Trump Pauses Canada, Mexico Auto Tariffs

President Donald Trump has decided to delay for a month a portion of the 25 percent tariffs he imposed on Canada and Mexico at the urging of automakers, the White House said Wednesday.

The reprieve will apply to all auto manufacturers operating in North America under the U.S.-Mexico-Canada trade agreement signed by the three nations during Trump’s first administration, the White House said.

“We spoke with the Big Three auto dealers,” White House spokesperson Karoline Leavitt told reporters. “We are going to give a one-month exemption on any autos coming through [the U.S.-Mexico-Canada Agreement].”

The White House made it clear that its decision, which sent the stock market surging a day after a sharp sell-off sparked by the imposition of the tariffs, did not mean an end to the president’s abrupt decision to launch what amounts to a trade war with the country’s two largest trading partners in part to pressure them to do more to halt illicit shipments of fentanyl.

Auto trade between the United States, Canada and Mexico accounts for a large share of U.S. trade with those countries, which totaled $1.6 trillion last year. U.S. auto trade with its neighbors totaled about $345 billion, including $120 billion with Canada and $225 billion with Mexico.

Many of the vehicles and auto parts made in Canada and Mexico enter the United States duty-free under the USMCA.

Leavitt stressed that Trump still plans to proceed April 2 with “reciprocal tariffs,” imposing levies on goods from countries around the world viewed as unequal trading partners by the administration.

Trump is giving automakers “an exemption for one month so they are not at an economic disadvantage,” Leavitt said.

A month may not buy enough time to adjust for vehicle makers and manufacturers that have become increasingly interdependent in recent decades.

The American Automotive Policy Council, which represents Ford, GM and Stellantis, has been asking Trump to exempt vehicles and parts that meet the stringent domestic and regional content provisions of the USMCA.

“Our American automakers, who invested billions in the U.S. to meet these requirements, should not have their competitiveness undermined by tariffs that will raise the cost of building vehicles in the United States and stymie investment in the American workforce, while our competitors from outside of North America benefit from easy access to our home market,” AAPC President Matt Blunt said in a statement earlier this week.

The delay does provide time for Canada, Mexico and the Trump administration to try to negotiate a deal with that would permanently remove all the tariffs.

"Obviously a pause is welcome, but this constant ‘on again-off again’ of tariffs is difficult for companies that are trying to make sourcing and pricing decisions in real time. We continue to hope that Mexico, Canada, and the US can resolve the situation without needing to resort to tariffs or threats,” said Tiffany Smith, a vice president at the National Foreign Trade Council.

In a post on Truth Social shortly before Leavitt’s briefing, Trump said the Canadian government still had not done enough to stop inflows of fentanyl that U.S. officials blame for thousands of American deaths, even as Canada argues it is just a tiny source of the problem.

"Justin Trudeau, of Canada, called me to ask what could be done about Tariffs," Trump wrote. "I told him that many people have died from Fentanyl that came through the Borders of Canada and Mexico, and nothing has convinced me that it has stopped. He said that it’s gotten better, but I said, 'That’s not good enough.'"

Trump added that "the call ended in a 'somewhat' friendly manner!" But Trump also accused Trudeau of using trade frictions with the United States "to stay in power" after the Canadian leader announced his intention to resign late last year.

"Good luck Justin," Trump wrote.

Trudeau's office put a brief summary of the call: "The Prime Minister and President spoke today about trade and fentanyl. Both countries will continue to be in contact today."

The call was said to last about 50 minutes, with Vice President JD Vance and Commerce Secretary Howard Lutnick joining for at least a portion of the conversation.

Canada has a C$1.3 billion border plan that includes increasing surveillance, deploying Black Hawk helicopters and appointing a “Fentanyl Czar.” It has also designated seven criminal organizations involved in the production and distribution of fentanyl as terrorist entities under the country’s criminal code.

The United States imports more cars from Canada and Mexico than it exports to those nations because of its much larger market and tariff preferences under the UCMCA, which the first Trump administration negotiated with its two largest U.S. trading partners to replace the 1990s-era North American Free Trade Agreement.

But the United States actually had a $7.1 billion surplus in overall automotive trade with Canada last year. That’s because the United States exported $28.4 billion worth of parts to Canada and only imported about $19.2 billion in return.

It also exported $20.5 billion worth of trucks, buses and special purpose vehicles to Canada, while importing just $9.9 billion of those vehicles from its northern neighbor.

The surplus in those two areas more than offset the U.S. deficit in bilateral passenger car trade, where the United States exported $14.9 billion worth of those vehicles to Canada and imported $27.6 billion, according to Commerce Department figures.

The situation with Mexico is markedly different though, since the United States runs a deficit with that country in all three categories of automotive trade: passenger cars, parts and other vehicles. That combined deficit totaled $117.6 billion last year.

Breaking it down, the United States imported $48.7 billion worth of cars from Mexico and exported just $4.6 billion in return; it imported $82.5 billion worth of parts and exported $35.8 billion; and it imported $50.2 billion worth of other vehicles and exported $3.2 billion.

Mickey Djuric and Mike Blanchfield in Ottawa contributed to this report.