Trump pauses auto tariffs until April 2

In this story, you'll learn:

• About the recent pause on tariffs for certain vehicles and why this occured
• Some of the motives behind President Trump's tariffs
• How the tariffs may impact the trucking industry

In yet another change to U.S. tariff policy, the Trump administration has amended the 25% tariffs against Canada and Mexico to exclude the automotive products complying with the United States-Mexico-Canada Agreement until April 2. These tariffs went into effect March 4 after a previous one-month reprieve for negotiations.

“We are going to give a one-month exemption on any autos coming through USMCA,” U.S. Press Secretary Karoline Leavitt said in a March 5 press briefing. “Reciprocal tariffs will still go into effect on April 2nd, 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.”

The night before in his address to Congress, President Donald Trump had explained his blanket reciprocal tariff policy: “April 2, reciprocal tariffs kick in, and whatever they tariff us, other countries, we will tariff them. That's reciprocal, back and forth. Whatever they tax us, we will tax them.”

Established under the International Emergency Economic Powers Act (IEEPA), the tariffs are framed as levers to force America’s northern and southern neighbors to stop illegal immigrants and drugs, such as fentanyl, from entering the country.

Leavitt claimed fentanyl “is now the number one killer of young people in this country aged 18 to 34,” and on the U.S.-Canada border, there was a 250% increase in fentanyl seizures from 2022 to 2023.

The underlying motivation, though, is to establish a level trade balance, Trump’s March 4 speech suggested.

“Other countries have used tariffs against us for decades, and now it's our turn to start using them against those other countries,” the president asserted.

According to Leavitt, the catalyst were discussions between President Donald Trump and the Big Three—Ford, General Motors, and Stellantis, which she said the Big Three requested.

And while the tariff specifics have been in constant flux, leaving those keeping track flummoxed, expect more changes ahead of April 2 as other industries attempt to sway Trump.

“The president is open to hearing about additional exemptions,” Leavitt said. “He always has open dialogue, and he'll always do…what he believes is right for the American people.”

If a permanent exemption can be reached, that will be big news for commercial vehicle fleets. According to Global Data, one out of every three pickups sold in the U.S. is made in Canada or Mexico.

Tariffs would add thousands of dollars to the initial cost. And in some instances, current supply in the U.S. cannot keet up with demand. Ford, for example, plans to produce up to 100,000 F-Series Super Duty trucks at its Oakville Assembly Complex in Ontario, Canada, because the Kentucky and Ohio plants are at capacity, Ford said in 2024.

Regarding medium- and heavy-duty commercial vehicles, S&P Mobility projected tariffs could increase their initial cost by 10%. Costs are already expected to rise for MY2027 due to incoming NOx rules from the EPA.

The U.S. medium market (Classes 4 through 7) imports 25% of its vehicles from Canada and Mexico while the Class 8 sector brings in 40%.

S&P Mobility noted the added costs would decrease demand from 9% growth to 9% decline, and overall reduce fleets ability to modernize.

Bill Long, president and CEO of MEMA, The Vehicle Suppliers Association, released a statement after the news broke:

"While this pause is a positive step, MEMA’s goal remains achieving relief for all vehicle components, ensuring that trade policies support a strong and competitive vehicle supplier industry. We look forward to continued dialogue with the Administration, policymakers, and industry stakeholders to advocate for comprehensive solutions that promote supply chain stability and investment confidence."