President Donald Trump has postponed tariffs on automobile imports from Canada and Mexico for one month following requests from executives at the Big Three automakers — General Motors, Ford, and Stellantis.
The delay comes shortly after Trump imposed 25% tariffs on all goods from the U.S.’s neighboring countries, which were previously duty-free under the North American trade agreement (sometimes referred to as NAFTA 2.0) negotiated during his first term.
The automakers have intricate supply chains and operate multiple manufacturing facilities in Mexico and Canada. GM, for instance, produces its Chevy Equinox in both countries, while Ford’s Lincoln Nautilus SUVs and Stellantis’s Dodge Chargers are manufactured in Ontario. Several automotive suppliers also have plants in Mexico and Canada.
With car prices already soaring, the potential tariffs could increase sticker prices by up to $12,000, as stated by Jeff Schott, a senior fellow at the Peterson Institute for International Economics, in an interview with the Detroit Free Press. This could dampen demand, leaving dealers with overpriced vehicles on their lots.
During a recent address to Congress, Trump urged manufacturers to relocate their operations to the United States. However, Ford CEO Jim Farley mentioned that the company lacks excess production capacity at its plants for such a shift. Farley warned that continued tariffs could have a detrimental impact on the U.S. industry.
According to Edmunds.com data, nearly half of all new vehicles sold in the U.S. through February were domestically built, with 17.4% manufactured in Mexico and 7.4% in Canada.
