U.S. President Donald Trump is giving the auto industry a one-month break from across-the-board tariffs, but not everyone is breathing a sigh of relief.
In a White House briefing Wednesday afternoon, press secretary Karoline Leavitt gave the news commerce secretary Howard Lutnick had hinted at earlier in the day.
It was another quick change for the highly integrated industry.
“Round and round we go. Where we stop, nobody knows,” said Flavio Volpe, CEO of the Automotive Parts Manufacturers’ Association.
The head of Canada’s largest private sector union called the 30-day reprieve an “extortion tactic.”
“What changed from yesterday and what is going to change in the next 30 days? The only thing that has changed is that Trump realized his tariffs were about to bring the U.S. auto sector to a grinding halt. Now he’s granting an extension to use that time to try to extract commitments from the companies to divest from Canada,” said Unifor National President Lana Payne.
“As long as the threat remains this extension doesn’t really change anything. The result is another month of instability in the auto industry, another month to pressure companies to move plants, another month to try to squeeze the Canadian government,” added Payne. “Trump has made it clear he wants our jobs. We need to remain on guard against any attempt to sacrifice Canadian workers and jobs in order to appease Trump.”
The on-again, off-again tariffs are a damaging repeat of what Trump did in early February by putting an initial 30-day pause on across-the-board tariffs against Canada and Mexico, said Canadian Chamber of Commerce public policy chief Matthew Holmes.
“Here we go again. We’ve seen this movie before,” said Holmes. “President Trump puts tariffs in place and then doles out exemptions one at a time. That is not how a long-lasting trade alliance is built.”
The head of the Canadian Vehicle Manufacturers’ Association — which represents the Big Three Detroit automakers Ford, GM and Stellantis — praised the 30-day delay.
“The CVMA welcomes the U.S. tariff exemption,” said CVMA president Brian Kingston. “We look forward to working on a permanent solution that recognizes the integration of the North American market.”
In a post on Truth Social shortly before Leavitt spoke, Trump seemed to pour cold water on the idea of tariff breaks, again claiming that fentanyl crossing into the U.S. from Canada was his biggest reason for imposing tariffs.
In a morning interview on Bloomberg TV, Lutnick said Trump would be making an announcement on whether some imports from Canada and Mexico would be getting a break from the across-the-board 25 per cent tariffs.
He specifically mentioned the automotive industry, where some components cross the Canada-U.S. or Mexico-U.S. border several times en route to becoming a finished product.
Industry analysts have estimated that the compounded tariffs could add several thousand dollars to the price of a finished vehicle, and have said the entire industry could grind to a halt within days if tariffs aren’t lifted.
In trading after Lutnick’s remarks, shares across the auto industry shot up.
In New York, shares of GM soared by 7.2 per cent on the day, while Ford rose by 5.8 per cent. In Milan, shares of Stellantis were up 4.5 per cent.
In Toronto, shares of parts manufacturers also got a lift, with Aurora-based Magna International rising 6.9 per cent and Guelph-based Linamar up by 4.1 per cent.
Canada exports roughly $70 billion a year in vehicles and vehicle parts to the U.S. The only Canadian industry with more exports to the U.S. is the oil and gas sector, which accounts for roughly $160 billion a year. In the across-the-board tariffs that officially began Tuesday, Trump put a 10 per cent tariff on Canadian energy imports.
It’s not a coincidence that the two biggest sectors of Canada’s exports to the U.S. are the ones catching something of a break in the trade war, said Jim Stanford, an economist with the Centre for Future Work.
“Clearly, the Trump government is under severe pressure from American companies to avoid the disaster that his tariffs would cause,” said Stanford, adding that the pause gives some time for Trump to step back from the ledge.
“He now has to try to find a face-saving way to back away,” Stanford said. “These tariffs will be as disastrous in 30 days as they would have been today.”
American businesses who count on other Canadian imports are also likely making their case to Trump for exceptions, Stanford added.
“I’m sure he’s hearing from every American company that uses aluminum as an input why this is going to be a disaster for them,” said Stanford, adding that U.S. farmers count on potash from Saskatchewan for their fertilizers.
On March 12, additional 25 per cent tariffs are set to be imposed on steel and aluminum imports to the U.S. On April 2, Trump is set to announce the results of Lutnick’s review of U.S. trade relationships, and has said he’ll be imposing “reciprocal” tariffs.
