As President Donald Trump's tariffs already begin to affect the stock market and weigh on consumer sentiment, the White House says U.S. automakers will get a one-month grace period on imported cars before they have to start paying new duties.
President Trump said Wednesday he had spoken with U.S.-based auto manufacturers Ford, General Motors and Stellantis.
In a statement, he said "We are going to give a one month exemption on any autos coming through USMCA,” or the free trade agreement covering North America that he negotiated during his first term as president.
White House press secretary Karoline Leavitt said Trump told the CEOs of the "Big Three" automakers that they should move operations to the U.S. to avoid long-term expenses from the new tariffs.
"He told them that he they should get on it. Start investing, start moving, shift production here to the United States of America where they will pay no tariff. That's the ultimate goal,” Leavitt said.
On Tuesday, the president enacted promised 25% tariffs on nearly all goods from Canada and Mexico, and 10% tariffs on energy-related imports from Canada, including oil, natural gas and electricity.
The trade war has already eliminated all gains made in the S&P 500 benchmark index since President Trump took office in January, and trade experts and retail CEOs have warned that U.S. consumers will now pay higher prices, potentially in a matter of days.
"There'll be a little disturbance, but we'll be okay with that," President Trump told Congress.
Canada and Mexico have sought retaliatory action against the tariffs, and China has indicated it will follow suit.
Some manufacturers expect to pass on costs to customers and some U.S. manufacturers are hopeful of an exclusion process, according to an advisor to domestic industry who spoke on the condition of anonymity to discuss sensitives conversations.
RELATED STORY | Trump urges farmers to 'bear with' tariffs as long-term gains expected
President Trump is open to the possibility of exemptions from tariff arrangements, Leavitt said Wednesday, but did not elaborate on specifics.
But Canadian Prime Minister Justin Trudeau says Canada will keep retaliatory tariffs against the U.S. in place as long as the U.S. has any active tariffs against Canada. Officials in Canada have warned auto manufacturing in the country would last just days before the effects of the tariffs forced plant closures.
President Trump said he would implement "reciprocal" tariffs against countries April 2nd, part of his broader tariff agenda the administration argues will raise revenue and drive down debt.
“The administration is trying to accomplish several different things with these tariffs. It’s trying to address unfairness, it’s trying to address specific national security issues and it’s trying to ensure the economy remains strong as a result," said Tim Brightbill, an international trade law and policy attorney at Wiley Rein LLP. "It may be possible to do all of these things but it’s a very difficult balancing act. And with so many different types of tariffs being announced and others potentially on the way we’re in uncharted territory to how this all will work."
“The more aggressively these tools are used the greater likelihood of pushback from the markets, from our allies, from the courts and from Congress,” said Brightbill.
