US President Donald Trump is exempting the automakers from 25% tariffs for one month after negotiating with major industrial leaders. Auto stocks rose following the news.
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US President Donald Trump is granting automakers in Mexico and Canada a one-month tariff exemption after negotiations with leading industrial figures.
"We spoke with the Big Three auto manufacturers. We are going to give a one-month exemption on any autos coming through USMCA," White House Press Secretary Karoline Leavitt confirmed on Wednesday.
"Reciprocal tariffs will still come into effect on 2 April, but at the request of the companies associated with USMCA, the President is granting them an exemption for one month so they are not at an economic disadvantage," she said.
A 25% tariff on all imported goods from Mexico and the US had come into effect a day earlier, on Tuesday, along with an additional 10% levy on Chinese imports.
Last month, Trump also announced he would impose 25% tariffs on all automobile, pharmaceutical, and semiconductor imports as soon as 2 April.
Added to this, he signed an executive order to investigate trade relations, aiming to introduce reciprocal tariffs, expected to take effect as early as 1 April.
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 nations.
The agreement is due for review by July next year.
Carmaker leaders negotiate with the White House
White House officials spoke with executives from Stellantis, Ford, and General Motors on Wednesday, according to Leavitt.
Trump’s exemption offers these automakers time to bring their production back to the United States.
“He told them they should get on it, start investing, start moving, shift production here to the United States of America, where they will pay no tariff. That’s the ultimate goal,” Leavitt stated.
Retaliatory tariffs
Both Canada and China have retaliated to Trump's tariffs with countermeasures, while Mexican President Claudia Sheinbaum has said she will announce her own response on Sunday.
Previously, Ford CEO Jim Farley warned that the 25% tariffs on Canada and Mexico and the 10% tariffs on China would be disastrous for US companies operating globally.
Additionally, a report from Anderson Economic Group (AEG) suggested that the tariffs, including the additional 10% levy on China, could increase car prices by as much as $12,200 (€11,290) for some models.
Automaker stocks rise
Automakers’ shares surged following Trump’s one-month tariff exemption on Wednesday.
Ford Motor’s stocks were up 3.65%, General Motors shares rose 1.76% and Stellantis climbed 2.46%.
The automaker’s shares in Europe also experienced gains, with Mercedes-Benz up 3.08%, Volkswagen rising 3.38%, and BMW up 4.3%.
Additional tariff exemptions considered
A White House spokesperson indicated that Trump may consider further tariff exemptions after pausing the automaker duties.
The US President is reportedly weighing exemptions on certain agricultural products affected by tariffs on Canada and Mexico.
However, Trump posted on Truth Social that Canada’s efforts to curb fentanyl trafficking were not sufficient.
He added that his call with Canadian officials "ended in a somewhat friendly manner".
