US President Donald Trump has temporarily exempted carmakers from the new 25% tariffs on goods from Canada and Mexico, just one day after announcing the sweeping duties, according to a BBC report
This move follows warnings from major US retailers about the likelihood of price hikes hitting store shelves soon, raising questions about Trump's promises to "make America affordable again."
On Tuesday night, Trump extended his aggressive trade policy to target the US's two closest neighbours, Canada and Mexico. However, after speaking with executives from major car manufacturers like General Motors, Ford, and Stellantis, the president agreed to grant a one-month exemption from the tariffs on cars crossing through the US, Canada, and Mexico.
White House press secretary Karoline Leavitt confirmed the exemption, saying it was given at the request of the companies to avoid putting them at an economic disadvantage.
Trump has long claimed that tariffs will push global companies to build factories in the US, boosting local industry. However, Ford's CEO Jim Farley had previously warned that steep tariffs on these key trading partners could cause major problems for the US auto sector.
This latest move led to a jump in carmaker shares, with GM up by 7.2%, Ford rising 5.8%, and Stellantis increasing by 9%. The S&P 500 index also climbed by 1.1% in response.
A phone call between Trump and Canadian Prime Minister Justin Trudeau did not result in any major breakthroughs. Trump took to social media to blame Trudeau for causing "problems" with the US, particularly due to his border policies. Trudeau, on the other hand, publicly disagreed, calling Trump's decision “dumb” despite acknowledging his intelligence.
Trump addressed the issue during his joint speech to Congress, admitting that the tariffs might cause some disruption but stating that “we’re OK with that”. He also used the opportunity to blame the challenges in living costs on his predecessor, Joe Biden, claiming that he inherited an “economic catastrophe” and “inflation nightmare”.
Though the US economy has remained fairly resilient in recent years and inflation has dropped significantly from its peak, Trump is focused on reducing the cost of living for American families. He reiterated that fighting for the country’s economy and providing relief to working families would remain among his top priorities.
Since his return to office, Trump has considered implementing tariffs on goods from Canada and Mexico. While he initially proposed this on his first day back in office, he later postponed the decision to February, only to grant a one-month delay last month.
Trump’s overall aim with these tariffs, alongside his broader trade strategy, seems to be to push for political and economic concessions from countries like China, Canada, and Mexico, particularly over illegal drug trafficking. However, businesses both in the US and around the world have raised concerns about the disruption these measures could cause.
