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The major U.S. automakers were given a one-month exemption from new tariffs on Canadian and Mexican imports, the Trump administration said Wednesday.
“We spoke with the Big Three auto dealers. We are going to give a one month exemption on any autos coming through USMCA,” President Donald Trump said, according to a statement provided White House Press Secretary Karoline Leavitt during a news conference.
The tariffs that went into effect early on Tuesday include 25% duties on all Mexican goods and most Canadian goods, and 20% on goods imported from China. The duties on Canadian goods include a carveout for energy products, which will be taxed at 10%.
The U.S. Chamber of Commerce has said tariffs will only “increase the economic pain” being felt by Americans, warning that some companies it represents could be forced out of business. Stock markets plunged as a result of Trump’s tariffs, as well as retaliatory measures from other nations.
Most major U.S. industries are set to be impacted by the new tariffs, including farmers and restaurants, as well as retailers like Best Buy (BBY+1.13%) and Target (TGT-0.79%). Automakers were expected to be especially vulnerable to the economic effect of the tariffs because their supply chains are highly dependent on Canada and Mexico.
The Michigan-based Anderson Economic Group estimates that a 25% tariff would add between $4,000 and $10,000 per car to vehicles assembled in North America. Battery-electric vehicles could cost as much as $12,000 more.
The profit margins of General Motors (GM+7.07%), Ford Motor Co. (F+5.65%), and Stellantis (STLA+9.07%) would be wiped out without price hikes, Barclays analysts said in a note earlier this week. Leavitt said those companies reached out to the president and requested the exemption, which the president was “happy to do.”
“Let’s be real honest: Long term, a 25% tariff across the Mexico and Canada borders would blow a hole in the U.S. industry that we’ve never seen,” Ford Motor Co. CEO Jim Farley said at a recent investor conference.
The temporary reprieve was teased earlier Wednesday by Commerce Secretary Howard Lutnick, who said that some industries may receive some relief throughout March. On April 2, Trump plans to issue his reciprocal tariffs, which he says will make trade more fair to the U.S.
“Whatever they tax us, we will tax them,” the president said on Tuesday. “If they do nonmonetary tariffs to keep us out of their market, then we will do nonmonetary barriers to keep them out of our market.”
Lutnick had noted that any relief would likely be targeted at products that are compliant with regulations under the USMCA trade deal that Trump negotiated during his first term. That deal is up for renewal in 2026.
“My thinking is it’s going to be somewhere in the middle. Not 100% of all products and not none,” Lutnick said. “I think Mexico and Canada are trying their best [to crack down on the smuggling of fentanyl into the U.S.]”
Almost 98% of fentanyl seized by Customs and Border Patrol was intercepted at the U.S.’ southwest border with Mexico, the BBC reported. Less than 1% was found at the northern border with Canada, and the remainder was found at other checkpoints. Canada and China have both questioned the Trump administration’s focus on fentanyl, calling it an excuse to issue his tariffs.
Trump on Wednesday said on his Truth Social that Canada’s efforts to limit the flow of fentanyl were “not good enough,” claiming in a follow-up post that Prime Minister Justin Trudeau’s border policies “are responsible for the death of many people.”