Auto stocks rose on Wednesday on reports that President Donald Trump plans to delay auto import tariffs by about six months.
With time running out ahead of a Saturday deadline to make a decision on whether to impose tariffs on car and auto part imports over national security concerns, the White House is expected not to press ahead with duties on imported autos, Reuters reported, citing Trump administration officials.
After Saturday, the administration can decide to delay tariffs on autos for 180 days as long as it continues talks with trading partners.
Market participants had feared that Trump would use the threat of the tariffs to gain the upper hand in trade talks with the European Union and Japan.
U.S. auto tariffs would raise the price of both new and used vehicles and dealerships would see employment declines and a decrease in revenue, according to the Center for Automotive Research.
But with the European Union standing ready to retaliate against any potential U.S. levies on autos, the president has seemingly decided that fighting a trade war on multiple fronts may prove too costly.