Trump grants one-month exemption to big three automakers from Mexico, Canada tariffs: White House

WASHINGTON -- The White House said on Wednesday that US President Donald Trump is granting a one-month exemption to three major automakers from the newly imposed 25-percent tariffs on Mexico and Canada.

"We spoke with the big three auto dealers (makers), we are going to give a one-month exemption on any autos coming through USMCA. Reciprocal tariffs will still go into effect on April 2," White House Press Secretary Karoline Leavitt told reporters at a press briefing.

Levitt said Trump has spoken with three companies?— Ford, General Motors, and Stellantis?— and they made this request. The president agreed to grant them a one-month tariff exemption.

Bloomberg News reported earlier Wednesday that Trump is exempting automakers from newly imposed tariffs on Mexico and Canada for one month, "as a temporary reprieve following pleas from industry leaders".

The United States-Mexico-Canada Agreement (USMCA) is a trade agreement negotiated, signed, and ultimately enacted during Trump's first term, aimed at replacing the former North American Free Trade Agreement (NAFTA).

Under the USMCA, auto parts procurement must meet specific rules to qualify for duty-free treatment. These rules are designed to encourage regional production and sourcing within North America. For passenger vehicles and light trucks, at least 75 percent of the vehicle's value must originate in North America, while the minimum requirement for heavy trucks is 70 percent.

On Feb 1, Trump signed an executive order imposing a 25-percent tariff on products imported from Mexico and Canada, with a 10 percent tariff increase on Canadian energy products. On Feb 3, Trump announced a 30-day delay in implementing the tariffs on both countries and continued negotiations. According to this decision, the relevant tariff measures took effect on March 4.

Trump on Tuesday night defended his tariff strategy when delivering an address to a joint session of Congress, but acknowledged that such policies will cause "a little disturbance."

Nevertheless, economists and observers have expressed deep concerns about the potential impact of tariffs on the US economy.

The Tax Foundation estimated that, without considering retaliatory measures, Trump's 25 percent tariffs on Canada and Mexico, which went into effect Tuesday, will reduce long-term GDP by 0.2 percent, reduce hours worked by 223,000 full-time equivalent jobs, and reduce after-tax incomes by an average of 0.6 percent.