US automakers got a one-month stay on Wednesday from US President Donald Trump's tariffs on cars imported from Canada and Mexico, and Wall Street breathed a sigh of relief.
The reprieve came after Trump spoke with leaders of the "Big 3" automakers — Ford, General Motors and Stellantis, according to White House press secretary Karoline Leavitt.
But 25 percent tariffs for everyone else importing from Canada and Mexico took effect on Tuesday, as did a 20 percent across-the-board levy on China, which was doubled from 10 percent.
"He told them (the US automakers) that they should get on it, start investing, start moving, shift production here to the United States of America where they will pay no tariff," Leavitt said.
The White House announced that automakers who comply with the United States-Mexico-Canada Agreement (USMCA) get the 30-day exemption, which is set to expire on April 2.
"We spoke with the Big Three," Leavitt said, adding that Trump didn't want the companies to be put at an "economic disadvantage".
"As America's top auto producer, we appreciate President Trump's work to support our industry and exempt auto companies complying with USMCA," Ford said in a statement Wednesday. "Since President Trump's successful USMCA was signed, Ford has invested billions in the United States and committed to billions more in the future to both invest in American workers and ensure all of our vehicles comply with USMCA."
Through February, nearly half of all new vehicles sold in the United States were built domestically, but more than 17 percent were assembled in Mexico, and 7.4 percent in Canada, according to Edmunds.com.
Kevin Roberts, director of economic and market intelligence at CarGurus, an online auto-shopping site, told The New York Times that it was unrealistic to expect that the automakers could move their factories to the United States in one month's time.
"The auto industry is so global and so highly interconnected, you're not going to be able to shift a large amount of production in a month's time," Roberts said.
He estimated that a 25 percent tariff would add almost $12,000 to the average price of a car Canada, and $10,000 to one from Mexico.
Shares of GM, Ford and Stellantis all finished higher on Wednesday. The S&P 500 rose 1.1 percent to rebound from a selloff that had erased all of its gains since Election Day. The Dow Jones Industrial Average climbed 485 points, or 1.1 percent, and the Nasdaq Composite gained 1.5 percent.
"The economic impact and consumer impact is still ahead of us," said Sameer Samana, head of global equities and real assets at Wells Fargo Investment Institute. "It comes back to what no one really knows, and that is how long these tariffs stay in place."
Ford CEO Jim Farley said at an investor forum last month that the automaker could tolerate the levies in the short term, but that they "would blow a hole in the US industry that we've never seen".
Ford has three plants in Mexico; it exported just under 196,000 cars to North America in the first half of 2024, with 90 percent going to the US, according to Mexico's AMIA. The plants in Mexico also assemble two of Ford's new EVs
GM imported roughly 750,000 vehicles from Canada or Mexico in 2024 to the US, with most made in Mexico, according to GlobalData. The autos include the Chevy Silverado, GMC Sierra pickup trucks and mid-sized SUVs. GM's three plants in Canada produce electric vans, the Chevrolet Silverado Heavy Duty truck, and the V8 engine and dual clutch transmission.
Stellantis operates assembly plants in Mexico making Ram pickups and vans, as well as the Jeep Compass mid-sized SUV. The group owns two assembly plants in Canada: one where it makes Chrysler models, and another scheduled to restart output of a new Jeep model this year.
S&P Global Mobility on Tuesday — before the one-month delay — predicted that roughly a third of automobile production in North America could have been cut by next week due to the 25 percent tariffs, CNBC reported.
The forecasting firm reported that 25 automakers on average produce 63,900 light-duty passenger vehicles in North America each day, with about 65 percent built in the US; 27 percent in Mexico, and 8 percent in Canada, the website said.
On social media, "Melanie" wrote on X: "Once again President Trump is picking winners & losers in regards to tariffs. The big 3 automakers have a one month reprieve but other companies, including small businesses suddenly have 25% more cost. Many companies don't work on a big profit margin so this 25% is very damaging."
"FOUR whole weeks to ship supply chains, production lines, and to qualify new domestic suppliers?" wrote Ryan King on X.
Agencies contributed to this story.
