Tesla Reclaims $1 Trillion Valuation as U.S.-China Tensions Ease

Tesla Reclaims $1 Trillion Valuation as U.S.-China Tensions Ease

Tesla stock surged early Monday, climbing 7.7% to $321.18 in premarket trading and briefly pushing the company’s market capitalization back above the $1 trillion mark — a level not seen since late February. The broader market also reacted positively to the news, with S&P 500 and Dow Jones Industrial Average futures rising 2.8% and 2.1%, respectively.

? Trade Truce Sparks Rally

The rally followed encouraging developments over the weekend as the U.S. and China signaled a temporary pause in escalating trade tensions. Former President Donald Trump posted on Truth Social about a “very good meeting” in Switzerland with Chinese officials, noting that “much [was] agreed to,” including intentions to open Chinese markets more fully to American businesses.

Under the agreement:

• The U.S. will reduce its base tariff rate on Chinese goods from 34% to 10% for the next 90 days.

• Additional tariffs are suspended during this negotiation window.

• China is also cutting some of its tariffs in response.

Before this truce, tariffs on Chinese imports exceeded 100%, a level that many analysts likened to a trade embargo. “A positive step in the right direction,” Wedbush analyst Dan Ives noted in a Sunday report.

?? China: A Critical Market for Tesla

Tesla relies heavily on China:

• Its most productive gigafactory is based there.

• The country contributed approximately 22% of Tesla’s total revenue in 2024.

While Tesla’s supply chain is largely localized in China — meaning tariffs have minimal direct cost impact — the broader concern lies in consumer sentiment. Growing national pride and geopolitical tensions have led many Chinese buyers to favor local electric vehicle brands like BYD, said Cantor Fitzgerald analyst Andres Sheppard.

? Sales Still Slipping in China

Despite this week’s stock rebound, Tesla continues to face declining sales in China:

• Q1 2025 sales dropped about 2% year-over-year, according to industry data.

• Sales in the first five weeks of Q2 are down around 15% compared to the same period last year, per Citi analyst Jeff Chung.

Tesla shares fell over 10% in mid-April during the height of the tariff tensions, closing below $230 on April 21. As of Monday, the stock trades just under $300.

? Investors Eye Robotaxi Launch

In addition to easing trade tensions, optimism surrounding Tesla’s self-driving taxi service is also fueling investor interest. CEO Elon Musk confirmed during the company’s Q1 earnings call on April 22 that the robotaxi launch is on track for June in Austin, Texas.

As that date approaches, expectations for autonomous driving tech could become a primary driver of Tesla’s stock performance, alongside ongoing developments in U.S.-China trade relations.

✅ Bottom Line

Tesla's bounce back to a $1 trillion valuation reflects renewed investor confidence as macro headwinds ease. With China policy easing and innovation on the horizon, particularly in autonomous driving, Tesla remains a stock to watch in the coming weeks.