Tech and Semiconductor ETFs Bounce as Trump Pauses Tariffs—but Uncertainty Lingers

Macro Volatility Sends Mixed Signals for Tech

In a dramatic (or perhaps not) policy reversal, U.S. President Donald Trump temporarily paused planned tariffs on smartphones, computers, and key tech components—including semiconductors, flash memory, and flat panel displays. The original plan imposed 145% tariffs on Chinese imports, sending shockwaves across markets and wiping billions off the valuation of U.S. tech giants like Apple.

The pause, confirmed in guidance from U.S. Customs and Border Protection, is aimed at giving firms time to shift production out of China. However, officials have already hinted that this is only a “suspension” and that a new tariff framework specifically targeting semiconductors and related components is being prepared.

Meanwhile, global markets are still digesting a wave of retaliatory tariffs from China—now at 125% on U.S. imports—adding another layer of complexity to a volatile macroeconomic landscape. Bond yields spiked, the S&P 500 dropped over 5%, and tech was at the center of the storm.

A Fragile Reprieve for Tech Stocks

While markets welcomed the tariff pause, the mood remains cautious. U.S. officials have indicated that tech components may soon fall under a new tariff regime focused on “critical technology re-localization.” If this materializes, the current bounce could prove short-lived.

Goldman Sachs analysts and others warn that the U.S. government is likely to keep trade pressure on China while using the threat of tariffs as leverage to accelerate supply chain shifts. For ETF investors, the result is likely to be continued volatility—even in traditionally resilient tech names.

Big Tech’s Scramble and the Supply Chain Dilemma

Apple, in particular, has taken extraordinary steps to protect its U.S. inventory. At the end of March, the company reportedly chartered six cargo planes from India, carrying 600 tonnes of iPhones to avoid incoming tariffs. Apple’s production in India is now capable of covering nearly half of U.S. demand—a critical pivot as the company tries to diversify away from China.

Still, analysts remain skeptical that a meaningful reshoring of tech manufacturing can happen quickly. Moving full-scale iPhone production to the U.S. would be costly and complex, potentially pushing device prices above $3,000. For now, the company—and the broader tech sector—must manage risk under a regime of shifting rules and unpredictable trade diplomacy.

Europe Prepares Its Own “Digital Tax” Bazooka

Across the Atlantic, the European Union is closely watching Washington’s back-and-forth. EU officials have floated a retaliatory “digital services tax” on U.S. tech firms should trade negotiations fail. The proposed measure—nicknamed the “bazooka”—would significantly increase the tax burden on American digital giants like Apple, Google, and Meta operating in Europe.

While the Commission is pushing this tool under its anti-coercion framework, intended to counteract unilateral economic pressure, there’s a major obstacle: Ireland. As home to the European headquarters of many major U.S. tech firms, Ireland has signaled clear resistance to any EU-wide digital tax, fearing economic fallout. Irish Prime Minister Micheál Martin recently stated he was opposed to such a move, warning it would “only make matters worse.”

This internal division makes consensus difficult, but the mere threat of retaliatory taxation highlights the growing strain in transatlantic tech relations and adds another layer of uncertainty for investors already navigating volatile U.S. policy shifts.

Tech and Semiconductor ETFs Rebound, But Flows Stay Mixed

Despite the volatility, tech and semiconductor ETFs delivered a strong bounce last week, reflecting the relief rally after the tariff suspension:

• VanEck Semiconductor UCITS ETF (SMGB) surged +6.71% WTD, leading chip sector gains. Still -23.84% YTD, it attracted $20.5M in weekly inflows, though remains deep in red for the year.
• Amundi MSCI Semiconductors UCITS ETF (CHIP) rose +6.54% WTD, yet is still down -24.29% YTD, with weekly outflows of nearly €8M.
• iShares S&P 500 Info Tech UCITS ETF (IUIT) gained +5.73% WTD, but remains -22.66% YTD and saw outflows of $13.6M last week.
• SPDR S&P U.S. Tech ETF (SXLK) and Xtrackers MSCI World Info Tech ETF (XDWT) posted weekly gains of +5.85% and +5.05%, respectively, though both continue to struggle YTD.

Across the broader sectors:

• Information Technology ETFs saw a +4.51% WTD return, but net outflows of $137.4M.
• Semiconductor ETFs outperformed with a +5.47% WTD return, though year-to-date flows remain negative at -$148.5M.

The rebound was strong—but investor flows suggest many are still hedging their bets, waiting for a clearer policy signal before fully committing to a sustained rotation back into tech.

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Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.