Carmakers, Mexican, and Canadian goods get monthlong US tariff break

President Donald Trump on Thursday signed orders granting a one-month tariff exemption for Mexican and Canadian goods that fall under the United States-Mexico-Canada trade agreement negotiated during his first term. Trump also dropped tariff rates on potash, a critical agricultural product used in fertilizer, to 10%. Trump added the tariff exemptions after personal calls with Mexico’s president, Claudia Sheinbaum, and Canadian prime minister Justin Trudeau. The Trump administration’s initial 25% tariffs on Canada and Mexico took effect Tuesday.

Roughly half of goods coming into the United States from Mexico and about 38% of goods from Canada should qualify for the exemption, NBC reported.

Trump’s compromise with Mexico and Canada came the day after his office announced a one-month reprieve from the tariffs for automakers. Press Secretary Karoline Leavitt said the exemption applied to all auto products compliant with the USMCA trade agreement. American automakers Stellantis, Ford, and General Motors had lobbied Trump for the change. Leavitt added that Trump was open to discussing additional exceptions. Separately, the Trump administration’s reciprocal tariffs on all countries are scheduled to take effect April 2, she said.

How did Mexico and Canada respond to the change? Mexico’s Sheinbaum thanked Trump and pledged to continue work on border security initiatives. She is not expected to institute retaliatory tariffs that she previously planned to introduce March 9. Canada’s finance minister, Dominic LeBlanc, said Thursday that due to the change his country would wait to impose a second round of retaliatory tariffs until the exemption expires April 2. But Canada’s first wave of $21 billion in retaliatory tariffs against the United States will remain in place, the Associated Press reported. Ontario Premier Doug Ford is also planning to move ahead on Monday with a 25% increase in electricity costs for power his province provides to Michigan, New York, and Minnesota.

Are automakers moving production to the United States? Stellantis on Thursday thanked Trump for the one-month tariff reprieve and pledged to build more American cars. Reuters news agency reported on Feb. 3 that Japanese carmaker Honda planned to move manufacturing of its next Honda Civic to Indiana from Mexico to avoid tariff costs.

Dig deeper: Read my report on the retaliatory tariffs Mexico, Canada, and China initially imposed on the United States.