US automakers get a breather for now

US automakers got a one-month respite on Wednesday from their government's tariffs on cars imported from Canada and Mexico, and Wall Street breathed a sigh of relief.

The reprieve came after US President Donald Trump spoke with leaders of the "Big Three" automakers — Ford, General Motors and Stellantis, according to White House Press Secretary Karoline Leavitt.

However, 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, and 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, or 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 on 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, an automotive research platform.

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 US in one month.

"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 from 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 sell-off 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.

Consumer impact

"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 the Mexican Automotive Industry Association. The plants in Mexico also assemble two of Ford's new EVs.

GM imported roughly 750,000 vehicles from Canada and Mexico in 2024 to the US, with most made in Mexico, according to GlobalData.

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 the 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.

Agencies contributed to this story.

hengweili@chinadailyusa.com