U.S. President Donald Trump has decided to press pause on new tariffs on automakers operating out of Canada and Mexico. This one-month exemption applies to vehicles and components covered under the United States-Mexico-Canada Agreement (USMCA). The decision came after speaking with the Big Three — Ford, General Motors and Stellantis. The U.S. administration believes that the one-month delay will give the automobile manufacturers additional time to move their production facilities to the country. According to a report by the Associated Press, White House Press Secretary Karoline Leavitt noted that Trump told the companies to “start investing, start moving, shift production here.” 

Temporary calm before the storm 

The 25% tariffs will take effect on April 2, 2025. The message is quite clear that there is no way to go around the new taxes. As expected the automobile sector has taken a cautious approach and is trying to put up an optimistic outlook. In an official statement, Ford said, “Ford said in a company statement, “We will continue to have a healthy and candid dialogue with the Administration to help achieve a bright future for our industry and U.S. manufacturing.” Meanwhile, GM and Stellantis backed Trump’s approach, viewing it as an opportunity for American companies to increase domestic investment.

The automobile companies have no option but to put up a brave front as they know this entire process is anything but simple. Speaking to Associated Press, John Paul MacDuffie, professor of management at the University of Pennsylvania said, the automobile companies “will be hit differently based on exactly where their supply chain is.” He added, “Of course, if the goal is to move a lot of production to the U.S. … I guess you could. But I don’t see those changes happening quickly.”

Analysts predict that the 25% tariffs will drive up the costs of vehicles, engines, and other components. They also warn that this impending crisis could ultimately result in widespread job losses.