Auto stocks are rising this morning following a report that said China is moving toward cutting its tariffs on U.S.-made cars.
CHINA MOVES TOWARDS CUTTING TARIFFS ON U.S.-MADE CARS: China is moving toward cutting its tariffs on imported U.S.-built vehicles, a move President Donald Trump already boasted about as a concession won during trade discussions in Argentina, Bloomberg reported on Tuesday, citing people familiar with the matter. A proposal to decrease tariffs on cars produced in the U.S. to 15% from the current 40% has been submitted to China's Cabinet to be evaluated in the coming days, according to the report. The step has not yet been finalized and may still change, the sources cautioned. Publicly traded stocks in the sector include Ford (F), General Motors (GM), Fiat Chrysler (FCAU) and Tesla (TSLA).
WHAT'S NOTABLE: In July, China raised the tariff on U.S.-made cars to 40% as part of retaliatory measures against the U.S. Following a summit on trade in Buenos Aires earlier this month at the G-20 Summit, Trump tweeted that China had agreed to "reduce and remove" tariffs on imported American-made cars, which Chinese officials did not immediately confirm or deny. At the time, a Foreign Ministry spokesman commented that "[President Trump and President Xi] instructed their economic teams to work toward the direction for removing all tariffs for win-win outcomes and mutual benefit." According to the U.S. Department of Commerce, U.S. automobile exports to China were worth $9.5B last year.
MOVE MAY BE BENEFICIAL FOR TESLA: Tuesday's news may beneficial for automakers like Tesla, whose vehicle sales in China plunged 70% in October, according to a China Passenger Car Association report obtained by Reuters. According to an official of the country's passenger car association, Tesla sold just 211 cars in China in October. Tesla previously said tariff increases on auto imports were hurting its sales in the country and that it would cut prices to make its cars "more affordable" and absorb more of the hit from the tariffs. Tesla has also begun a tender process to construct its Shanghai Gigafactory to help it avoid rising tariffs on U.S. imports.
PRICE ACTION: In morning trading, shares of Tesla are up fractionally, Ford is up 2.4%, GM gained 3% and Fiat Chrysler rose 2%. Other automakers in the space also moved higher, including BMW (BMWYY), Volkswagen (VLKAY) and Daimler (DDAIF).
Ford
+0.195 (+2.29%)
General Motors
+0.93 (+2.70%)
Tesla
+1.73 (+0.47%)
Ticker changed to STLA
+0.34 (+2.22%)
BMW
+ (+0.00%)
Symbol is now VWAGY
+ (+0.00%)
DDAIF
+