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Donald Trump handed the carmaker a month’s resignation on tariffs on imports from Mexico and Canada in his latest last-minute policy shift to Roil Corporate America.
White House spokesman Caroline Leavitt said the president spoke Wednesday with Stellantis, Ford and General Motors, manufacturers of Chrysler and Jeep.
Leavitt added that the exemption will apply to vehicles complying with the terms of the 2020 trade agreement between the US, Mexico and Canada.
“The president is exempt from them for a month, so they are not at a financial disadvantage,” Leavitt said.
A senior Trump administration official later said the exemption would also apply to auto parts complying with the USMCA contract. Parts make up a large part of North American transnational trade in the industry.
The carveout came after the Trump administration’s imposition of 25% tariffs on imports from Canada and Mexico, and the further 10% collection into China on Tuesday.
At one point, all post-election profits for the S&P 500 were wiped out before the index was reclaimed. The index recovered strongly on Wednesday, increasing significantly to add 1.1%.
Stocks of the US automaker jumped, with Ford rising 5.8%, GM rising 7.2%, Stellantis’ US registered deposit receipts rising 9.2%. Other automotive groups also acquired, with Japan’s Honda and Nissan gaining 2%.
Previous modelling by Nomura Analysts estimated that tariffs on vehicles imported into the US that are not USMCA compliant would have a negative impact on the profits of Mazda, Subaru, Mitsubishi Motors and Hyundai.
Tariffs in Mexico and Canada were viewed as particularly punitive for the automotive industry due to the complex supply chains that intersect North America.
Trump’s tariffs have escalated the North American trade war. Canada responded to all US imports with its own sudden collection. Mexico said it plans to announce its response on Sunday.
Prime Minister Justin Trudeau will not lift Canada’s retaliatory tariffs if Washington maintains Ottawa’s taxation in signs of tension raised by the early trade war, a senior government adviser told the Financial Times.
Flavio Volpe, head of the Canadian Association of Auto Parts Manufacturers, added that a month’s recession will not solve the problems of businesses and workers who fear unemployment or plant closures.
He said: The evidence for this is the fact that it was American companies that demanded this respite, not Canada or Mexico. ”
The American Automotive Policy Council, the trade body representing Stellantis, Ford and GM in Washington, welcomed the move. GM has said individually that the new approach will allow US automakers to compete and invest in the country.
“When the situation becomes clearer, we are ready to make a quick and optimal decision.” Toyota said. Executives of Japanese car producers have previously said they would try to cut costs before raising vehicle prices in response to tariffs.
Automotive industry executives said Toyota could increase production in the US and Canada to increase to the US ahead of the 30-day grace period expires, but warned of “severe impacts” if tariffs were applied to US imports from Mexico and Canada.
Leavitt suggested that more industries could argue for sculptures from tariffs, and said Trump “hears about additional exemptions.”
“He’s always open to dialogue, and he’ll always do that.. What’s right, what he believes is right for Americans,” she added.
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However, Leavitt said Trump’s “mutual” tariffs will still come into effect on April 2, as planned.
“He feels strong about it. No matter what, there’s no exemption,” she said. “That’s where I came from for a month.”
Leavitt said Trump would tell businesses to “get it” and start moving their production to the US. “That’s the ultimate goal.”
Earlier on Wednesday, U.S. Commerce Secretary Howard Lutnick said the president would “consider” the relief for certain sectors.
However, he repeated the Trump administration’s frustration that Mexico and Canada did not crack down on the fatal opioid fentanyl trafficking, suggesting that the resignation could last just a month.
Additional Reports by Claire Bussy of Chicago
