The Trump administration officially announced on March 5th that it will grant a one-month exemption on the 25% tariffs imposed on automobiles imported from Mexico and Canada. This decision follows the imposition of the tariffs, which began on March 4th. White House Press Secretary Caroline Levitt shared the announcement during a briefing, stating, “We have talked to the ‘Big 3’ automakers,” and “We will exempt tariffs for one month on automobiles coming in (to the U.S.) through the ‘United States, Mexico, Canada Trade Agreement (USMCA).'” Levitt further explained that the exemption was granted at the request of industries associated with the USMCA, emphasizing the aim to avoid economically disadvantaging these industries during the transition.
It is important to note that the one-month exemption measure was not primarily intended to address U.S. relations with Canada and Mexico but to safeguard domestic industries. On the same day, President Trump held discussions with representatives from the “Big 3” American automakers — General Motors (GM), Ford, and Stellantis. The 25% tariff on automobiles from Canada and Mexico, initially set to take effect on February 4th, had been postponed for a month but was ultimately enforced on March 4th.
However, the decision to implement these tariffs has resulted in some economic challenges. The U.S. economy is experiencing negative impacts, with stock prices of American companies plummeting, especially in industries that rely heavily on the integrated supply chains with Canada and Mexico. The USMCA, a free trade agreement, had previously allowed for tariff-free trade between these countries, and the imposition of tariffs disrupts that system. There are growing concerns that these tariffs could lead to significant increases in automobile consumer prices in the U.S.
The temporary exemption for Canadian and Mexican automobiles will also provide Korean automakers and parts suppliers, who have established operations in Mexico, with time to devise countermeasures in response to the tariffs. Additionally, Spokesperson Levitt reaffirmed during the briefing that the “reciprocal tariff,” which considers each country’s tariff rates and non-tariff barriers, will take effect on April 2nd.