President Donald Trump has given major U.S. automakers General Motors, Ford, and Stellantis a one-month reprieve on the administration’s tariffs for Canadian and Mexican imports.
The move was announced on Wednesday after Trump personally spoke with the leaders of the Big Three automakers. The temporary pause applies to auto imports coming through the United States–Mexico–Canada Agreement.
“Reciprocal tariffs will still go into effect on April 2,” White House Press Secretary Karoline Leavitt said, “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.”
The U.S. slapped Canada and Mexico with blanket 25 percent tariffs on Tuesday, causing U.S. stock markets to drop significantly. The S&P 500 index ended the day at its lowest level since November 4, the day before Trump’s reelection victory.
After news of the pause for automakers broke, stocks began rising. The S&P 500 index bounced back from Tuesday’s drop by 1.1 percent, while shares of automobile companies jumped. General Motors’ stock rose 7.3 percent, Ford’s increased 5.3 percent, and Stellantis’s is 9 percent higher.
The president initially signed the tariffs on Canada and Mexico to take effect last month, but those were delayed after both countries agreed to negotiate with the U.S. to help curb fentanyl smuggling across the northern and southern borders. Border security and the fentanyl crisis are the motivating factors for the tariffs.
Trump said he spoke with outgoing Canadian Prime Minister Justin Trudeau about how his nation’s efforts to stop the flow of fentanyl are “not good enough,” he posted on his Truth Social platform.
Additionally, the U.S. doubled its existing tariffs on Chinese goods to 20 percent. The increase prompted China to escalate its rhetoric against the U.S.
“If the U.S. truly wants to solve the [fentanyl] issue, then the right thing to do is to consult with China by treating each other as equals,” the Chinese embassy in the U.S. said in a pointed message. “If war is what the U.S. wants, be it a tariff war, a trade war or any other type of war, we’re ready to fight till the end.”
China is a primary producer of fentanyl and the drug’s precursor chemicals before they are shipped to Mexico and trafficked mainly across the southern border.
Canada and China have already implemented retaliatory tariffs of their own targeting U.S. imports, while Mexico vows to pursue similar measures. Mexican President Claudia Sheinbaum is expected to speak with Trump this week before making an official announcement regarding next steps on Sunday.
The Trump administration may be considering additional tariff exemptions for other industries beyond the one-month pause on auto imports, Leavitt said.
“The president is open to hearing about additional exemptions,” she told reporters. “He always has open dialogue, and he’ll always do what he believes is right for the American people.”
In his address to a joint session of Congress on Tuesday night, President Trump said his sweeping tariffs are justified because the U.S. has “been ripped off for decades by nearly every country on Earth.” He vowed to stop it.
“Other countries have used tariffs against us for decades and now it’s our turn to start using them against those other countries,” he said, pointing to the European Union, China, Brazil, India, Mexico, and Canada as examples of countries that charge “tremendously higher tariffs than we charge them.”
Tariffs are controversial because they could potentially incite a global trade war and hurt the national economy, but the Trump administration insists they are necessary to combat the fentanyl crisis, boost U.S. manufacturing, and protect jobs. Regardless, more tariffs are incoming next month.
Trump revealed the next round of tariffs will start on April 2, joking that he doesn’t want other countries to think his tariff policies are a prank if they began a day earlier on April Fools’ Day.