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The president of the United States of America, Donald Trump, has acted on the requests from the executives at the Big Three US automakers, Ford, General Motors, and Stellantis, to delay tariffs on automobile imports from Canada and Mexico for one month.
Politico had initially reported the reprieve, which happened barely 24 hours after President Trump issued 25% tariffs on all goods from the U.S. This event had previously been duty-free under a North American trade agreement (sometimes characterized as NAFTA 2.0) negotiated during his first term. However, this exemption affects compliance with the USMCA, as documented by The Wall Street Journal.
Several US automakers, including the Big Three, have complex supply chains and operate several manufacturing facilities in Mexico and Canada. For example, GM produces its Chevy Equinox in Mexico and Canada, and both Ford’s Lincoln Nautilus SUVs and Stellantis’s Dodge Chargers are made in Ontario. Multiple automotive suppliers also have factories in the two countries.
Car prices are already at historic highs, and the tariffs threaten to send sticker prices skyrocketing by as much as $12,000, according to Jeff Schott, senior fellow at the Peterson Institute for International Economics, who was interviewed by the Detroit Free Press. That could lead to less demand, leaving dealers with unaffordable cars on their lots.
In an address to Congress on Tuesday, Trump urged US automakers to move their operations onshore. White House press secretary Karoline Leavitt said in a briefing Wednesday that Trump expects GM, Ford, and Stellantis to shift production to the U.S. before the tariffs kick off at the end of the month.
“He told them they should get on it,” Leavitt said.
Ford CEO Jim Farley said last month at an investor talk the company doesn’t have excess capacity at its plants to shift production. Farley noted that Ford could withstand tariffs in the short term, but if they persisted, they “would blow a hole in the U.S. industry that we’ve never seen.”
Through February, nearly half of all new vehicles sold in the U.S. were built in the U.S, but 17.4% of them were built in Mexico and 7.4% in Canada, according to data from Edmunds.com.
“Since President Trump’s successful USMCA was signed, Ford has invested billions in the United States and committed to billions more in the future to both invest in American workers and ensure all of our vehicles comply with USMCA,” reads Ford. “We will continue to have a healthy and candid dialogue with the Administration to help achieve a bright future for our industry and U.S. manufacturing.”
