Tariff reprieve for carmakers

US President Donald Trump has decided to exempt carmakers from his 25 per cent tariffs on Canada and Mexico for one month after a direct plea from bosses at General Motors, Ford Motor and Stellantis.

The White House says the one-month reprieve will be in place as long as those countries comply with existing free trade rules.

Trump met with the heads of the three automotive groups the day before the March 6 announcement and they reportedly asked him directly to reconsider the tariffs on vehicles.

Karoline Leavitt, White House press secretary, says: “The president is giving them an exemption for one month, so they’re not at an economic disadvantage.”

The tariffs pose potential difficulties for carmakers as they produce vehicles in all three countries and often ship parts across North American borders multiple times as they get built into systems and finished vehicles, reports Reuters.

The sweeping 25 per cent levies have led to frictions between the three nations. Canada has hit back with tariffs on selected US imports and Mexico says it will also introduce retaliatory measures.

Analysts suggest that if the tariffs are eventually applied to carmakers it could add an average of $3,000 (NZ$5,200) to the sticker price of vehicles and up to US$7,000 on units coming from Mexican and Canadian plants. 

The exemption will also benefit other global brands with large US production footprints, such as Honda and Toyota.

The Japanese government says it will assess Trump’s latest move and take appropriate action.

Concerns about the tariffs have been raised with officials by the Japan Automobile Manufacturers Association (JAMA), reports the Japan Times.

Masanori Katayama, JAMA chairman, last month said: “We hope that the US government will establish a business environment where Japanese automakers feel safe to make investments with greater predictability.”