Donald Trump has temporarily spared carmakers from sweeping US tariffs on goods from Canada and Mexico, one day after an economic strike on the US’s two biggest trading partners sparked warnings of widespread price increases and disruption.
The US president extended his aggressive trade strategy at midnight on Tuesday by targeting the country’s two closest neighbors with duties of 25%.
US retail giants predicted that prices were “highly likely” to start rising on store shelves almost immediately, raising questions about Trump’s promises to “make America affordable again” after years of heightened inflation.
After a call with top executives at General Motors, Ford and Stellantis, however, Trump approved a one-month exemption from tariffs on “any autos coming through” the US, Mexico and Canada, the White House press secretary, Karoline Leavitt, announced on Wednesday.
The exemption has been granted “at the request of the companies”, Leavitt told reporters, “so they are not at an economic disadvantage”.
While Trump has claimed tariffs will embolden US industry by forcing global firms to build factories in the US, Ford’s CEO, Jim Farley, publicly cautioned last month that imposing steep tariffs on Canada and Mexico could “blow a hole” in the country’s auto industry.
Shares in large carmakers rose sharply, with GM up 7.2%, Ford up 5.8% and Stellantis up 9% in New York. The benchmark S&P 500 increased 1.1% on Wall Street.
A separate call between Trump and Justin Trudeau, the Canadian prime minister, did not lead to any larger breakthrough, however. Trudeau “largely caused the problems we have with them because of his Weak Border Policies”, Trump declared on his Truth Social platform after they spoke. “These Policies are responsible for the death of many people!”
Trudeau insisted there had been improvements at the border, the US president claimed, adding that he told him this was “not good enough”.
After the US imposed tariffs this week Trump, Trudeau told Trump publicly: “Even though you’re a very smart guy, this is a very dumb thing to do.”
During Trump’s joint address to Congress on Tuesday evening, he acknowledged that tariffs would cause disruption. There will be “a little disturbance, but we’re OK with that”, he said.
He blamed cost of living challenges on his predecessor, Joe Biden, from whom he claimed to have inherited “an economic catastrophe and an inflation nightmare”.
The US economy has, in fact, remained resilient in recent years, and inflation has fallen dramatically from its peak – at the highest level in a generation – three years ago.
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“Among my very highest priorities is to rescue our economy and get dramatic and immediate relief to working families,” said Trump. “As president, I am fighting every day to reverse this damage and make America affordable again.”
Trump had initially pledged to target Canada and Mexico with tariffs on his first day back in office. Upon his return, however, he said he was considering imposing the tariffs at the start of February. Last month, he offered Canada and Mexico a one-month delay at the 11th hour.
Trump and his allies claim that higher tariffs on US imports from across the world will help “Make America great again”, by enabling it to obtain political and economic concessions from allies and rivals on the global stage.
But businesses, both inside the US and worldwide, have warned of widespread disruption if the Trump administration pushes ahead with this strategy.
Since winning November’s presidential election, the president has focused on China, Canada and Mexico, threatening the three markets with steep duties on their exports unless they reduced the “unacceptable” levels of illegal drugs crossing into the US.
Source: theguardian.com
