Tariff Truce: What the US-China Deal Means for Muslim Investors

Written by Haider Saleem
Financial and Political Analyst | LinkedIn / X

A surprise de-escalation in the US-China trade war has rippled across global markets. 

On 12 May 2025, the United States and China agreed to temporarily slash tariffs on each other’s goods, dialing back one of the most aggressive trade standoffs in recent years. 

The agreement offers a 90-day window to continue talks and potentially secure a longer-term trade deal.

This article explores:

1. What the new tariff agreement involves

2. How markets – and halal sectors – have reacted

3. Why Muslim investors should remain cautious

4. Key takeaways for halal portfolios

1. What Just Happened?

Following talks, the US announced a sharp drop in tariffs on most Chinese imports: from 145% down to 30%. China, in return, lowered its own tariffs on US goods from 125% to 10%¹. The mutual pause is expected to last for 90 days, with potential for extension if dialogue progresses.

The announcement followed a chaotic April, when US President Donald Trump imposed sweeping reciprocal tariffs under what he called “Liberation Day” measures².

Markets immediately rallied:

• S&P 500 rose 3.3%
  
• Tech heavy Nasdaq 100 jumped 4%, re-entering bull market territory
  
• Dow Jones gained 2.8%²

Meanwhile, traditional safe havens like gold and US Treasuries fell as risk appetite returned. For many Muslim investors, gold is seen as a Shariah-permissible store of value, particularly during periods of economic uncertainty, making its price movement a key signal in halal portfolio strategies. The US dollar saw its biggest post-election surge since November 2024².

2. What It Means for Markets and Halal Sectors

The tariff pause has boosted sectors heavily exposed to international trade – especially technology, e-commerce, and manufacturing. Companies like Amazon, Nvidia, and Apple surged, as did global shipping firms such as Maersk and Hapag-Lloyd¹.

For halal-focused investors, some key impacts include:

• Positive signals for Shariah-compliant stocks in global trade, logistics, and consumer goods. These are sectors that typically pass halal screens when free from excessive debt or haram income.
  
• Shipping and freight stocks rallied, reflecting a rush by US companies to import Chinese goods before the 90-day window closes⁶.
  
• Tech and electronics stocks rebounded, with some anticipating fewer disruptions in supply chains – though tariffs on sectors like video games and consoles remain¹.

At the same time, gold – often seen as a halal hedge against instability – dipped². This highlights the seesaw between risk appetite and safe haven demand when geopolitical news shifts rapidly.

Note for Muslim investors: Even if a company benefits from lower tariffs, ensure it passes Shariah screening for things like debt ratio, interest income, and sector activity.

3. Long-Term Uncertainty: Not Out of the Woods

While markets are celebrating the truce, many economists and central bank officials warn that risks haven’t disappeared.

Fed Governor Adriana Kugler noted that even reduced tariffs could “boost inflation and weigh on growth”². Sector-specific tariffs and national security concerns – particularly on semiconductors and medical supplies – remain in force.

From Beijing, the mood from business is more restrained.¹

For halal investors, this underscores the importance of distinguishing between short-term sentiment and long-term fundamentals. A volatile trade backdrop can still impact:

• Company earnings consistency
  
• Supply chain resilience
  
• Input costs and pricing power

4. Halal Investor Takeaways

Here are four considerations for Muslim investors navigating this tariff pause:

i. Diversification is More Important Than Ever

This episode reminds us how geopolitical surprises can shake specific sectors. Diversified exposure – across asset classes, geographies, and halal industries – may help cushion volatility.

ii. Avoid Reactive Moves

Markets rallied fast, but it’s uncertain if the rally will last. Halal investors may consider whether companies benefiting from the tariff pause align with their values and long-term fundamentals.

iii. Inflation and FX Still in Play

Even with lower tariffs, import costs might remain elevated. Sectors like food, clothing, and consumer electronics – could still face pricing pressures.

iv. Use Shariah Tools Wisely

Platforms like Musaffa can help screen whether a company is still compliant in light of new revenue sources, debt levels, or changes in sector activity.

Conclusion

 The US-China tariff reset has lifted market sentiment but offers no guarantees. While some halal-compliant sectors may benefit temporarily, longer-term risks persist. For Muslim investors, this is a moment to remain watchful, stay diversified, and prioritize values alongside returns.

References

1. BBC News, “Trump says US-China relations ‘reset’ as markets surge on tariff pause”, 12 May 2025.
   
2. Bloomberg, “Nasdaq 100 Enters Bull Market After US-China Truce”, 12 May 2025.

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