The tariff rollercoaster continues. You might remember that a month or so ago, U.S. President Donald Trump planned to enact tariffs on Mexico and Canada — tariffs that could’ve had a negative impact on the auto industry. He then backed off after working with Mexico and Canada. There would be a one-month pause.
Trump then said he’d enact tariffs anyway, at 25 percent, with the plan starting earlier this week. Now the administration is doing a one-month pause. Again.
According to The New York Times, this comes after representatives of the Detroit Three — Ford, General Motors, and Stellantis — met with Trump to plead their case that tariffs would hurt the automotive industry by driving prices up for consumers. The automotive industry is deeply intertwined across the three countries — parts from one country get shipped to another for installation during production and supply chains stretch across borders. Cars and car parts can cross the border multiple times during production.
It now appears that Trump is granting a one-month exemption for cars that are produced under the United States-Canada-Mexico Agreement. It’s not clear how this affects cars built across North American borders by foreign-based automakers. Cars like the Toyota RAV4.
The Trump administration says that other tariffs, including ones that could affect the auto industry, are still set to start on April 2.
A statement from Karoline Leavitt, the White House press secretary, read in part: “at the request of the companies associated with U.S.M.C.A., the president is giving them an exemption for one month so they are not at an economic disadvantage.”
According to the Times, Leavitt was asked why the reprieve was just a month long. She said the time was given so that automakers could shift production to the U.S.
This where we, the car people, point out that it is difficult for automakers to shift production of cars and components from one plant to another on such a short timeline, though we suppose there may be some adjustments.
Trump’s efforts regarding tariffs are likely to remain a fluid situation, and we’ll continue to monitor how his approach to tariff policy affects the industry.
[Image: Jonah Elkowitz/Shutterstock.com]
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