NEW YORK: President Donald Trump has granted a one-month exemption from auto tariffs on imports from Canada and Mexico following an outcry from Detroit, underscoring the clout of US automakers.
The “Big Three”—Ford, General Motors, and Stellantis—operate on an integrated North American model, leaving them highly vulnerable to the proposed tariffs. Trump, who won Michigan in 2024, halted the tariffs just a day after they took effect.
While offering short-term relief, the move is “not a cure,” Bank of America warned, as the tariffs could return next month. The auto sector remains a major US employer, with 436,000 workers—55 per cent of whom are with the Big Three. The trio also accounts for half of US assembly plants and nearly half of the 10 million vehicles produced annually.
The USMCA trade pact, inked during Trump’s first term, enables firms like Toyota and Honda to use Mexico and Canada as production hubs. In 2024, the Chevrolet Silverado and Ford Maverick were among the key imports from Mexico, while the Chrysler Pacifica and Lincoln Nautilus came from Canada, per GlobalData.
Trump’s broader tariff agenda includes a proposed 25% levy on imported cars, though details remain unclear. If USMCA protections hold, automakers from Germany, Japan, and South Korea face the greatest risk.
“The reality is a month is nowhere near enough time to relocate factories or reconfigure supply chains,” said Jessica Caldwell of Edmunds.
Automakers may ramp up production and stockpile inventory as a hedge, but that could backfire if tariffs don’t materialize.
For now, the industry watches as Trump’s protectionist push looms over North America’s deeply integrated auto supply chain. – AFP
