By Stephen Wilmot

The U.S.-China truce trade is on, and the auto industry is center stage, thanks to its reliance on global production hubs and supply chains.

Shares in Mercedes-Benz and BMW rose roughly 5% Monday. The German companies both make sports-utility vehicles in the American south for the U.S. market and for global export.

The cheaper SUVs they sell in China are manufactured locally. But the most luxurious models come from the U.S. and were caught in the tit-for-tat tariffs now being temporarily unwound.

BMW said in March that tariffs between the U.S. and China would cost it a "low three-digit-million" euro amount, including on parts shipped from China to its plant in Spartanburg, South Carolina.

Chinese parts are used throughout the industry, including in U.S.-built vehicles. The prospect of lower tariffs on parts helped lift Stellantis shares 7% in Milan. The maker of Jeep SUVs and RAM trucks is listed on both sides of the Atlantic. Detroit peers Ford and GM also rose in premarket trading.

Another strong performer in Europe was Volvo Cars, up 8%. The company, majority-owned by China's Geely, is particularly reliant on Chinese supply chains.

Even auto stocks that are less directly exposed to U.S.-China trade rose Monday, as investors bet easing tensions would lift consumer sentiment and hence vehicle sales.

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(END) Dow Jones Newswires

May 12, 2025 06:12 ET (10:12 GMT)

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