The Trump administration plans to delay its May 18 deadline for its auto-tariffs decision by up to six months, multiple news outlets reported on Wednesday, citing anonymous sources. The reports sent auto stocks higher on Wednesday.
The headlines sent shares of Ford and General Motors higher in midday trading, gaining as much as 1.6% and 1.4%, respectively. Elsewhere in the auto space, Mercedez-Benz parent Daimler shares went positive on the session and electric-car maker Tesla climbed off session lows, but remained in negative territory.
Wednesday’s reports come at a tense moment for US-China relations as the trade war between world’s two-biggest economies escalated this week.
In a retaliatory measure, China on Monday said it would raise tariffs on about $60 billion worth of US goods. That followed President Donald Trump’s announcement last Friday that the US would more than double the duty on roughly $200 billion in Chinese imports to 25% from 10%.
The Trump administration had weighed implementing tariffs as high as 25% on imported cars and auto parts.
The news Wednesday appears to merely delay, though not resolve, tensions between the US and international trade partners, Morgan Stanley strategists said in a Wednesday note to clients.
Ultimately, they still believe the tariffs as likely to come later this year.
“If this holds, we would characterize this as a modest positive,” Michael Zezas and Meredith Pickett said, adding the delay would “somewhat reduce” the odds of tariffs going into effect with either side possibly moderating their positions.
“However, the core impasse driving the tariff tension, whether or not to include agricultural issues in negotiations, remains between the EU and US,” they said.
This story is developing. Check back for updates.