Trump pauses tariffs for autos as Trudeau call yields no breakthrough

Automakers received temporary reprieve on Wednesday from U.S. President Donald Trump's tariffs targeting Canada and Mexico, as concerns mounted over consumer impacts and talks with Canadian Prime Minister Justin Trudeau yielded no immediate breakthrough.

Following discussions with the "Big Three" U.S. automakers – Stellantis, Ford and General Motors – Trump decided to "give a one-month exemption on any autos coming through USMCA," White House Press Secretary Karoline Leavitt said, referring to the North American free trade pact.

"They made the ask, and the president is happy to do it," Leavitt told reporters.

Wall Street stocks rallied after the announcement, with shares of the three automakers each surging about 6 percent or more.

The American Automotive Policy Council said it applauded Trump's move.

But prospects of wider relief were dampened after Trump's call with Trudeau. The U.S. leader said he was unconvinced that Ottawa had done enough to address Washington's concerns over smuggling of the dangerous drug fentanyl.

Canada contributes less than 1 percent of fentanyl to the United States' illicit supply, according to Canadian and U.S. government data. But Trump has shrugged off these figures.

Trump's sharp 25 percent tariffs on U.S. imports from Canada and Mexico – with a lower rate for Canadian energy – kicked in Tuesday, sending global markets tumbling and straining ties between the neighbors.

Ottawa swiftly announced retaliatory levies, while Mexican President Claudia Sheinbaum plans to unveil her response at a mass rally on Sunday.

Trump has cited illegal immigration and fentanyl trafficking in imposing tariffs, though he frequently lambasts alleged trade imbalances when discussing levies.

More exemptions?

Consumer items appear poised for U.S. price hikes after Trump's tariffs on Canada, Mexico and China.

These include products like avocados, strawberries, electronics and gasoline.

Of the agricultural products imported from Mexico to the United States in 2023, more than 72 percent were fresh fruit and vegetables, as well as beer and other alcohol, government figures showed.

Trump said on Tuesday that tariffs would bring "a little disturbance" to the world's biggest economy.

Leavitt defended Trump's remarks on Wednesday as "realistic," saying that standing up to foreign nations "requires a little bit of disruption."

But she added of tariffs, "The president is open to hearing about additional exemptions."

Earlier on Wednesday, U.S. Commerce Secretary Howard Lutnick said Trump was mulling market segments where he could provide temporary relief.

Economists warn that tariff hikes stand to bog down economic growth and add to U.S. inflation.

(With input from AFP)