Trump Backtracks on Tariffs, Exempts Automakers for Another Month

It seemed inevitable from the moment Donald Trump announced his sweeping 25% tariffs on all imports from Mexico and Canada that the carveouts would come. One day into the attempt to inflict pain on seemingly everyone, including his own populus, Trump has issued his first exception: Automakers have managed to lobby for an additional month of tariff-free trade, according to Bloomberg.

White House Press Secretary Karoline Leavitt announced that cars coming across the northern and southern border as part of the cleverly named United States–Mexico–Canada Agreement (USMCA), a trade deal that Donald Trump negotiated during his first term but now is largely blowing up, will be exempted through the start of April. “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,” Leavitt said.

The move reportedly came after Trump administration officials met with leadership from Ford, General Motors, and Stellantis, which owns Chrysler, with more meetings expected in the coming days, according to Bloomberg. Notably, an executive for American automaker Tesla also happens to sleep in the White House. It’s hard to imagine Musk didn’t have the president’s ear on the decision in some shape or form, given that his company relies heavily on Chinese auto parts made in Mexico.

Per Bloomberg, part of the reason Trump granted the brief reprieve to automakers is to allow them to draft up plans on how they’ll invest more in domestic production. Which, hey, that would be great! The United Auto Workers union even offered its support for the idea of using tariffs for this purpose. Usually, though, you’d secure those types of investments ahead of time, maybe even start actually building up your manufacturing base before levying the tariffs. Standing up factories is not exactly a 30-day process—it can take years. But maybe automakers will figure it all out before the next set of reciprocal tariffs, including ones on auto imports, go into effect on April 2.

While automakers managed to successfully negotiate a carve-out, it seems like Trump has decided to play hardball with everyone else, including the leadership of the countries with which he just started a trade war.

Canadian Prime Minister Justin Trudeau has been actively trying to comply with Trump’s largely nonsensical demands, including issuing more border security and reducing the amount of fentanyl that crosses the Canadian border. Trudeau has correctly acknowledged that less than 1% of all fentanyl intercepted at US borders comes from Canada, and the Center for Foreign Relations found that Canada is “responsible for almost none of the fentanyl that winds up inside U.S. borders.” But Trump has insisted that Canada’s efforts are “not good enough” for the tariffs to come off.

It’s clear that Trump is trying to get concessions from basically everyone at this point, but he’s largely making them guess what those concessions are. Automakers figured out enough to buy themselves some time. We’ll see if anyone else cracks the code and gets some relief.