Motorists on both sides of the border were breathing a huge sigh of relief after US president Donald Trump granted a one-month exemption on his newly imposed 25% tariffs on Canadian and Mexican automobiles made by the Big Three Detroit automakers.
According to multiple sources, it followed “urgent appeals” from carmakers concerned about the disruption to North America’s tightly integrated supply chain.
“We spoke with the Big Three auto dealers,” White House spokesperson Karoline Leavitt told reporters Wednesday. “We are going to give a one-month exemption on any autos coming through the U.S.-Mexico-Canada Agreement.”
The temporary reprieve offers a brief respite for an industry heavily reliant on cross-border trade.
In 2023, auto trade between the United States, Canada, and Mexico accounted for USD$345 billion, with parts and vehicles moving back and forth multiple times before reaching final assembly. Many of these goods have traditionally crossed the border tariff-free under the U.S.-Mexico-Canada Agreement (USMCA).
The decision follows a call between Trump and the CEOs of General Motors and the chair of Stellantis, who urged the administration to reconsider the broad tariffs. While the White House said it acknowledged their concerns, Trump himself continued to insist that the tariffs remain a key tool in his broader trade agenda.
The move to include autos in the tariffs sparked sharp criticism from Ontario Premier Doug Ford, who warned that the auto sector could grind to a halt if the tariffs remain in place beyond the exemption period.
“Assembly lines and the auto sector will shut down within 10 days, I predict,” Ford said on Monday after the surcharges were imposed. “Parts go back and forth up to eight times, and each time they hit a 25% tariff on both sides of the border.“
While Ford’s government has proposed a CAD$5-billion support fund to help Ontario industries weather the tariffs, the province is calling for their full repeal.
Ford, who has previously threatened to cut off electricity flows to the US, was reportedly talked down from implementing even further retaliatory measures from US Commerce Secretary Howard Lutnick himself ahead of Wednesday’s announcement.
Meanwhile, American labour unions could hardly contain their glee at using tariffs as a necessary step to revive domestic manufacturing south of the 49th.
On Tuesday, the United Auto Workers (UAW) issued a strong endorsement of Trump’s move, arguing that past trade deals have hollowed out the US auto sector by encouraging investment in Canada and Mexico at the expense of American workers.
“Tariffs are a powerful tool in the toolbox for undoing the injustice of anti-worker trade deals,” the UAW said in a statement. “For 40 years, we’ve seen corporations chase low wages abroad while gutting blue-collar jobs here at home. We want to see serious action that will incentivize companies to reinvest in America and stop cheating the American worker, the American consumer, and the American taxpayer.”
Despite their broad support for the tariffs, the UAW said it is in talks with the White House to shape future trade policies after the 30-day period expires.
Mexico, the largest supplier of vehicles to the US market, has remained relatively quiet amid the tariff dispute. Mexican officials have emphasized the need to maintain a stable trade environment but have not indicated any formal retaliation.
Mexican President Claudia Sheinbaum said her company would respond to the new taxes with its own retaliatory tariffs on Sunday, coinciding with mass demonstrations in the capital city. Observers said the delay might indicate that Mexico still hopes to de-escalate Trump’s trade war.
