US stocks push higher despite renewed tariff tensions

June 3, 2025 Umar Ali

The U.S. and China are butting heads again over trade tariffs, particularly on tech products and electric vehicles (EVs). Washington wants to protect American manufacturers from cheap Chinese imports, so it is slapping higher tariffs on some goods.

Now, normally, when you hear the word tariffs, stock markets panic because tariffs can slow down international trade and hurt company profits.

But oddly enough the stock market has been going up.

The S&P 500, Nasdaq, and Dow Jones all saw gains, even after the tariff news hit the headlines.

Think of the Stock Market Like a Crowd at a Concert

Imagine you are at a concert. The band just announced there will be a delay because of some technical issues. Most people grumble, but then the lead singer comes out and promises something exciting. We are releasing a new album next week, and this delay is part of the prep!.

Now suddenly, the mood lifts. Even though there is a hiccup, the promise of good things ahead gets people cheering.

That’s kind of how the stock market works.

Investors are forward looking. They do not just react to what is happening right now, they try to guess where things are going tomorrow, next week, or next year. So, even if tariff tensions rise, if they believe the economy is still strong or the government will support growth, they keep investing.

5 Big Reasons US Stocks Are Rising Anyway

Let us walk through what is really driving the market higher even with those tense tariff headlines.

1. Strong Earnings from Big Companies

Some U.S. companies recently reported better than expected profits. When these big players do well, investors feel more confident about the whole market.

It is like when your favorite local restaurant is full every night you assume the whole neighborhood must be doing well too.

2. The Federal Reserve Is Hinting at Interest Rate Cuts

Interest rates are like the cost of borrowing in the economy. High rates are expensive to borrow at slower growth.
Lower rates, cheaper loans, more spending and investment.

Lately, the Fed (that is the U.S. central bank) has been hinting that it might lower rates later this year which is music to Wall Street’s ears.

3. Tariffs Were Expected

In the stock market world, expectations matter more than surprises.

Traders already expected the tariffs, especially since tensions between the U.S. and China have been simmering for years. So, when it was announced, it was not a shock.

4. AI and Tech Optimism is Fueling the Fire

Le us be real AI hype is real, and tech investors are riding that wave.

Companies in artificial intelligence, semiconductors, and cloud computing are getting a lot of love from the market.These companies are not always as exposed to tariffs as traditional manufacturing.

So while tariffs affect one corner of the market, another corner like tech is booming and pulling the entire stock market up with it.

Real Life Example Grocery Shopping During a Storm

Imagine you hear there is a storm coming next week. So you run to the store to buy supplies even if you are not 100% sure the storm will hit. Everyone’s doing the same, shelves are clearing out, and stores are busy.

That is what markets do when they anticipate economic events. They make moves before the storm hits, not after.

So by the time the tariff storm officially arrived, most investors had already gone shopping. That is why markets did not crash as they had already prepared.

What This Means for Everyday Investors

Now you might be thinking, Okay, cool but what should I do with this info?

Stay calm. Do not panic sell just because of tariff headlines.
Diversify. Do not put all your eggs in one basket tech, healthcare, energy, etc. spread risk.
Watch interest rates. Rate cuts could boost the market even more.
Long-term mindset wins. The market may wobble short-term, but historically, it recovers and grows.

FAQs US Stocks and Tariff Tensions

Q: What exactly are tariffs, and why do they matter?
A: Tariffs are like taxes on imported goods. They can make foreign products more expensive. For companies that rely on imports or exports, tariffs can hurt profits which affects stock prices.

Q: Isn’t China the biggest risk when it comes to tariffs?
A: China is a major trade partner, it affects industries like tech, manufacturing, and agriculture. But the U.S. has a strong domestic market too.

Q: Should I invest in tech stocks now because of AI hype?
A: Tech is hot right now, especially AI. But investing based on hype is risky. Do your research, look at fundamentals, and consider long term potential not just what is trendy.