Restaurant Stocks Rebound As US–China Tariff Truce Offers Sector Relief: What's Going On?

Restaurant stocks that were hammered earlier in the week are starting to recover as markets respond to a major trade agreement between the U.S. and China.

What To Know: After sharp declines sparked by President Donald Trump's aggressive tariff policy on Wednesday, a new 90-day truce announced Friday has led to a broad shift in sentiment, especially for consumer-facing sectors like restaurants.

The initial round of tariffs hit restaurant stocks hard due to their exposure to global supply chains, particularly in sourcing food machinery, packaging and commodities from China and other countries.

Starbucks Corp SBUX, which operates over 7,600 stores in China and relies heavily on coffee imports, was among the worst hit, falling more than 11% on Thursday. Chains like Shake Shack SHAK, Dutch Bros BROS, CAVA Group Inc CAVA, Cracker Barrel Old Country Store Inc CBRL and Portillos Inc PTLO also posted steep losses ranging from 7% to over 13% that day, as investors anticipated rising costs and disrupted sourcing channels.

Friday’s announcement of a tariff rollback between the U.S. and China reversed much of the market’s earlier fear. The agreement, reached in Geneva, Switzerland, slashes U.S. tariffs on Chinese goods from 145% to 30% and reduces Chinese tariffs on American goods from 125% to 10%, starting May 14. This decision effectively pauses one of the most aggressive protectionist escalations in recent trade history and removes a significant overhang for the restaurant industry.

The market’s reaction was immediate. U.S. equity futures surged, the dollar strengthened and recession probabilities dropped as optimism returned to the broader economy.

For restaurants, the truce eases concerns over rising input costs, food inflation and supply chain disruptions, giving companies more clarity on operational planning and cost management in the short term.

While many of these stocks are still recovering from the earlier losses, the tariff pause gives breathing room to an industry that was directly caught in the crossfire of escalating trade tensions. Investors are now watching for signs of sustained improvement in consumer sentiment and corporate earnings as the macroeconomic picture stabilizes.

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