US President Donald Trump has granted temporary relief to automakers from the new 25% import tax on goods from Canada and Mexico, just one day after the tariffs were implemented.
The White House announced the exemption while Trump continued criticizing Canada for allegedly failing to prevent drugs from entering the US. “Nothing has convinced me that it has stopped,” Trump posted on social media following a call with Canadian Prime Minister Justin Trudeau about the economic disruption caused by the tariffs.
The relief announcement helped US stock markets recover, with shares closing higher after two days of declines that had erased post-election gains in the S&P 500.
The tariff exemption applies to vehicles manufactured in North America that comply with existing free trade agreement rules, which specify how much of a car must be produced in each country to qualify for duty-free treatment. This agreement was negotiated during Trump’s first term.
White House press secretary Karoline Leavitt explained that Trump approved a one-month exemption for the auto industry following appeals from Ford, General Motors, and Stellantis, whose supply chains extend across North America. Analysts at S&P Global Mobility had warned the tariffs would disrupt a third of North American car production within a week.
Following the announcement, Ford shares rose more than 5%, General Motors gained over 7%, and Stellantis US shares increased by more than 9%.
“The president is open to hearing about additional exemptions,” Leavitt added. “He always has open dialogue and he’ll always do what he believes is right for the American people.”
Ford issued a statement promising continued “healthy and candid dialogue with the administration” while highlighting its billions in US investments.
The economies of the US, Canada, and Mexico are deeply integrated, with goods worth billions crossing their borders daily. The Canadian Chamber of Commerce warned that despite targeted relief, affordability would suffer and business relationships would be damaged.
“We’ve seen this movie before. President Trump puts tariffs in place and then doles out exemptions one at a time,” said Matthew Holmes, the organization’s chief of public policy. “That is not how a long-lasting trade alliance is built.”
Ontario Premier Doug Ford told Canadian media that the automotive reprieve wouldn’t change his retaliatory plans, which include halting US liquor sales in the province.
Trump’s actions, including threats of “reciprocal” tariffs worldwide, have intensified fears of a broader trade war. On Tuesday, he increased tariffs on Chinese goods to at least 20%, prompting China to retaliate against US exports, including agricultural products.
Canada responded with its own import levies on US goods like peanut butter, oranges, and wine after Washington’s 25% tariffs took effect. Mexico also promised retaliation.
US retailers have warned of imminent price increases on products like avocados, while economists predict the tariffs could trigger recessions in Mexico and Canada.
Trump has acknowledged potential short-term economic pain for the US but maintains his goal is to protect American industry and boost manufacturing. He has framed the tariffs against America’s neighbors and China as a response to migration and fentanyl crossing the border.
Trudeau has called Trump’s drug-related justification for tariffs against Canada “completely bogus.”
White House officials confirm Trump still plans to implement reciprocal tariffs on other countries he perceives as treating the US unfairly starting April 2.
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