The Timing of Trump's China Announcement Is Incredibly Convenient for Tesla

Tesla released first-quarter earnings on Tuesday, revealing that its net income had plummeted by an astonishing 71 percent since the first quarter of last year.

Sales are dropping precipitously around the world, in large part due to Tesla CEO Elon Musk's wildly controversial behavior.

Yet, the company's stock rose more than seven percent Wednesday morning, indicating early investor optimism.

Why? One undeniable factor is Musk promising during Tuesday's call that he'd be spending more of his time leading Tesla — and less time gutting the federal government — which is something investors have been begging him to do for a while now.

But another extremely auspicious factor: president Donald Trump's announcement that he's planning to be "very nice" to China, hinting at a possible U-turn in the United States' disastrous trade war.

The announcement couldn't have come at a more convenient moment for Tesla, dropping after the disastrous revenue figures on Tuesday but before markets opened on Wednesday, shooting the entire market — and Tesla — skyward from the "Trump Slump" that had resulted from all the trade posturing.

Add it all up, and it looks a lot like Trump did his buddy Musk an immense favor by giving him incredible news at the exact moment that he needed it most.

The reaction on Wall Street was swift in light of the news, with the S&P 500 Index rising two percent and AI chipmaker Nvidia's shares going up four percent.

As Bloomberg reported, the rally indicates some of the market's biggest equity gains in roughly two weeks. Trump's sky-high tariffs aimed at China sparked a major selloff, leading to the worst April for the Dow Jones Industrial Average since 1932.

Even international markets rallied in light of the news, indicating a major sigh of relief that Trump could finally come to his senses.

As Musk admitted during Tuesday's earnings call, while Tesla was in a "stronger position than any of our competitors" thanks to "localized supply chains," the "tariffs are still tough on a company when margins are still low."

"So, you know, I'll continue to advocate for lower tariffs rather than higher tariffs," Musk argued, "but that's all I can do."

But considering Trump's rapidly changing tune, his closest ally appears to have finally proven convincing enough for him to lower rates, something that could provide some much-needed relief for the huge swathes of the US economy.

It wouldn't be the first time Trump has bent over backwards to help Musk's carmaker. Earlier this year, Trump turned the lawn in front of the White House into an improvised Tesla showroom in a naked attempt to shore up some enthusiasm for the already tarnished car brand.

More on Tesla: Elon Musk Realizes He's Dragging Tesla Into Ruin

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