The circus surrounding U.S. tariffs continues, and continues to devolve into ridiculousness. This afternoon the U.S. President ordered a one-month pause in the imposition of 25-percent tariffs as they apply to goods in the automotive sector entering the U.S. from Canada and Mexico.
At a press conference held at the White House on Wednesday afternoon, spokesperson Karoline Leavitt announced the news that Commerce Secretary Howard Lutnick had alluded to earlier in the day.
“We've been talking with the big three auto dealers. We're going to grant a one-month exemption on all automobiles that go through USMCA.” USMCA is the free trade agreement between Canada, the United States and Mexico.
“Reciprocal tariffs will still go into effect on April 2,” she added. “But at the request of the companies associated with USMCA, the president is giving them an exemption for one month so they’re not at an economic disadvantage.”
The Toronto Star quoted Flavio Volpe, CEO of the Automotive Parts Manufacturers' Association (APMC), as summing up the prevailing mood across the industry: “We're going in circles. No one knows where we'll stop.”
As we've reported in recent days, the application of 25-percent tariffs in the automotive industry would have the effect of killing the industry, with some predicting paralysis within the next seven to ten days. Following Howard Lutnick's remarks, shares across the industry soared. In New York, GM shares were up 5 percent at 1 p.m., while Ford was up 3.9 percent. In Milan, Stellantis shares were up 4.51 percent.
This comes after stock market declines over the past three days in anticipation of the effects of the tariffs.
The Toronto Star points out that Canada exports around $70 billion USD worth of vehicles and parts to the United States every year. The only Canadian industry that exports more to the U.S. is the oil and gas sector, which accounts for around $160 billion USD a year.