Chinese electric vehicle stocks are taking a breather this morning after US President Donald Trump decided in favour of delaying new tariffs on foreign imports.
His inaugural address on January 20 was silent on tariffs – and focused instead on national issues like immigration, energy production, and economic policies.
The unexpected delay is serving as a much-needed catalyst for the Chinese EV stocks today, which had been bracing for potential economic disruptions under Trump 2.0.
Shares of Xpeng and Nio Inc are up close to 10% each at writing.
Yuan is also gaining against the US dollar
Trump’s presidential campaign had threatened to impose up to 60% tariffs on Chinese goods.
On Monday, however, the US President did not mention China or announced immediate plans of raising tariffs during his inaugural speech, offering a sigh of relief to the EV investors.
The positive sentiment helped Beijing’s yuan also inch up a little against the US dollar today.
According to analysts, Donald Trump’s decision to hold off on announcing raised tariffs may be a sign that he now wants to take a more measured approach to trade relations with China.
Shares of other Chinese electric vehicle manufacturers like BYD and Li Auto are in the green this morning as well.
Analysts still recommend caution on Chinese EV stocks
The relief rally in Chinese EV stocks on Tuesday suggests the market is fairly optimistic about the prospect of continued cooperation between the US and China.
Nonetheless, some analysts continue to recommend caution as the broader narrative is still that Trump has “delayed” the tariffs and not decided against them altogether.
“The relief might not last long as no one knows if Trump will make some other wild cards.
People don’t know if they should trust him or not,” according to Kenny Wen – the head of investment strategy at KGI Asia.
So far, however, the immediate reaction to Trump’s inauguration has been positive for Chinese EV stocks – and markets will continue to monitor how the Sino-US relations unravel under Donald Trump as the 47th President of the United States.
Trump 2.0 is broadly seen as negative for EV stocks
The rally in shares of the Chinese electric vehicle companies this morning is all the more significant considering many thought of Trump 2.0 to be a negative for EV stocks across the board.
That’s because the Republican leader has been vocal against the Biden administration’s Inflation Reduction Act that offered material subsidies on the purchase of eligible electric vehicles.
There have even been rumours that Donald Trump would move to repeal parts of the IRA that benefit the EV sector.
Other than tariffs, another key area that his inaugural address on January 20th went silent on was cryptocurrencies.
The US President did not mention crypto even once in his speech.
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