Trump exempts some automakers from Canada, Mexico tariffs for one month

According to the White House, President Donald Trump will exempt automakers from his severing 25-percent tariffs on Canada and Mexico for a month as long as they adhere to the terms of an existing free trade agreement.

Following a meeting with Trump’s top executives from Ford, GM, and Stellantis, Trump made the announcement on Wednesday.

On the news, Ford and General Motors both increased by 4.1 percent and by 5.3 percent, respectively.

The president’s press secretary stated on Wednesday that the president is open to hearing about additional exemptions, but Canadian Prime Minister Justin Trudeau is not willing to impose any tariffs on Canada if Trump imposes any, according to an official from the senior government who spoke on condition of anonymity because he was not authorized to speak to the press.

Automobile manufacturers, which manufacture goods in all three countries and frequently ship parts across North American borders multiple times as they are incorporated into systems and finished goods, are facing significant challenges due to Trump’s tariffs.

Prior to the US and Canada’s assembly lines starting to close, Ontario’s premier Doug Ford previously told The Associated Press that the auto industry would last for approximately 10 days.

He predicted that “people will lose their jobs.”

According to Trump, a one-month exemption for cars and trucks that adhere to the complex content regulations of the US-Mexico-Canada Agreement would benefit Ford, GM, and Stellantis because they do so in accordance with the complex regulations that require that all vehicles have at least 75 percent of North American content to be eligible for duty-free entry to the US market.

According to a list of “core parts,” which include engines, transmissions, body panels, and chassis components, the regulations also mandate that 40% of a passenger car’s components be produced in the US or Canada. Pick-up truck acceptance is limited to 45%.

Two industry sources told Reuters news agency that while they want certainty about tariff laws and vehicle emissions regulations, automakers want to see significant changes being made.

Trump might also impose a 10% tariff on imported Canadian energy, including crude oil and gasoline, that adheres to the USMCA’s rules of origin, according to a source with knowledge of the discussions.

Trade tensions

The country sends the US a third of its exports and receives from it a third of all imports, which could derail Canada’s burgeoning economic recovery.

The US may already be harmed by trade tensions. With uncertainty surrounding Trump’s policies a likely factor, new data released on Wednesday revealed slower payroll growth, as well as lower wage growth for employees who leave jobs. US stock indices have fallen steadily this week, and the dollar hit&nbsp is at three-month lows on Wednesday. Since February 20, the Nasdaq has fallen 9%.

Additionally, Trump has added ten percent to the price of Chinese goods.

Some foreign carmakers with significant US production footprints, including Honda and Toyota, would gain from an exemption, but competitors who don’t would be subject to the full 25-percent US tariffs.