Nowadays, it’s hard not to take President Donald Trump’s words without a grain of salt.
It’s hard to know when the president is just joking and when he is dead serious.
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Most people assume he is joking when he talks about ignoring the Constitution and running for a third term. Most people assume he’s joking when he talks about annexing Canada as the 51st state. Some people assume he’s joking about suspending habeas corpus and sending U.S. citizens to foreign supermax prisons (while others are deathly scared that he will try to do just that).
So on Sunday, when Trump’s economic acolytes Commerce Secretary Howard Lutnick and Treasury Secretary Scott Bessent began saying that they had a deal with China in place, there was some skepticism.
Related: Ford loses its last cheap vehicle to tariffs
Over the weekend, it was reported that Chinese delegates left trade talks in Geneva, Switzerland, halfway through a meeting with Bessent with no deal.
Still, on Sunday, Bessent and Trade Representative Jamieson Greer said the meeting represented substantial progress with more details to come on Monday.
On Monday, progress was announced, with China dropping its retaliatory duties on American imports to 10% from 125%. The U.S. will also lower its 125% baseline tariff to 10%, but it will also maintain a 20% tariff on the illegal fentanyl China smuggles into the United States.
The move is temporary for both sides, giving each 90 days to hammer out a finalized plan.
Detroit’s Big 3 automakers have publicly praised Trump’s trade war for giving them a leg up in domestic sales, but investors were jumping for joy at the news that a deal had been reached.
Stellantis had to pause production at some of its plants due to tariffs
Christoph Soeder/picture alliance via Getty
Detroit is a big winner from China deal
Detroit’s Big 3 isn’t equally American.
General Motors (GM) and Ford (F) are obviously iconic American brands, but Stellantis (STLA) , formerly Chrysler Dodge, is owned by a French conglomerate.
Ford by far makes the most vehicles in the U.S. of any brand in the world. During its latest earnings call, Ford said it made 300,000 more vehicles in the U.S. than its next closest competitor.
This was reflected in the stock jump on Monday.
Stellantis shares jumped more than 8% in early morning trading Monday, as the international company is the most exposed of the Big 3 to import tariffs.
Meanwhile, General Motors showed more modest growth, rising about 5% at last check.
With its robust domestic production, Ford saw an increase of 3.5% at last check.
Detroit reacts to the new tariff normal
Over the past few weeks, Detroit’s automakers have made some drastic choices in order to prepare for a world with 125% tariffs.
In April, a leaked Ford memo said that the company could turn to raising prices to offset costs from import duties. Later, the company suspended its guidance for the year.
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Last week, Ford sent a notice that it would raise prices on the Mustang Mach-E electric SUV, Maverick pickup truck, and Bronco Sport SUV by as much as $2,000 on some models, due in part to tariffs.
Meanwhile, General Motors also said it was suspending its guidance for the year and pausing a $4 billion share buyback program.
“Because the original guidance didn’t include impact from tariffs, prior guidance can’t be relied upon,” Paul Jacobson, the company’s chief financial officer, said at the time. “We will update when we have more information on tariffs.”
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Stellantis, meanwhile, has paused production at plants in Canada and Mexico and also suspended its full-year guidance.
Monday’s China news does nothing to alleviate these concerns for the Big 3, as there is still much uncertainty about the next steps. However, investors are breathing a sigh of relief as it seems America is finally normalizing relations with its biggest trade partner, China.
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