Carmakers granted temporary exemption from Trump’s Canada, Mexico tariffs

• Published On: 06 March 2025 at 18:36

Just one day after the tariffs went into effect, US President Donald Trump announced a temporary exemption for automakers from the new 25% import tax on vehicles from Canada and Mexico.

Despite this decision, Trump has continued to criticise Canada for not doing enough to combat drug trafficking into the United States.

"Nothing has convinced me that it has stopped," Trump tweeted after speaking with Canadian Prime Minister Justin Trudeau about the economic disruption caused by the new trade tariffs.

The news of the relief boosted US stocks, which closed higher after two days of declines that erased the S&P 500's gains since the November presidential election.

The tariff exemption is applicable to cars manufactured in North America that meet the continent's existing free trade agreement requirements.

The agreement, negotiated by Trump during his first term, specifies how much of a vehicle must be manufactured in each country to qualify for duty-free status.

According to White House press secretary Karoline Leavitt, Trump approved a one-month tariff exemption for the car industry in response to appeals from Ford, General Motors, and Stellantis, all of which have North American supply chains.

Analysts at S&P Global Mobility warned that the new tariffs, which tax imported goods, could disrupt a third of North American car production within a week.

"The president is open to hearing about additional exemptions," Ms. Leavitt stated. "He always has open dialogue and he'll always do what he believes is right for the American people."

Following the announcement, Ford shares increased by more than 5%, while General Motors rose by more than 7%. Stellantis shares in the United States increased by more than 9%.

Every day, billions of dollars in goods cross the border between the United States, Canada, and Mexico, reflecting their economies' deep integration.