After Detroit’s Big Three automakers warned the tariffs on North American imports could cause a major market imbalance, they have been lifted until April 2.
President Donald Trump has temporarily lifted auto tariffs on Mexico and Canada, granting a one-month exemption before his administration implements reciprocal tariffs next month. The decision, announced March 5 by White House Press Secretary Karoline Leavitt, follows direct appeals from major automakers concerned about economic disadvantages under the proposed tariffs.
“We spoke with the Big Three auto dealers. We are going to give a one-month exemption on any autos coming through USMCA,” Trump stated in a message read by Leavitt during a White House briefing. She confirmed that Stellantis, Ford and General Motors requested the exemption.
Despite this temporary relief, Leavitt emphasized that tariffs will still take effect as planned on April 2.
“Reciprocal tariffs 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’re not at an economic disadvantage,” she said.
Trump’s move has sparked reactions across North America, particularly in Canada, where officials remain firmly opposed to any tariffs on their auto exports.
“We’re on the same page — zero tariffs — and we are not going to budge,” Ontario Premier Doug Ford said during a March 5 briefing, aligning with Canadian Prime Minister Justin Trudeau’s stance against trade barriers.
The North American auto industry is deeply interconnected, with parts and vehicles moving across borders multiple times before reaching dealerships. In 2023, U.S. auto plants produced 10.2 million vehicles, while Mexico manufactured 4 million and Canada 1.3 million, according to S&P Global Mobility. Roughly 70% of vehicles built in Canada and Mexico were sold in U.S. dealerships.
Industry leaders warn that imposing tariffs on North American auto imports while allowing European and Asian manufacturers to continue operations without similar restrictions could create a major market imbalance.
“It gives free rein to South Korean, Japanese and European companies,” Ford CEO Jim Farley told investors in February, adding that competitors importing vehicles from outside North America would not face the same cost increases.
Without an exemption, a 25% tariff on Mexican and Canadian auto imports could raise vehicle production costs by $3,500 to $12,000, according to an analysis by the Michigan-based Anderson Research Group. Automakers have argued that such tariffs could significantly disrupt supply chains and consumer pricing.
Trump’s administration remains open to additional exemptions, though Leavitt reinforced that companies should use the grace period to consider shifting production to the U.S. “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,” she said.
Meanwhile, financial markets responded positively to the announcement, with the Dow Jones Industrial Average rising 540 points on March 5. Auto stocks surged, with Ford gaining 5.7%, Stellantis jumping 9.3%, and GM climbing 7.7%.
While the one-month extension offers temporary relief, uncertainty looms for businesses dependent on North American trade. A recent Institute for Supply Management survey revealed widespread concern over tariffs, with respondents citing potential ripple effects that could significantly impact operations.
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