U.S. President Donald Trump is giving the Big Three automakers a one-month exemption from sweeping tariffs he imposed on Canada and Mexico, the White House confirmed Wednesday.
The exemption came after Trump held a call earlier Wednesday with representatives of Stellantis, Ford and General Motors at the request of the companies, which rely on North American production lines enshrined in the United States-Mexico-Canada Agreement (USMCA).
“We are going to give a one-month exemption on any autos coming through USMCA,” White House Press Secretary Karoline Leavitt said, reading from a statement she attributed to Trump.
“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 are not at an economic disadvantage.”
Leavitt told reporters the reprieve was meant to give those companies time to shift investments to the U.S. Trump has repeatedly said he wants to boost the domestic auto manufacturing sector, using tariffs to move away from free trade routes.
“He told (the Big Three companies) 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.
She added Trump was open to additional exemptions to the 25 per cent tariffs imposed Tuesday on Canada and Mexico, when asked specifically about boosting egg imports to counter bird flu-related supply issues.
But she said there would be “no exemptions” to Trump’s so-called reciprocal tariffs set to begin on April 2, which seek to match tariffs put on U.S. goods by other countries.
U.S. Commerce Secretary Howard Lutnick had hinted Tuesday at a potential deal that would see Trump, Canada and Mexico “meet in the middle” on Tuesday’s tariffs, which the administration insists are related to fentanyl, but not remove them entirely.
Ontario Premier Doug Ford said he and Prime Minister Justin Trudeau were “on the same page” in rejecting that offer and insisting on “zero tariffs” on Canada.
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“There’s no such thing as half pregnant, we either have zero or we’re going to get on with the show here,” Ford told reporters in Toronto on Wednesday.
Earlier Wednesday, Lutnick told Bloomberg News that a deal would more likely mean carve-outs for automakers under the USMCA, which sets requirements for rates of U.S. products to be used in vehicle manufacturing.
“If you complied with the agreement, then maybe you avoid tariffs, and if you didn’t comply with the agreement, well, you did so at your own risk,” Lutnick said.
The Canadian Vehicle Manufacturers’ Association, which represents Stellantis, Ford and GM, said it “welcomes” the exemption.
“We look forward to working on a permanent solution that recognizes the integration of the North American market and reinforces the strong standards established in the USMCA/CUSMA,” the association’s president and CEO Brian Kingston said in a statement.
But Ford, whose province’s auto sector includes the Big Three automakers, said he was wary of a temporary reprieve and shifting “goalposts” for tariffs.
“That always concerns me, when someone says ‘give us 30 days as we ramp up to start moving south of the border.’ That’s unacceptable,” he said.
“We need certainty. Businesses need certainty across the board.”
Ford warned on Tuesday that the auto industry could shut down entirely in a matter of days due to cost increases from tariffs on Canadian-made parts and components.
The Canadian Chamber of Commerce said Trump’s tariff policies and exemptions are creating instability in the U.S.-Canada trading relationship.
“Here we go again,” executive vice president and public policy chief Matthew Holmes said in a statement Wednesday.
“We’ve seen this movie before. President Trump puts tariffs in place and then doles out exemptions one at a time. That’s not how a long-lasting trade alliance is built.”
Other auto industry representatives voiced similar exasperation towards Trump’s announcement.
“Round and round we go, where we stop, nobody knows,” Flavio Volpe, head of the Automotive Parts Manufacturers’ Association, posted on social media.
“The only thing that has changed is that Trump realized his tariffs were about to bring the U.S. auto sector to a grinding halt,” said Unifor national president Lana Payne, whose union represents more than 22,000 autoworkers.
“As long as the threat remains this extension doesn’t really change anything. The result is another month of instability in the auto industry, another month to pressure companies to move plants, another month to try to squeeze the Canadian government.”
The North American auto supply chain is highly integrated through the U.S., Canada and Mexico, as parts cross the border in various stages of manufacturing that could expose car companies to multiple tariffs.
The industry is also bracing for 25 per cent tariffs on steel and aluminum that Trump says will be effective March 12.
Vehicles made by Ford, GM and Stellantis comply with the USMCA’s complex rules that require 75 per cent North American content in order to get duty-free access to the U.S. market.
The rules also require 40 per cent of a passenger car’s content to be manufactured in the United States or Canada, based on a list of “core parts” including engines, transmissions, body panels and chassis components. The threshold for pickup trucks is 45 per cent.
Trump claimed tariffs and other policies he wants to enact to spur purchases of U.S.-made vehicles will allow the American auto industry to “absolutely boom” during his address to a joint session of Congress Tuesday night.
He also touted recent investments by automakers, including Honda, to build manufacturing plants in the U.S. following Trump’s return to the White House.
The Ford and Trudeau governments have collectively spent tens of billions of dollars attracting auto manufacturers to build new and expanded facilities in Ontario, with a focus on electric vehicles and battery manufacturing, as part of their job creation strategies.
Over the past few years, the two governments have announced over $50 billion in support for a slew of auto companies investing in Ontario, including Stellantis, Volkswagen, Ford and Honda.
Trump has claimed Canada “stole” auto manufacturing from the U.S. by offering attractive incentives to manufacturers.
“They stole it because our people were asleep at the wheel,” Trump said in February.
—With files from Global’s Isaac Callan and Colin D’Mello, the Canadian Press and Reuters