President Trump granted automakers a one-month reprieve from the import tariffs he imposed on Canada and Mexico — avoiding major disruption of the North American auto industry but underscoring the fickle nature of U.S. trade policy in the Trump era.
The president granted the tariff relief after conversations with Ford, General Motors and Stellantis, who complained that the import taxes that kicked in on Tuesday would make them less competitive than their European and Japanese rivals.
"The president is giving them an exemption for one month so they are not at an economic disadvantage," said White House spokeswoman Karoline Leavitt. She stressed that "reciprocal tariffs" on imports from Europe and Asia are still set to take effect next month.
The White House said the exemption would also apply to other automakers operating in North American so long as they meet the content requirements of the United States-Mexico-Canada agreement, or USMCA, which Trump signed in 2020.
Over the last three decades, automakers have developed highly integrated operations in the U.S., Mexico, and Canada, with some vehicles crossing the border multiple times during assembly. The 25% tariff on imports from the United States' northern and southern neighbors could jeopardize that system.
Trump wants the automakers to do more of their manufacturing in the United States.
"That's the ultimate goal," Leavitt said.
Not all get the tariff reprieve
The tariff relief doesn't extend to the many other products the U.S. imports from Canada and Mexico, including lumber, fresh produce, tequila and Canadian whisky. Economists say much of the cost of the tariffs is ultimately passed along to consumers.
Trump said he spoke by telephone Wednesday with Canadian Prime Minister Justin Trudeau.
"The call ended in a "somewhat" friendly manner, Trump said in a social media post.
Stocks rallied as investors hoped for additional tariff relief. The Dow Jones Industrial Average rose 485 points, Wednesday, erasing more than a third of its loss in the two previous days.
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