WASHINGTON — Even with President Donald Trump granting an ambiguous one-month reprieve for North American autos from blanket 25% tariffs on Canada and Mexico, industry observers said the continued trade drama is harming business.

"While another postponement of the White House’s proposed tariffs on automotive-related trade between the U.S. and Canada and Mexico is somewhat of a reprieve for the industry, damage has already been done," said Glenn Stevens, executive director of the Detroit Regional Chamber’s MichAuto association.

"For an industry that operates in three-to-five-year product cycles, this level of day-to-day uncertainty is debilitating," he added.

The exemption, negotiated by what White House press secretary Karoline Leavitt called the "big three" Michigan automakers, halts trade barriers that would have been disastrous for an industry with highly integrated supply chains across the three countries. It also comes after domestic automakers cried foul over tariffs impacting their North American products but not vehicles imported from overseas, mostly by foreign companies with U.S. operations.

Leavitt, in a press conference Wednesday, said Trump had conversations with representatives from Ford Motor Co., General Motors Co. and Stellantis NV about the tariffs that went into effect Tuesday.

Reading a statement from Trump, Leavitt said: "We spoke with the big three auto dealers. We are going to give a one-month exemption on autos coming through USMCA," referencing the U.S.-Mexico-Canada free trade agreement.

"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 are not at an economic disadvantage."

Leavitt, however, did not provide more details on exactly whether the exemption applies only to fully assembled vehicles or includes auto components shipped repeatedly across the border throughout the manufacturing process. But if the exemption does leave USMCA rules fully in place, then it is likely that all qualifying automotive goods are eligible.

The USMCA, which Trump signed during his first term, has extensive provisions on automotive rules of origin. Those rules govern which goods are eligible for preferential treatment, like reduced tariffs or duty-free trade.

The agreement dictates that finished vehicles and "core auto parts" must have 75% North American content to avoid any otherwise applicable tariffs and 65-70% for other parts. Core parts include engines, transmissions and advanced batteries, among others.

USMCA also includes rules requiring 40-45% of the labor for a vehicle's production must come from North American workers earning at least $16 per hour and that 70% of a vehicle manufacturer's steel purchases by value must originate from within the three countries.

After falling sharply Tuesday, stocks of Stellantis, Ford and GM were all surging Wednesday afternoon as news spread that the automakers were set to be at least temporarily exempted from the tariffs. The United States imported more than $461 billion worth of automotive goods in 2024, nearly half of which came from Canada and Mexico.

Stevens, of MichAuto, said Wednesday afternoon it wasn't immediately clear which automakers or suppliers would get the monthlong breather, and which won't, outside of GM, Ford and Stellantis.

"It's a reprieve, it's a delay, but it doesn't solve the issue for the industry — certainly if it's just another 30 days," Stevens said. "We've already seen damage done. What's going to happen in another 30 days?"

He said it was good news that executives from the Detroit Three had been able to convey the complexity and importance of the industry, and the need for tariff relief, to the Trump administration in recent days.

But the delay won't mean business can get back to usual, he said, as the automakers will continue to delay major decisions on expansion or product launches until there is more certainty. Those delayed investment decisions have trickle-down effects, affecting the planning and financials of suppliers.

Warren Browne, an auto supplier consultant and former GM executive who worked at the carmaker for 40 years, similarly said he was skeptical that the one-month reprieve would do much to settle the industry or increase the chances of automakers bringing more production to the United States.

“To change tariffs every day and not have a situated trade policy is just as bad as having high tariffs,” he said. “The outcome of allowing the furor to have a daily change in tariffs is a strategic hold across the supply chain.”

The delay will allow the components and vehicles already in production to pass through, but uncertainty remains about tariffs and how long they could remain in place.

“The unintended consequences will be that they won’t move back to the U.S.,” Browne said. “Suppliers and autos won’t know what the next move is. They’ll just pass the cost onto customers. Why would you move Equinox and Blazer back to Orion (from Mexico) if the stuff is going to go away in six months because fentanyl drops?”

Automakers, he added, already will have communicated their policy preferences on trade to the Trump administration, and the president’s actions in instituting the duties on Tuesday show indifference.

The American Automotive Policy Council, a lobbying group that represents the Detroit Three automakers in Washington, praised the pause.

“American Automakers Ford, GM and Stellantis applaud President Trump for recognizing that vehicles and parts that meet the high US and regional USMCA content requirements should be exempt from these tariffs," said Matt Blunt, AAPC president and former Republican governor of Missouri. "We look forward to working with President Trump and his administration on our shared goals of increasing U.S. automotive production and expanding exports to markets all around the world."

Republican U.S. Rep. John James, who represents a suburban Detroit district with a major automotive industry presence, suggested Wednesday that he played a role in encouraging the exemption.

"@realDonaldTrump is standing up for Michigan workers and Michigan’s economy," James wrote in a social media post. "Trump understands the complexity of the auto industry. I have been in contact with Secretary @howardlutnick and the Trump Administration, as well as reps of the auto industry."

He added: "We will continue to work to get more cars built in MI, more cars sold around the world, and more jobs back in MI!"

Asked if Trump expects automakers to be able to shift more production to the United States within a month, Leavitt said the president told the Michigan automakers that "they should get on it."

"Start investing, start moving. Shift production here to the United States of America, where they will pay no tariff," she said. "That's the ultimate goal."

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