President Donald Trump delayed tariffs on car imports from Canada and Mexico a month after a request from executives of the big three carmakers (General Motors, Ford and Stellantis) in the hopes that the carmaker will move its offshore operations to the United States by April 2nd.
The first reported grace period by Politico is less than two days after Trump issued a 25% tariff on all goods from his US neighbors, and previously the North American Trade Agreement (also characterized as NAFTA 2.0) was negotiated during his first term. The exemption applies to USMCA compliant car manufacturers in accordance with the Wall Street Journal.
Several automakers, including the Big 3, have complex supply chains and operate several manufacturing facilities in Mexico and Canada. For example, GM produces Chevrolet equinox in Mexico and Canada, while Ford’s Lincoln Nautilus SUV and Stellantis dodge charger are made in Ontario. Multiple automotive suppliers also have factories in both countries.
According to Jeff Shott, a senior fellow at the Institute for International Economics, interviewed by the Detroit Free Press, the car’s prices are already historic highs, with tariffs threatening to increase sticker prices up to $12,000. It could lead to less demand, and dealers are pasting affordable cars into their lots.
In his speech to Congress on Tuesday, Trump urged manufacturers to move their operations on ashore. White House press chief Karoline Leavitt said at a briefing Wednesday that Trump hopes GM, Ford and Stellantis will move production to the US before tariffs begin at the end of the month.
“He told them they should ride it,” Leavitt said.
Ford CEO Jim Farley said last month that the company does not have the excess capacity in its factories to shift production. Farley said Ford could withstand tariffs in the short term, but if they last, they would “draw a hole in a US industry that we’ve never seen before.”
By February, nearly half of all new vehicles sold in the US were built in the US, but 17.4% in Mexico and 7.4% in Canada, according to data from Edmunds.com.
“Since President Trump’s USMCA was signed, Ford has invested billions of dollars in the United States, committed to billions more in the future, both investing in American workers, ensuring that all vehicles are USMCA compliant,” reads Ford’s statement. “We will continue to have a sound and candid dialogue with the administration to help us achieve a bright future for our industry and the US manufacturing.”
This article was updated with information from the White House Press Secretary and a statement from Ford.
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