Trump temporarily suspends tariffs on car manufacturers in Mexico and Canada!
US President Donald Trump is giving automakers in Mexico and Canada a tariff exemption for one month after negotiations with key industry figures.
“We spoke with the big three automakers. We will provide a one-month waiver for any vehicle that comes through the USMCA, ” White House press secretary Caroline Leavitt confirmed Wednesday. “The reciprocal tariffs will still go into effect on April 2, but at the request of the companies involved in the USMCA, the President is giving them a one-month waiver so that they are not at a disadvantage economically ,” she said.
A 25% tariff on all goods imported from Mexico and the US had taken effect the day before, on Tuesday, along with an additional 10% tax on Chinese imports. Last month, Trump also announced that he would impose 25% tariffs on all imports of automobiles, pharmaceuticals and semiconductors starting April 2.
In addition, he signed an executive order to investigate trade relations, aiming to impose reciprocal tariffs, which are expected to take effect as early as April 1. The United States-Mexico-Canada Agreement (USMCA), which replaced NAFTA in July 2020, requires that 75% of a vehicle's parts be manufactured in North America to qualify for zero tariffs when traded between the three countries. The agreement is expected to be reviewed by July next year.
White House officials spoke with executives from Stellantis, Ford and General Motors on Wednesday, according to Leavitt. Trump’s waiver gives those automakers time to bring their production back to the United States. “He told them they need to get on with it, start investing, start moving, move production here to the United States of America, where they won’t pay any tariffs. That’s the ultimate goal ,” Leavitt said.
Both Canada and China have responded to Trump's tariffs with countermeasures, while Mexican President Claudia Sheinbaum said she would announce her response on Sunday. Earlier, Ford CEO Jim Farley warned that 25% tariffs on Canada and Mexico and 10% tariffs on China would be catastrophic for US companies operating globally.
Furthermore, a report by Anderson Economic Group (AEG) suggested that the tariffs, including the 10% additional tax for China, could increase car prices by up to $12,200 (€11,290) for some models.
Automaker shares rose after Trump's one-month tariff exemption on Wednesday. Ford Motor shares rose 3.65%, General Motors shares rose 1.76% and Stellantis rose 2.46%. European automaker shares also saw gains, with Mercedes-Benz up 3.08%, Volkswagen up 3.38%, and BMW up 4.3%.
A White House spokesman indicated that Trump may consider further tariff exemptions after the automaker's duties were halted. The US president is reportedly weighing exemptions for some agricultural products affected by tariffs in Canada and Mexico. However, Trump posted on Social Truth that Canada's efforts to curb fentanyl trafficking were not enough. He added that his phone call with Canadian officials " ended in a somewhat amicable manner."
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