Trump: China will reduce tariffs on US cars, auto stocks surge

A
visitor gets off a new BMW i8 plug-in hybrid sports car during
the Auto China 2016 in Beijing, China, April 25,
2016.
REUTERS/Jason
Lee

• Auto stocks rallied Monday after Trump tweeted on
  Sunday that China will cut and remove tariffs on cars imported
  from the US. 
• The tweet came just after the US and China reached a
  tentative truce on the trade war.
• So far, Trump has posted tariffs on $250 billion goods
  of Chinese goods coming into the US. And China has targeted
  $110 billion worth of US imports.
• Earlier this year, China also raised duties on US auto
  imports to 40%, and slashed auto import tariffs for the broader
  market to 15% from 25%.

Auto stocks are surging Monday after President Donald Trump
said on Sunday that China will cut tariffs on cars imported from
the US. 

“China has agreed to reduce and remove tariffs on cars coming
into China from the US,”
Trump tweeted. “Currently the tariff is 40%.”

“While the words ‘reduce’ and ‘remove’ mean entirely different
things, the market should enjoy some temp. relief,” a team of
Evercore analysts led by Arndt Ellinghorst wrote. “Positive for
BMW and DAI who import their Chinese SUVs from the US (as well as
Tesla who exports all cars globally from US).”

Trump’s tweet came one day after

a dinner
 with 
Chinese
President Xi Jinping
produced a tentative truce on the
trade war between the world’s two largest economies. 

Trump agreed to postpone new tariffs on Chinese imports by three
months and Xi said China would purchase “a not yet agreed upon, but very
substantial” amount of US goods and label Fentanyl a
controlled substance. However, the current 10% tariffs on $200
billion of Chinese imports will jump to 25% if an agreement isn’t
reached by 90 days, the White House said. 

So far, Trump has posted tariffs on $250 billion goods
Chinese goods coming into the US. And China, in retaliation, has
targeted on $110 billion worth of US imports. In July, China also
raised duties on US auto imports to 40%, while slashing auto
import tariffs for the broader market to 15% from 25%, adding a
huge headwind for the
$10.5 billion worth of cars the US ships to China each
year.

And Trump’s tweet gave a huge relief for the automakers
such as BMW and Daimler AG, who manufacture in the US for export
to the world’s biggest auto market.
Here is the
scoreboard of American and European automakers as of 9:35 a.m.
ET: