President Trump said Wednesday that he would suspend tariffs on cars coming into Mexico from Canada and Mexico after the 25% tariff he imposed on America's closest trading partner a day ago spurred resistance from the stock market.
White House Press Secretary Karoline Leavitt read Trump's statement on Wednesday. The White House spoke with the three biggest automakers and said that vehicles coming in through the US and Mexico-Canada agreements will be given a month's exemption.
“At the request of businesses related to the USMCA, the president has given them a month's exemption, so they are not at a financial disadvantage,” the statement said. The three carmakers Trump spoke to were General Motors, Ford Motor and Stellantis.
Asked why Trump gave him a month's resignation, Levitt said the president hopes the car maker will return production to the US. She said the message was “to ride it, start investing, start moving, here we will shift production to the United States, and not pay tariffs there.”
The grace was a demonstration of the accidental approach that Trump led to trade policy, in which the president announced, paused and then proceeded, within weeks, policies that had a deep impact on the North American economy. The decision comes after Trump held a conference call Tuesday with General Motors CEO Mary T. Rose. John Elkan, Chairman Stellantis. William C. Ford, chairman of Ford Motor. And Jim Farley, Ford's CEO, said someone explained on the phone.
Executives told the president that if they place tariffs on cars and parts in Canada and Mexico, they would effectively erase all the profits of the company by leviing them with billions of dollars in new costs, people said. They alleged that cars built in these countries supported employment in the US at parts factories, dealers and other affiliated companies.
They said they invested in factories in North America as guaranteed by the USMCA, a trade agreement that Trump negotiated with Canada and Mexico in his first term, saying the continent will become a free trade zone. A sudden change to the rules for that zone can have catastrophic results.
Executives from the three companies said they would not oppose tariffs imposed on vehicles imported from outside North America, the person said. Besides Canada and Mexico, the US imports a large number of cars from Japan, South Korea and Germany.
It was unclear what the grace meant for automakers such as BMW, who manufacture cars in Mexico but do not fully comply with the terms of the trade treaty. Currently, BMW pays a 2.5% tariff to import vehicles from a factory in San Luis Potosi, Mexico. BMW also manufactures cars at Spartanburg, SC, one of the largest factories in Germany.
Trump said the collection aims to stop the flow of drugs and immigration on the US border to Canada and Mexico. But after months of threat, he chose to enforce tariffs this week, even after Canada and Mexico promised to devote more resources to cracking down on borders and drug trafficking.
Leaders in Mexico and Canada called on Trump to drop tariffs, saying they were unfair and unfair.
But Trump refused to provide Canada with a wide range of grace despite a new overture by Prime Minister Justin Trudeau. Trump wrote on social media that he had spoken with Trudeau and was not yet convinced that Canada had done enough to stop the flow of fentanyl across the border.
Truthfully societal, Trump wrote to Trudeau that “many people died of fentanyl, which has passed through the border between Canada and Mexico, but nothing I've convinced that it's stopped.”
The President added: “He said it was getting better, but I said, 'That's not enough.' ”
Data shows that fentanyl is only coming to the US through Canada, and Canadians are broken with the claim that they are an important source of drugs for the US.
On Tuesday, Canada called for talks with the US at the World Trade Organization over tariffs, saying it had violated the US's commitment to the WTO
Vice President J.D. V. V. V. V. V. and Howard Lutnick, the secretary of Commerce, were called Trump and Trudeau. A senior Canadian official said the debate lasted 50 minutes, adding that the president has nurtured access to Canadian dairy markets for US producers.
Lutonic and Canadian Finance Minister Dominic LeBlanc will continue the conversation throughout the day to find a compromise on the exhaust. Trudeau is not ready to lift Canadian retaliatory tariffs on U.S. goods, officials said, but if the US decides to remove or reduce tariff duties on certain Canadian goods, they could consider selective tariff reductions or removals. The official spoke on condition of anonymity. Because they were not given the authority to briefly explain the press in the ongoing negotiations.
At a press conference on Wednesday, Mexican President Claudia Sheinbaum rebelliously repeated several times, “We won't submit it.”
Sinbaum said a call with Trump is scheduled for Thursday, but there was no update or information regarding Rutnick's claims regarding the tariff changes. She said if tariffs remain, the Mexican government will announce retaliation measures on Sunday when it was also called a demonstration in Mexico City.
“We must protect sovereignty among all of us,” she said.
Sinbaum also said in response to the tariffs, her government has already awarded new trade partnerships, including Canada and Chile.
“We'll be having more agreements and partnerships with other countries,” she said.
The stock market plunged globally on Tuesday as Trump imposes a 25% tariff on most products from Canada and all Mexican products, and an additional 10% tariff on all imports from China.
Stocks in some automakers bounced back Wednesday in hopes that Trump will reduce tariffs in Canada and Mexico. General Motors, Ford Motor and Stellarantis all rose. Most automakers rely on factories and suppliers in these countries for cars and parts, and it is not possible to transfer production to the US easily or quickly.
A month's reprieve does little to resolve the industry's long-term exposure to Trump's tariff parade. They include steel and aluminum tariffs that will take effect on March 12th and “mutual” collections that Trump will be imposed on April 2nd.
But it could give car manufacturers the opportunity to stockpile cars and parts made in Mexico and Canada and blunt the impact of tariffs later in place.
Kevin Roberts, director of economic and market intelligence at online vehicle shopping site Cargurus, said it is unrealistic for car companies to expect their factories to move to the US within a month.
“The automotive industry is so global and so interconnected that we cannot shift mass production within a month,” Roberts said.
The 25% tariff adds nearly $12,000 to the average price of a car from Canada, Roberts estimated $10,000 to the average price of a car imported from Mexico.
Annie Correal, Matina Stevis Gridnev, Vikas Bajazi and Neil E. Boudette reported.
