In a significant development for global trade, President Donald Trump announced a landmark trade agreement with China on May 11, 2025, aimed at de-escalating the ongoing trade war between the world’s two largest economies. The deal, described by Trump as “the first of many,” follows months of intense negotiations and comes after a 90-day tariff pause on most trading partners, though China faced steep 145% tariffs until recently. While details remain sparse, the agreement reportedly includes increased Chinese purchases of U.S. goods, including automobiles, and a mutual commitment to reduce certain trade barriers, though not all tariffs have been lifted.
The announcement, made from the Oval Office, sparked immediate optimism in financial markets, with the Dow Jones Industrial Average climbing 1.4% by the close of trading. Treasury Secretary Scott Bessent, who led negotiations alongside U.S. Trade Representative Jamieson Greer in Geneva, hailed the deal as a step toward “fairer trade.” However, analysts caution that the agreement’s impact on specific sectors, like the U.S. automobile industry, remains uncertain. American automakers such as General Motors, Ford, and Stellantis rely heavily on Chinese markets and supply chains, making them sensitive to trade policy shifts.
The trade war’s earlier tariffs disrupted auto production, with companies like Stellantis pausing operations in Canada and Mexico due to import duties. Today’s deal could stabilize supply chains by easing some costs, potentially boosting stock prices for automakers. However, China’s retaliatory 125% tariffs on U.S. goods, partially relaxed under the new deal, still pose challenges. Investors are also wary of the deal’s long-term enforceability, given China’s failure to meet purchase targets in Trump’s first-term trade agreement.
Market volatility has been a hallmark of Trump’s tariff policies, with the S&P 500 down 10% since his January inauguration. While the deal signals progress, economists warn that lingering 10% baseline tariffs and unresolved issues, like non-tariff barriers, could temper gains. For auto stocks, tomorrow’s market reaction may hinge on investor confidence in the deal’s specifics and China’s commitment.
What do you predict will happen to U.S. automobile company stocks tomorrow? Will this trade deal spark a rally, or will caution prevail? Share your thoughts below