Trump's tariff waiver causes market fluctuations: Yields on non-investment grade bonds turn negative, Bitcoin rebounds to $8,590, Apple products are unaffected.
On April 11, President Trump of the United States announced a tariff exemption for certain tech products and paused the reciprocal tariff policy for 90 days, which led to fluctuations in global financial markets. Yields in the U.S. non-investment grade bond market turned negative, and Bitcoin's price rebounded to $85,900. Apple Inc. avoided the pressure of high tariffs because its products were exempted. This policy adjustment provided a temporary boost to the tech and crypto asset markets, but it did not eliminate market uncertainty.
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04/13 10:08
Trump's tariff waiver causes market fluctuations: Yields on non-investment grade bonds turn negative, Bitcoin rebounds to $8,590, Apple products are unaffected.
On April 11, President Trump of the United States announced a tariff exemption for certain tech products and paused the reciprocal tariff policy for 90 days, which led to fluctuations in global financial markets. Yields in the U.S. non-investment grade bond market turned negative, and Bitcoin's price rebounded to $85,900. Apple Inc. avoided the pressure of high tariffs because its products were exempted. This policy adjustment provided a temporary boost to the tech and crypto asset markets, but it did not eliminate market uncertainty.
Non-Investment Grade Bond Market Returns Turn Negative, Spread Widens to Largest Since COVID-19 Pandemic
On April 2, Trump announced a reciprocal tariff policy, initially planning to impose tariffs of up to 125% on Chinese imports, causing significant market volatility. The U.S. non-investment grade bond market was the first to be hit, with the spread widening from 342 basis points on April 2 to 445 basis points on April 4, marking the largest weekly fluctuation since the COVID-19 pandemic. The yield to worst (YTW) increased from 7.6% to 8.4%.
As of April 4, the year-to-date returns of the non-investment grade bond market turned to -1.0%. Among them, BB-rated bonds were flat, B-rated bonds were at -1.4%, and the riskiest CCC-rated bonds dropped to -4.6%, reversing the trend of strong performance in CCC-rated bonds in recent years. In contrast, the S&P 500 Index and the Russell 2000 Index have fallen by 13.4% and 17.8% year-to-date, respectively.
Despite the uncertain short-term market outlook, AXA's U.S. non-investment grade bond team pointed out that default rates remain low, and there is still potential for spread income opportunities over the next 12 months.
Cryptocurrency Market Rapidly Rebounds, Bitcoin Surpasses $85,900
On the evening of April 11, Trump announced a tariff exemption list covering tech products such as smartphones, laptops, semiconductors, memory, and displays, providing a noticeable boost to the tech industry and cryptocurrency market. According to a Santiment report, after the announcement, Bitcoin's price quickly rebounded to $85,900, surpassing the previous resistance level of $83,000.
CryptoQuant noted that although Bitcoin had earlier fallen by 27% this week, marking the largest drop in this cycle, the exemption policy alleviated market pressure, resulting in a mild bullish response in the crypto market. Santiment's analysis suggests that cryptocurrencies are highly correlated with tech stocks, and when tech stocks benefit from favorable policies, investor confidence in crypto assets also rises.
Additionally, the exemption list includes semiconductor manufacturing equipment and computer components, which have long-term positive significance for the crypto industry that relies on this hardware for mining and blockchain infrastructure.
Apple Products Exempted, Avoiding Price Surge Pressure
In the exemption list announced by the Trump administration, almost all of Apple's main product lines were excluded from tariffs, including iPhone, iPad, Mac, Apple Watch, and AirTag. According to Bloomberg, this policy adjustment is a "timely rain" for Apple, avoiding the previously anticipated price surge and supply chain disruption risks.
According to Morgan Stanley estimates, about 87% of iPhones and 80% of iPads are manufactured in China, and facing high tariffs would pose significant cost pressure on Apple. To address potential risks, Apple has already shifted some iPhone production to India, but it remains difficult to completely detach from the Chinese supply chain in the short term.
The exemption measure not only relieved Apple but also stabilized its stock price performance. Previously, Apple's market value had lost over $640 billion due to tariff news.
Content of Tariff Exemption List and Policy Background
According to the U.S. Customs and Border Protection announcement, the exemption list covers approximately $390 billion worth of imported goods, with over $100 billion coming from China. The exempted products include:
- Smartphones and wireless communication devices
- Laptops, desktops, and servers
- Semiconductor manufacturing equipment and integrated circuits
- Memory, hard drives, and displays
- Solar cells and audio-visual equipment
These products will not be subject to the 125% tariff on Chinese goods or the 10% global base tariff, only subject to a uniform 10% additional tariff, retroactive to April 5.
Trump stated that the exemption aims to give U.S. companies time to move production lines out of China, emphasizing that this move is intended to "protect American consumers and businesses from short-term impacts."
