasdaq jumped by 1.6%, while the Dow Jones dipped by 0.6%. The Nasdaq Composite, heavily weighted towards technology stocks, rose by 3.3%, signalling investor confidence in tech companies benefiting from the deal.

Tech Giants: Tech stocks, which were among the most impacted by the trade war, saw the most significant gains. Companies like Amazon and Meta, which rely on Chinese manufacturing, stand to gain immensely from the reduction in tariffs.

Asian Market Movements

Asian markets also saw a boost following the trade announcement. Hong Kong’s Hang Seng Index gained 1.8%, and South Korea’s Kospi increased by 1.2%. However, Japan’s Nikkei 225 remained relatively flat, declining by 0.2%, likely due to lingering concerns over the economic implications for the country’s manufacturing sector.

 

Sectors Set for Growth

With the tariff reduction, several sectors are poised to benefit the most from the trade deal. Let’s break down the sectors likely to experience growth.

Technology Sector

The technology sector stands to gain significantly, particularly companies involved in the development of AI, semiconductors, and other high-tech components. The reduction in tariffs on electronic components and semiconductors will likely lead to a decrease in production costs for tech companies.

Nvidia (NVDA): As a leader in AI hardware, Nvidia is well-positioned to capitalise on increased demand in the tech sector. With its critical role in AI infrastructure, Nvidia has seen its stock price rise by over 6% following the deal. The company’s strong growth trajectory is expected to continue as global demand for AI technology accelerates.

Super Micro Computer (SMCI): Specialising in high-performance computing solutions, Super Micro is set to benefit from the increased demand for AI infrastructure. The company’s stock price has experienced upward momentum, aligning with the broader sector trend.

Consumer Goods and Retail

The reduction in tariffs on consumer goods will help companies that rely on Chinese imports, particularly those in the retail and consumer goods sectors. These companies will see reduced costs, leading to higher profit margins and a more competitive market position.

Amazon (AMZN): As one of the largest e-commerce platforms globally, Amazon stands to benefit significantly from the reduction in tariffs. The company’s operations in China have been directly impacted by the tariff war, and the deal is expected to reduce costs for both Amazon and its consumers, boosting overall sales.

Nike (NKE) and Under Armour (UA): Companies like Nike, which source a large portion of their products from China, are expected to see a surge in profits. The reduced tariffs on footwear and apparel will help these companies lower their production costs, leading to improved margins.

 

E-Commerce Platforms

The reduction in de minimis tariffs (on shipments under $800) will benefit e-commerce platforms that rely on low-cost shipments from China. Companies such as Shein and Temu, which have experienced growth in the global market, will see reduced shipping costs, allowing them to offer more competitive prices.

Shein and Temu: These fast-growing e-commerce platforms, which have gained substantial market share in the past few years, are well-positioned to expand further now that tariff burdens on small shipments have been eased. The deal is expected to fuel their growth, especially in markets like the US, where they face less competition due to their price points.

 

Stocks to Consider

Here are some stocks that investors should consider following the US-China trade deal:

Nvidia (NVDA)

Nvidia, a leader in graphics processing units (GPUs) and AI hardware, has been at the forefront of the technology revolution, particularly in sectors like artificial intelligence (AI), autonomous driving, and gaming. With the recent trade agreement, Nvidia stands to benefit in multiple ways:

AI and High-Performance Computing: The reduction in tariffs on semiconductor components will lower production costs for Nvidia, which relies heavily on international supply chains. As the demand for AI technology continues to rise globally, Nvidia’s cutting-edge GPUs are critical for AI infrastructure. The company has already seen a significant increase in demand for its products, with AI adoption in sectors like healthcare, finance, and autonomous vehicles skyrocketing.

Chinese Market Access: Nvidia has a solid presence in China, a country that is rapidly advancing in AI and gaming technology. The tariff reduction will make Nvidia’s products more competitively priced in the Chinese market, potentially boosting sales in one of the largest consumer bases for technology. Nvidia’s deep ties with Chinese tech companies further solidify its potential for growth in the region.

Stock Performance: Since the announcement of the trade truce, Nvidia’s stock has experienced a sharp rise, reflecting investor confidence in the company’s future growth. As the AI market continues to expand, Nvidia is well-positioned to maintain its leadership in the sector. Analysts predict significant growth in Nvidia’s stock, making it a solid choice for long-term investors.

Why Buy Nvidia?

• Strong position in high-growth sectors like AI, cloud computing, and gaming
• Lower production costs due to tariff reductions
• Increased market access in China

Alibaba (BABA)

Alibaba, China’s largest e-commerce and cloud computing company, is one of the biggest beneficiaries of the US-China trade deal. Here’s why investors should consider adding it to their portfolios:

E-Commerce Dominance: As China’s leader in e-commerce, Alibaba stands to benefit from reduced tariffs, which will lower costs for the company’s platform operators and increase the affordability of goods for Chinese consumers. With the rise of digital shopping and the ongoing growth of the middle class in China, Alibaba’s vast e-commerce ecosystem is poised for continued expansion.

Cloud Computing Expansion: Alibaba Cloud is one of the largest cloud providers in Asia and is rapidly gaining market share globally. The company’s growth in cloud computing services is significant, and with reduced tariffs, Alibaba’s cloud business can expand more seamlessly across international borders. The cloud computing sector, particularly in Asia, is expected to see exponential growth in the coming years, and Alibaba is in a prime position to capitalize on this growth.

Improved Regulatory Environment: The easing of regulatory concerns surrounding Chinese tech companies has brought back investor confidence in stocks like Alibaba. The company’s ability to operate freely in both the Chinese and international markets gives it an edge over competitors in the e-commerce space.

Stock Performance: Alibaba has been trading at more attractive valuations compared to its international counterparts, making it a potentially lucrative buy for investors looking for growth in the Asian tech market. With the trade deal in place and the regulatory environment improving, Alibaba’s stock is expected to climb further.

Why Buy Alibaba?

• E-commerce and cloud computing leadership in China and Asia
• Improved regulatory environment for Chinese tech firms
• Potential for growth in international markets

Tesla (TSLA)

Tesla, the world’s leading electric vehicle (EV) manufacturer, is another stock that investors should consider in the wake of the US-China trade agreement. Here’s how the deal benefits Tesla:

Chinese Market Exposure: China is not only the largest EV market in the world but also one of the key production bases for Tesla. The tariff reduction on US-made goods, especially electric vehicles, directly benefits Tesla, as it makes the company’s vehicles more affordable for Chinese consumers. With Tesla’s Gigafactory in Shanghai, it can continue ramping up production for the Chinese market while benefiting from lower tariffs on its US-made parts and vehicles.

Increased Demand for Electric Vehicles: The global push towards green energy and electric vehicles has been gaining momentum. With the easing of trade tensions between the US and China, Tesla is likely to see increased demand for its vehicles in China, as the country accelerates its transition to cleaner energy solutions. In addition, government incentives for electric vehicles in both the US and China are expected to further bolster sales.

Innovation and Expansion: Tesla continues to innovate, with advancements in autonomous driving technology and energy storage solutions. The trade deal provides Tesla with the opportunity to further expand its operations, not just in China but also in other international markets, where it can benefit from the tariff reductions on its vehicles and components.

Stock Performance: Tesla’s stock has been on a remarkable growth trajectory, and this trade deal could serve as another catalyst for its continued rise. With the US and China looking to foster better relations, Tesla stands to gain from lower production and operational costs.

Why Buy Tesla?

• Strong presence in the Chinese EV market
• Government incentives for EVs in both the US and China
• Continued innovation in electric vehicles and autonomous technology

Super Micro Computer (SMCI)

Super Micro Computer, a leader in high-performance computing solutions, is another stock that investors should keep an eye on following the US-China trade agreement.

AI and High-Performance Computing: As AI technologies continue to evolve, the need for high-performance computing (HPC) solutions is increasing. Super Micro is well-positioned to benefit from this trend, as it provides the infrastructure necessary for AI-driven applications across various industries, including healthcare, finance, and tech. The reduction in tariffs on computing hardware will reduce the costs for Super Micro, allowing it to remain competitive in the global market.

Global Expansion: Super Micro’s international reach, particularly in Asia, means it will benefit from lower tariffs on exports to China. As the demand for AI infrastructure increases in China, Super Micro can expect to see growth in its business there, boosting revenue.

Stock Performance: The company’s stock has already shown positive growth, in line with the broader trend in the high-performance computing sector. Super Micro’s stock is expected to continue appreciating as the demand for AI infrastructure intensifies globally.

Why Buy a Super Micro Computer?

• Leader in high-performance computing and AI infrastructure
• Significant growth potential in the global AI market
• Tariff reductions improve cost structures and profitability

 

Risks and Considerations

While the trade deal presents numerous opportunities, there are still several risks to consider:

Temporary Nature: The agreement is only temporary, lasting for 90 days. If either party fails to comply or if tensions escalate again, tariffs could be reinstated, negatively affecting global markets.

Geopolitical Risks: Beyond trade tensions, geopolitical concerns such as military tensions or diplomatic disputes could lead to further disruptions in trade, impacting the broader market.

Global Economic Factors: Inflation and domestic economic conditions, particularly in the US and China, could undermine the benefits of the trade deal, affecting both consumer demand and investor confidence.

 

Conclusion

The US-China trade deal has already had a positive impact on global markets, with significant gains in sectors like technology, consumer goods, and energy. While the trade truce is temporary, it provides an opportunity for investors to capitalise on stock gains in sectors poised for growth.

Investors should consider diversifying their portfolios, focusing on industries that stand to benefit from the deal, such as technology, e-commerce, and energy. At the same time, it is crucial to remain aware of the risks, particularly the temporary nature of the deal and broader economic and geopolitical factors that could impact market stability.

 

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FAQs

• How long will the US-China trade agreement last?

  The current agreement is set for a 90-day period, with both nations working towards a more permanent resolution.

• Which sectors are most likely to benefit from the trade deal?

  Technology, consumer discretionary, and energy sectors are expected to see significant benefits due to reduced tariffs and increased demand.

• Are Chinese tech stocks a good investment following the trade agreement?

  With regulatory concerns easing, Chinese tech stocks like Alibaba and Tencent may present attractive investment opportunities.

• What risks should investors be aware of regarding the trade deal?

  The temporary nature of the agreement, potential future tariff reinstatements, and ongoing geopolitical tensions pose risks to market stability.

• How should investors approach the current market conditions?

  Investors should consider diversifying their portfolios, focusing on sectors poised for growth, and staying informed about developments related to the trade agreement.