Trump delays auto tariffs on Canada, Mexico by 1 month
What's the story
US President Donald Trump has announced a one-month delay on the tariffs imposed on cars imported from Mexico and Canada.
The temporary relief was granted after discussions with major US automakers Ford, General Motors (GM), and Stellantis.
The decision is aimed at preventing any potential financial impact on these companies due to the new trade policy.
White House Press Secretary Karoline Leavitt confirmed this exemption in her daily briefing yesterday.
Trade agreement
Exemption granted to prevent economic disadvantage
Leavitt said the exemption was provided at the request of companies involved in the United States-Mexico-Canada Agreement (USMCA), a free-trade deal set up during Trump's first term.
She stressed that the President's aim is to bring auto production back to America this month.
The move comes as an attempt to ensure American automakers aren't put at an economic disadvantage due to these tariffs.
Industry response
Ford, GM, Stellantis respond to tariff exemption
Ford thanked Trump and committed to exempting auto companies in compliance with USMCA.
The automaker promised to continue conversations with the administration over industry challenges.
GM also thanked Trump, highlighting its major investment in US manufacturing since the agreement came into effect while Stellantis strongly supported Trump's resolve to empower the American automotive sector.
Future plans
Canada and Mexico brace for Trump's reciprocal tariffs
Trump's decision comes ahead of his planned implementation of reciprocal tariffs worldwide on April 2.
Unlike the current situation, no exemptions are expected for these upcoming tariffs.
These new taxes could be imposed in addition to the existing 25% tariffs on other Canadian and Mexican goods.
The potential impact of these measures has already caused a stir among businesses, with many expressing concerns over their implications on future operations.
Canadian response
Canada isn't cheering the auto tariff reprieve
Despite the exemption, Canada hasn't welcomed the decision.
Ontario Premier Doug Ford and Canadian Prime Minister Justin Trudeau have both said they refuse to accept any tariffs on their goods.
Trudeau's office said both countries would continue to communicate about the issue, which means US and Canadian officials are still in talks over these trade policies.
Economic implications
Impact on North American auto industry
The North American car industry has been borderless for decades, thanks to various free trade agreements.
However, US automakers argue that tariffs on autos and auto parts from Canada and Mexico could significantly hike costs for cars built at North American plants.
This is because even cars assembled in US plants use parts from these two countries.
Without exemption, the 25% tariff could hike production costs by $3,500-$12,000 per vehicle.