Automakers received temporary reprieve Wednesday from US President Donald Trump’s tariffs targeting Canada and Mexico, as concerns mounted over consumer impacts and talks with Canadian Prime Minister Justin Trudeau yielded no immediate breakthrough.
The two leaders reportedly spoke for 50 minutes on phone, discussing fentanyl smuggling and trade.
Following discussions with the “Big Three” US automakers — Stellantis, Ford and General Motors — Trump decided to “give a one-month exemption on any autos coming through USMCA,” White House Press Secretary Karoline Leavitt said, referring to the North American free trade pact.
“They made the ask, and the president is happy to do it,” Leavitt told reporters.
Wall Street stocks rallied after the announcement, with shares of the three automakers each surging about six percent or more.
The American Automotive Policy Council said it applauded Trump’s move.
But prospects of wider relief were dampened after Trump’s call with Trudeau. The US leader said he was unconvinced that Ottawa had done enough to address Washington’s concerns over smuggling of the dangerous drug fentanyl.
Canada contributes less than one percent of fentanyl to the United States’ illicit supply, according to Canadian and US government data. But Trump has shrugged off these figures.
On social media, Trump accused Trudeau of using the dispute to “stay in power,” but noted their discussion ended in a “somewhat” friendly manner.
Later on Wednesday, US Secretary of State Marco Rubio spoke with his Canadian counterpart Melanie Joly, according to a US statement.
“Secretary Rubio reaffirmed the importance of US-Canadian relations and reiterated that the Trump Administration will continue to put Americans’ safety and national security first,” said US State Department spokesperson Tammy Bruce.
Trump’s sharp 25-percent tariffs on US imports from Canada and Mexico — with a lower rate for Canadian energy — kicked in Tuesday, sending global markets tumbling and straining ties between the neighbors.
Ottawa swiftly announced retaliatory levies, while Mexican President Claudia Sheinbaum plans to unveil her response at a mass rally on Sunday.
Trump has cited illegal immigration and fentanyl trafficking in imposing tariffs, though he frequently lambasts alleged trade imbalances when discussing levies.
More exemptions?
Consumer items appear poised for US price hikes after Trump’s tariffs on Canada, Mexico and China.
These include products like avocados, strawberries, electronics and gasoline.
Of the agricultural products imported from Mexico to the United States in 2023, more than 72 percent were fresh fruit and vegetables, as well as beer and other alcohol, government figures showed.
Trump said Tuesday that tariffs would bring “a little disturbance” to the world’s biggest economy.
Leavitt defended Trump’s remarks Wednesday as “realistic,” saying that standing up to foreign nations “requires a little bit of disruption.”
But she added of tariffs: “The president is open to hearing about additional exemptions.”
Earlier Wednesday, US Commerce Secretary Howard Lutnick said Trump was mulling market segments where he could provide temporary relief.
Trump’s tariffs on Mexico and Canada are a heavy blow given that the three countries have a trade pact — which the US president renegotiated in his first term.
‘Other trading partners’
Sheinbaum said Wednesday that Mexico has to take key decisions for its future, adding that “if necessary, other trading partners will be sought.”
Expressing a preference for a negotiated solution, she has said she anticipates speaking to Trump by phone on Thursday about tariffs on Mexican goods.
She earlier vowed retaliatory action and called for supporters to gather in Mexico City’s main square on Sunday to hear details on her government’s response.
Lutnick told Bloomberg Television on Wednesday that broader reciprocal levies, tailored to each US trading partner, were still coming on April 2.
Trump has vowed tariffs targeting friend and foe to remedy practices deemed as unfair, slamming the European Union particularly.
Some of these duties could come immediately, although Lutnick said others could take a month or longer.
France’s President Emmanuel Macron called planned US tariffs on European products “incomprehensible,” adding Wednesday that he hoped to “dissuade” Trump from them.
This week, Trump also inked an order doubling an additional tariff rate on Chinese imports from 10 percent to 20 percent, similarly over the country’s alleged role in illicit fentanyl entering the United States.
The duties pile atop existing ones on Chinese products.
Beijing hit back, promising 10-percent and 15-percent tariffs on a range of US agricultural imports.
Economists warn that tariff hikes stand to bog down economic growth and add to US inflation.
