Auto stocks in focus as U.S.-China trade deal eases rare earth supply concerns
Auto stocks are likely to be in the spotlight today after U.S. President Donald Trump announced a new trade agreement with China, aimed at securing a stable supply of rare earth minerals and full magnets, critical components in the automotive industry, especially for electric vehicles (EVs) and hybrid systems.
ADVERTISEMENT According to the deal, a 55% tariff structure will apply to Chinese imports, while China will impose a 10% tariff on U.S. goods.
The deal, which was concluded after two days of talks in London, includes a commitment from China to supply the U.S. with essential magnets and rare earths used in EV motors, batteries, sensors, and high-performance braking systems. In return, the U.S. will ease educational visa access for Chinese students.
'President XI and I are going to work closely together to open up China to American Trade. This would be a great WIN for both countries!!!,' Donald Trump said.Overall, the trade agreement signals a de-escalation in trade tensions between the world's two largest economies and is being viewed as a positive trigger for capital goods, auto, and electronics sectors globally.Rare earths are used in electronics, defence tools, and electric vehicles. Trump's tariff decisions had already caused chaos in global trade. Companies lost billions due to high tariffs and confusion at ports.
ADVERTISEMENT Under the new agreement, China has pledged to supply rare earth elements and 'full magnets' upfront, aiming to restore access to materials essential for U.S. automotive, electronics, and defence sectors.
Also read: Nifty to climb new high by Sept-Oct; bullish on 3 stocks now: Dharmesh Shah
ADVERTISEMENT While the deal directly affects U.S.-China trade, India may stand to gain from reduced input volatility, better raw material access, and improved global market sentiment. For Indian automakers, it's a geopolitical tailwind for both EV growth and export competitiveness.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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