President Donald Trump has granted a one-month exemption on newly imposed tariffs for imports from Mexico and Canada, aiming to ease the economic strain on U.S. automakers and other industries heavily reliant on North American trade.
In theory, this temporary relief will provide businesses with time to adjust to the new regulations. However, experts still warn that this may not be sufficient time for companies to make necessary changes.
White House Press Secretary Karoline Leavitt announced the exemption during a news conference.
“We spoke with the Big Three auto dealers,” Leavitt said. “We are going to give a one-month exemption on any autos coming through USMCA.” She added, “Reciprocal tariffs will still go into effect on April 2. But at the request of the companies associated with USMCA, the president is giving them an exemption for one month so they are not at an economic disadvantage”.
Commerce Secretary Howard Lutnick provided further context, explaining, “USMCA-compliant goods will not have a tariff for the next month until April 2.”
According to Lutnick, American auto companies, which were originally granted tariff leniency Wednesday, were the leaders in pushing the tariffs back again. The Trump tariffs have been postponed multiple times since his inauguration in January.
“The autos were the lead in getting this done, but also Canada and Mexico have done a good job offering us ever more work to prove to us they’re going to cut the fentanyl deaths,” Lutnick said. “The administration has emphasized that the tariffs should be viewed through the lens of combating the flow of fentanyl, which has been a significant issue for the U.S.”
The market has shown significant volatility in response to the tariff news, with the S&P 500 falling by 1.3% on Thursday. Family offices and high-net-worth investors are reducing their deal-making activities due to uncertainty surrounding government policy. Additionally, American consumers are preparing for increased prices on various products, including groceries, automobiles, and electronics, as the tariffs are anticipated to raise costs.
Canadian Prime Minister Justin Trudeau has voiced his strong opposition to the tariffs, calling them a betrayal of the friendship between Canada and the United States. “Canada wants the tariffs removed,” Trudeau stated, emphasizing that the removal of the tariffs is the only acceptable outcome.
Mexican officials have expressed their concerns and will soon announce their response. The tariffs are expected to have a significant impact on the Mexican economy and the North American auto industry, which heavily relies on cross-border supply chains.
