UPDATE March 5, 2025 1:59 pm
WASHINGTON (AP) — President Donald Trump is granting a one-month exemption on his stiff new tariffs on imports from Mexico and Canada for U.S. automakers, amid fears that the trade war could harm U.S. manufacturers.
The announcement comes after Trump spoke with leaders of the “big 3” automakers, Ford, General Motors, and Stellantis on Wednesday.
“We spoke with the big three auto dealers,” Trump said in a statement read by his spokesperson. “We are going to give a one month exemption on any autos coming through USMCA,” referencing the North American free trade agreement he renegotiated in his first term.
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Original story:
Automotive industry employees, Wall Street investors, and avocado lovers all had one thing in common on Tuesday. They’re bracing for some changes.
The Trump administration’s 25% tariffs on Canadian and Mexican goods — except for Canadian energy resources, which are taxed at a 10% rate — went into effect just after midnight Tuesday. The administration also added an additional 10% tariff on Chinese goods after imposing an 10% tariff last month.
It’s a similar situation to what American consumers experienced in 2018. Soon after President Donald Trump took office during his first term, the administration imposed tariffs on Canadian and Mexican steel and aluminum, which were met with retaliatory tariffs on American goods, including steel, aluminum, cheese, and bourbon. The Trump administration is also expected to place a 25% tariff on all aluminum and steel imports on March 12, with no exceptions or exemptions.
Canada, Mexico, and the United States are exiting a period of free trade between their countries. The North American Free Trade Agreement was signed in 1992 and gradually removed most tariff and trade barriers moving between the three nations. In 2017, Trump called NAFTA “the worst trade deal in history.”
After renegotiations, the trio signed the United States-Mexico-Canada Agreement in November 2018. The USMCA increased intellectual property protections and made enhancement to U.S. labor laws to make them more competitive, among other changes, compared to the NAFTA.
The Trump administration said it is imposing Tuesday’s tariffs in an effort to reduce the number of people without legal status and the illegal flow of synthetic opioids like fentanyl entering the U.S. Trump also said he believes the tariffs will move manufacturers' production to the U.S.
The tariffs have been met with retaliatory trade policies and backlash.
Beijing plans to impose tariffs of up to 15% on some U.S. farm exports like chicken, wheat, corn, cotton, vegetables, and dairy products. The tariffs are expected to take effect on March 10. It also placed restrictions on more American companies and filed a lawsuit with the World Trade Organization against the U.S.
Canadian Prime Minister Justin Trudeau said at a press conference Tuesday that Canada has implemented a retaliatory 25% tariff against about 107 billion U.S. dollars worth of American goods, with some tariffs on about $20 billion U.S. dollars worth of goods taking place immediately and the remainder in 21 days.
“But [Trump] is rapidly going to find out, as American families are going to find out, that that's going to hurt people on both sides of the border,” Trudeau said. “Americans will lose jobs. Americans will be paying more for groceries, for gas, for cars, for homes, because we have always done best when we work together.”
Trudeau also said he is challenging the U.S. tariffs by filing dispute resolution claims through the World Trade Organization and the USMCA.
Mexican President Claudia Sheinbaum said she will announce retaliatory tariffs on Sunday if the U.S. tariffs are still in place and that she plans to speak with Trump this week.
Impacts for Michigan industries and consumers
Michigan industry leaders have said businesses and consumers will be adapting to changes due to both the U.S. tariffs and retaliatory tariffs.
Premier of Ontario Doug Ford said in an NBC interview on Monday that he plans to fight the U.S. tariffs by cutting off Canada’s energy supply to states that heavily rely on it, including Michigan, Minnesota, and New York.
“We keep the lights on for 1.5 million homes and manufacturing in New York, in Michigan, and in Minnesota,” Ford said. “If he wants to destroy our economy and our families, I will shut down the electricity going down to the U.S.”
There has been no public confirmation that Canadian authorities plan to limit the flow of electricity into the U.S. as part of its response to American tariffs as of Tuesday afternoon.
Patrick Anderson is the principal and chief executive officer of Anderson Economic Group, a consulting firm in Michigan that specializes in market and industry analysis. He said the promises made in Ontario do not raise much concern for him.
“The United States is now energy independent. And fortunately, we are not vulnerable to the kind of things that happened in the 1970s where foreign countries could say, ‘We're going to put an embargo of energy towards you,’” Anderson told Michigan Public. “...However, if they were to do that, it would have sporadic costs, where you would have people dependent on longstanding Canadian supplies that would have to hustle to try to find alternatives.”
Vic Veda is the vice president of communications at the Michigan Retailers Association, which represents about 5,000 member businesses across Michigan in retail industries like grocery, hardware, and jewelers. She said Michigan consumers will see price changes for goods that come from tariff-targeted countries. Veda also noted that consumers will be particularly impacted by Canada’s tariffs due to its proximity to Michigan.
“But as far as grocery and other goods that may be impacted, we will be seeing a lot of things, especially on fruits and vegetables that are imported from Mexico during the winter months. We rely very heavily on imported produce to meet the demand across the state,” Veda said.
Veda said the prices of beer, cars, and automotive parts are also likely to be affected by the tariffs.
Anderson agrees that car prices in the U.S. are expected to increase due to the tariffs, particularly because manufactured auto parts often move between Canadian, Mexican, and U.S. borders during the assembly and production processes.
“Anderson Economic Group has estimated the cost of these tariffs on a per car basis for our major industry, and we see these costs adding up to four, five, six, eight and even ten thousand dollars per car,” Anderson said. “So if you're an auto-making state, like Michigan is, the tariffs that add four or five or 10,000 dollars to each product you make is certainly going to have a negative effect on your ability to sell [the] product, a negative effect on the number of jobs you have in your main industry, and overall a real damage to your economy.”
Anderson emphasized that other changes are expected for Michigan’s agricultural industry. Michigan farmers rely on potash, a potassium compound commonly used as fertilizer. According to Corey Rosenbusch, president and CEO of The Fertilizer Institute, American farmers greatly rely on that resource.
“Today, 85% of our potash imports come from Canada. Potash is an irreplaceable component of modern agricultural production, and the U.S. has historically sourced nearly all the potash used by farmers from international markets,” Rosenbusch said in a statement Tuesday. “Potash deposits are geographically specific and mine development in the U.S. is time intensive and costly.”
Veda said Michigan residents who want to have a positive economic impact should be thoughtful about how they spend their dollars, especially during uncertain times.
“We encourage consumers to use the power of their dollar and spend wisely and spend with intention,” Veda told Michigan Public. “So seeking out Michigan-based retailers and supporting those small businesses is a really easy way that consumers can make a difference for Michigan's economy.”
