Yahoo Finance US Stocks Rally on Reports Trump May Soften Tone on Auto Tariffs
The major U.S. stock index futures finished higher on Wednesday after Bloomberg News and CNBC reported that President Donald Trump plans to delay the implantation of auto tariffs. The news helped reverse early session and a potential resumption of the previous session’s sell-off. The price action also reflected how sensitive investors have become to trade news in the wake of the near breakdown of U.S.-China trade talks and an escalation of the trade dispute with the addition of new tariffs.
In the cash market on Wednesday, the benchmark S&P 500 Index settled at 2850.96, up 16.55 or +0.60%. The blue chip Dow Jones Industrial Average closed at 25648.02, up 115.97 or +0.45% and the tech-based NASDAQ Composite finished at 7822.15, up 87.66 or 1.17%.
In a story first reported by Bloomberg News and later confirmed by CNBC, the Trump administration plans to delay auto tariffs by up to six months, stopping itself for now from widening global trade disputes.
According to CNBC, “The White House faces a Saturday deadline to decide whether to slap duties on car and auto part imports over national security concerns. After Saturday, the administration would have another 180 days to come to a decision as long as it is negotiating with its counterparts.”
Trump wanted to use the tariffs as a way to gain leverage over trading partners such as the European Union and Japan during ongoing trade talks, however, if he follows through with his tariff plan, he runs the risk of sparking fresh global trade clashes. According to reports, the EU has already prepared a list of retaliatory duties to implement if Trump targets autos.
Trump may have caved to pressure from both political parties especially since he was planning to use a national security justification to slap tariffs as high as 25% on cars. Republicans and Democrats on Capitol Hill have previously criticized the national security grounds used to imposing duties on goods from allies such as Canada.
Naturally, U.S. automakers have also opposed the potential tariffs. The industry group Alliance of Automobile Manufacturers said “imposing tariffs on imported vehicles and parts would be a mistake, with significant negative consequences” for the auto industry and its employees.
The news sent auto stocks higher which helped reverse early losses in the stock market and contribute to the end of the session gains. Fiat Chrysler’s U.S.-listed shares rose 1.9% while Ford Motor and General Motors gained 1.2% and 0.9%, respectively.
The new development also helped offset weaker-than-expected economic data from China which stoked fears that the U.S.-China trade war is dragging down global economic growth.
This article was originally posted on FX Empire
