Analysis-With tariffs stalled, Trump’s China policy drifts

The market implication is not “more tariffs” but a higher probability of policy whiplash becoming the baseline state. That is structurally bullish for incumbents with diversified supply chains and pricing power, and bearish for companies whose capex decisions depend on stable export-control regimes. In practice, the biggest hidden winner is not the obvious domestic manufacturing basket; it is firms with optionality to reroute production and re-source inputs without having to make binary China/U.S. commitments.

For semis, the key second-order effect is that inconsistent licensing raises the value of gray-area revenue while simultaneously increasing the discount rate applied to China exposure. That hurts names with concentrated advanced-node demand and helps the ecosystem operators that monetize tooling, packaging, and services across geographies. The signal is also mixed for AI capex: even if sales are permitted episodically, the risk premium on China-bound revenue should widen, which tends to compress multiple expansion in the most China-levered platforms before any actual unit impact shows up.

The other important read-through is that “managed trade” reduces the probability of a clean reshoring supercycle. If policy can be reversed within weeks, corporates will hedge with inventory and dual-sourcing rather than commit to domestic capacity, which means the inflationary benefit to U.S. industrials may be smaller and slower than consensus expects. Over the next 3-6 months, the more tradable setup is around headline volatility and licensing decisions; over 12-24 months, the risk is institutional erosion of U.S. credibility, which is harder to model but likely negative for multinational valuations tied to China growth assumptions.