Beijing’s stimulus measures, aimed at boosting domestic consumption, position China as a key market for US automakers, particularly if the US enters a recession. The US auto sector contributes 3-5% to US GDP and directly or indirectly employs around 5 million workers.
On March 9, the Kobeissi Letter highlighted the darkening clouds for the US auto sector:
“The share of subprime car borrowers at least 60 days past due on their loans hit 6.6% in January, the highest in at least 30 years. […]. Levels now exceed levels seen in 2020, 2008, and the previous peak recorded in 1996.
Considering the dynamics, the US administration may face challenging trade talks. China’s foreign minister recently said that if the US insists on waging a trade or tariff war, China will see it through to the end.