US to grant one-month reprieve from tariffs for automakers in USMCA

A day after imposing tariffs on imports from Canada and Mexico, the White House said it will grant a one-month exemption to automakers that are part of the US-Mexico-Canada Agreement.

The grace period for USMCA auto manufacturers was announced after a call between General Motors, Ford Motor Company and Stellantis executives with US President Donald Trump, White House Press Secretary Karoline Leavitt said at a March 5 press conference.

"We are going to give a one-month exemption on any autos coming through USMCA ... 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 said.

The latest statements came after Trump imposed tariffs on the US' closest neighbors -- an action closely watched by the closely intertwined North American energy markets. The US on March 4 imposed a 25% on imports from Mexico and Canada, with energy products from Canada facing a 10% tariff instead.

In addition to tariffs on Canadian and Mexican imports, US automakers and energy project developers are facing steel and aluminum tariffs currently scheduled to go into effect March 12.

Auto impacts

Each auto company previously shared concerns about the impact of tariffs on US auto manufacturers. Ford CEO Jim Farley said that persisting tariffs would have a "devastating impact," with "billions of dollars of industry profits wiped out."

GM previously said it was developing playbooks to respond to tariffs, but that it won't "spend a large amount of capital without clarity."

"We do build trucks in Mexico and in Canada and in the United States, and we have the capacity in the United States to shift some of that," GM CEO Mary Barra said in a Jan. 28 earnings call. "We also sell trucks globally, and so we can look at where the international markets are being sourced from."

Stellantis Executive Chairman John Elkann said the USMCA "should remain tariff-free," and that the first Trump administration was "very cognizant of making sure that US content was in the products we build in Canada and Mexico."

Upcoming reciprocal tariffs planned

The White House also affirmed during the press briefing March 5 that reciprocal tariffs, matching those in place from other countries, will go into effect as promised, on April 2.

President Trump "feels strongly about that, no matter what, no extension," Leavitt said.

During an address to Congress March 4, Trump doubled down on his desire to follow through with the added levies.

"Whatever they tariff us, other countries, we will tariff them. Whatever they tax us, we tax them," Trump said during the speech. "If they do non-monetary tariffs to keep us out of their market, then we do non-monetary barriers to keep them out of our market."

The president issued a memo on Feb. 13 directing his administration to investigate the trade and economic policies of other countries seen as harming the US through tariffs, value-added taxes and non-tariff barriers.

Energy seeking exemptions

While Commerce Secretary Howard Lutnick hinted March 4 that the US might ease some aspect of those tariffs, the current reprieve was limited to the three automakers -- at least for now.

Lutnick added March 5 that Trump is "leaning toward coming up with an idea" for exclusions that will be tied to the meeting terms of the USMCA.

Some energy-sector interests have asked White House to include an exemption for energy imports as well.

"Imposing tariffs on these essential energy sources would unnecessarily disrupt the complex and integrated supply chain that has developed over 50 years," said American Energy Alliance president Tom Pyle. "It will reduce output from US oil refineries, and raise electricity and fuel prices for the American people. I strongly urge President Trump to take the next step and exempt energy from his tariff agenda."

The American Petroleum Institute has also previously urged the US Trade Representative to include an exemption for crude oil, natural gas, and critical supply chain inputs from all across-the-board or additional tariffs.

Leavitt was asked March 5 whether the president would be open to any other carveouts aside from the automaker exemption.

"The president is open to hearing about additional exemptions," she replied. "He always has open dialogue."