President Trump has given carmakers a temporary break from the 25% tariffs he imposed this week on imports from Mexico and Canada. Hidden captions for Bill Pagliano/Getty Imagenorth America
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Bill Pagliano/Getty Imagenorth America
President Trump has given carmakers a month off import duties he imposed on Canada and Mexico. This avoids massive disruption in the North American automotive industry, but highlights the whimsical nature of Trump-era US trade policy.
The president granted tariff relief after a conversation with Ford, General Motors and Stellantis, who complained that the import taxes launched on Tuesday would make them less competitive than their European and Japanese rivals.
“The president is exempt from them for a month so they are not at a financial disadvantage,” said White House spokeswoman Karoline Leavitt. She emphasized that “mutual tariffs” on imports from Europe and Asia will come into effect next month.
The White House said the exemption will also apply to other car manufacturers operating in North America, as long as they meet the content requirements of the US-Mexico-Canada agreement signed by Trump in 2020, or the USMCA content requirements.
Over the past 30 years, automakers have developed highly integrated operations in the US, Mexico and Canada, with some vehicles crossing the border multiple times during Congress. A 25% tariff on imports from US northern and southern neighbors could put that system at risk.
Trump hopes the automakers will make more manufacturing in the US.
“That’s the ultimate goal,” Levitt said.
Not everyone gets a tariff deferral
Tariff relief does not extend to many other products the US imports from Canada and Mexico. These include wood, fresh produce, tequila and Canadian whiskey. Economists say much of the tariff costs will ultimately be passed on to consumers.
Trump said he spoke on the phone with Canadian Prime Minister Justin Trudeau on Wednesday.
“Cole ended in a ‘somewhat’ friendly way,” Trump said in a social media post.
Stocks recovered as investors wanted additional tariff relief. The Dow Jones industrial average rose 485 points on Wednesday, eliminating more than a third of its losses in the last two days.
