Trump Approves One-Month Pause On Canadian, Mexico Tariffs For Automakers

Topline

President Donald Trump approved a one-month exemption on newly implemented Canadian and Mexican tariffs for U.S. automakers, Press Secretary Karoline Leavitt said Wednesday after members of the Trump administration reportedly met with the three biggest U.S. carmakers.

Key Facts

Leavitt said at the White House press briefing Wednesday the U.S. is “going to give a one month exemption on any autos coming through USMCA,” or the United States-Mexico-Canada Agreement that Trump previously negotiated—a trade deal that includes rules around cars.

Leavitt said reciprocal tariffs—or tariffs equal to those that other countries charge for U.S. goods—will still go into effect on April 2, but “at the request of the companies associated with USMCA, the president is giving them an exemption for one month so they are not at an economic disadvantage.”

Officials in the Trump administration met with the leaders of Ford, General Motors and Chrysler parent Stellantis on Tuesday, Bloomberg reported, and another meeting may take place Wednesday.

Experts warned before the tariffs went into effect that the auto industry could “withstand only a few weeks” of the 25% tariffs before costs to automakers and suppliers would “rise astronomically,” The Detroit Free Press reported.

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What Did Trump Say About The Auto Industry In His Joint Address?

In his joint address to Congress Tuesday night, Trump said the U.S. is going to “have growth in the auto industry like nobody’s ever seen,” which he said is due to “a combination of the election win and tariffs.” He said when he spoke to the leaders of the three major U.S. automakers earlier in the day, and “plants are opening up all over the place.” Trump has long advocated for automakers moving production to the U.S. and made it a priority of his first term, urging Detroit automakers to move production to the U.S. in 2017. While campaigning last year, Trump said he wanted “German car companies to become American car companies. I want them to build their plants here” (many German and other foreign automakers have U.S. factories). Tariffs are a sensitive issue for automakers as even cars made domestically get parts from Canada and Mexico, and some components of vehicles travel from factories in the U.S. to Mexico or Canada and back again, the Associated Press reported. In addition to part production occurring in Mexico and Canada, many U.S. carmakers have moved production to the other North American countries, and they are the two biggest foreign markets for cars built in the U.S., according to the AP.

Big Number

$3,000. That’s at least how much Kelley Blue Book estimated Trump’s 25% tariffs would raise the price of an average new car. KBB also estimated in February that the tariffs could lead some full-size trucks to see spikes of up to $10,000.

Contra

On Tuesday, the United Auto Workers union released a statement praising Trump’s tariffs, saying, “tariffs are a powerful tool in the toolbox for undoing the injustice of anti-worker trade deals.” The statement continued to say the union was in “active negotiations with the Trump Administration about their plans to end the free trade disaster,” and they look forward to “working with the White House to shape the auto tariffs in April to benefit the working class.”

Key Background

Trump implemented 25% tariffs on Mexico and Canada on Tuesday after both countries received a one-month pause when they agreed to more border protection efforts in February. Trump had long threatened tariffs on imported goods, even though economists and business leaders warned they could have negative impacts on the economy, including higher consumer prices. Trump addressed the potential negative impacts Tuesday night in his joint address to Congress, asking farmers and others hurt by the tariffs to “bear with (him)” and saying, “it may be a little bit of an adjustment period.”