President Donald Trump has decided to grant a one-month exemption on his newly imposed tariffs on imports from Mexico and Canada for U.S. automakers. This decision comes amid concerns that the ongoing trade war could negatively impact U.S. manufacturers.
The announcement follows a discussion between Mr. Trump and the leaders of the “big 3” automakers – Ford, General Motors, and Stellantis – on Wednesday (March 5, 2025). During the conversation, Mr. Trump urged the automaker chief executives to consider moving their production operations to the U.S. from Canada and Mexico, as reported by White House press secretary Karoline Leavitt.
“We had discussions with the big three auto dealers,” Mr. Trump’s spokesperson read from a statement. “We have decided to provide a one-month exemption on any autos coming through USMCA,” referring to the North American free trade agreement that was renegotiated during his first term.
While President Trump is open to considering additional exemptions, Canadian Prime Minister Justin Trudeau is not inclined to lift Canada’s retaliatory tariffs if any tariffs on Canada remain in place. This stance was confirmed by a senior government official speaking to The Associated Press on condition of anonymity due to lack of authorization to speak publicly on the matter.
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Mr. Trudeau’s office stated that both countries will remain in contact to address the situation. Meanwhile, Ontario Premier Doug Ford expressed concerns to The Associated Press about the potential impact on the auto sector in the U.S. and Canada, warning that assembly lines in both countries could begin to shut down within about 10 days.
“People are at risk of losing their jobs,” Ford emphasized.
Commerce Secretary Howard Lutnick hinted at the possibility of certain exemptions to the 25% tariffs imposed on Canada and Mexico.
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Despite efforts to negotiate exemptions, President Trump’s tariffs have caused tension among allies who view his aggressive trade policies as misguided. Canada has indicated that it will not accept any compromises to reduce the recently imposed tariffs. The escalating trade war is raising concerns about potential economic repercussions, including higher costs, inflation, and job losses.
While acknowledging that the tariffs may cause some financial challenges, President Trump believes they will ultimately lead to increased domestic investment and job creation. In an interview with Bloomberg Television, Commerce Secretary Lutnick suggested that Mr. Trump could announce updates to his tariff plans later in the day, potentially sparing certain sectors like autos from additional import taxes.
On April 2, President Trump intends to unveil “reciprocal” tariffs to match the tariffs, taxes, and subsidies imposed by other countries. This move could significantly raise global tariff rates and escalate trade tensions.
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Mr. Lutnick indicated plans to discuss potential options with President Trump regarding Canada and Mexico, emphasizing their efforts to address the President’s concerns about drug trafficking. A decision from the President was expected later in the day on Wednesday.
President Trump recently imposed 25% taxes on imports from Mexico and Canada, with Canadian energy products subjected to a lower 10% tariff. Additionally, the President increased the 10% tariff on Chinese imports to 20%. While the administration has cited drug smuggling prevention as a primary reason for the tariffs, President Trump has also expressed intentions to address persistent U.S. trade deficits.
These tariffs prompted swift retaliatory measures from Canada and China, with Mexico planning to announce its response in the coming days. The U.S. stock market has witnessed a decline, erasing gains made since President Trump’s election victory. Consumers are already feeling the impact of inflation and are concerned about potential price hikes resulting from the tax increases. Amid these concerns, Commerce Secretary Lutnick hinted at a possible reconsideration during an interview with Fox Business Network.
President Trump downplayed the potential economic consequences as a “minor disturbance,” suggesting that the anticipated benefits, including reciprocal tariffs on countries with tariffs on U.S. exports, would outweigh any challenges. He emphasized the need for patience during this transitional period.
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President Trump expressed optimism following discussions with top executives from major U.S. automakers, including General Motors, Ford, and Stellantis. The domestic auto industry, heavily reliant on supply chains in Mexico and Canada, faces significant vulnerability to tariffs.
Meanwhile, Prime Minister Trudeau of Canada announced plans to impose tariffs on over $100 billion worth of American goods over a 21-day period, highlighting the strain on the longstanding friendship between the two countries.
“Today, the United States initiated a trade war against Canada, its closest partner and ally. At the same time, they are engaging positively with Russia, appeasing Vladimir Putin, a deceitful, murderous dictator. It doesn’t add up,” Trudeau remarked.
Also Read | How will Mexico respond to Trump’s tariffs?
Mexico is expected to announce its own retaliatory measures in response to the tariffs imposed by the U.S. Beijing has already implemented tariffs of up to 15% on various U.S. farm exports and expanded restrictions on U.S. companies.
“If the U.S. desires war, whether in the form of tariffs or trade disputes, we are prepared to fight until the end,” stated China’s embassy to the United States on Tuesday night.
In response, U.S. Defence Secretary Pete Hegseth indicated the readiness of the United States to engage in conflict with China, emphasizing the importance of maintaining strength to deter potential adversaries.
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“Those who seek peace must be prepared for war,” Hegseth stated on Wednesday morning. “Strength is essential if we want to prevent conflicts with China or any other adversaries.”
Ms. Leavitt, along with two other administration officials, faces a lawsuit from The Associated Press on First and Fifth Amendment grounds. The news agency alleges that the officials are retaliating against editorial decisions they disagree with. The White House contends that the AP is not complying with an executive order to refer to the Gulf of Mexico as the Gulf of America.
Published – March 06, 2025 01:26 am IST
