Cnn
–
President Donald Trump granted an exemption on car rates on Mexico and Canada for a month, the White House press secretary Karoline Leavitt confirmed on Wednesday.
“We spoke with the three major car dealerships. We are going to give an exemption of one month on all the cars coming by the USMCA, “said Trump in a statement that Leavitt read in a white house briefing. These dealers included Stellantis, Ford and General Motors, who asked for the appeal, she said.
“Reciprocal prices will come into force on April 2. But at the request of the companies associated with the USMCA, the president gives them an exemption for a month so that they are not economic disadvantage. ”
Leavitt said that companies should use this month to work towards the president’s objectives.
“He told them that they should go, start investing, start moving, moving production here in the United States of America, where they will not pay any price. This is the ultimate goal, ”she added.
But Canada does not encourage the a month’s suspended period, even if data from the US trade department show that cars are Canada’s second export to the United States.
Ontario Prime Minister Doug Ford said that he and Canadian Prime Minister Justin Trudeau did not want to accept prices on the goods in their country. “We are on the same wavelength, zero prices and we are not going to move,” he told journalists during a briefing on Wednesday.
Trump’s decision to grant the extension was due before his reciprocal prices plan around the world, which should be announced on April 2. Unlike the prices on Mexican and Canadian goods, Trump will not consider for any exemption from the reciprocal prices pending, Leavitt told journalists.
They could also reach prices of 25% still in place on other Canadian and Mexican goods. For example, last week, on an interview with Fox News, the US Secretary of Commerce Howard Luxe called the national sales tax of 5% in Canada during the discussion of the potential reciprocal rates that Trump could consider.
Mexico and Canada are essential to the car supply chain
It has long spent cars 100% made in America. In recent decades, the North American automotive industry has operated practically without borders, thanks to free trade agreements that have been signed by various presidents, including Trump.
Consequently, parts and whole vehicles have freely crossed the borders, sometimes several times, before ending up in an American dealer.
American car manufacturers have argued that having prices on cars and car parts from Canada and Mexico puts cars built in North American factories with enormous disadvantage. Indeed, even the cars assembled in American factories all have parts from Mexico and Canada and would therefore see thousands of dollars each with higher costs. But cars imported from plants in Europe and Asia which have relatively few Mexican or Canadian parts would not have these higher costs.
“He gives rein to South Korean and Japanese and European companies for free,” said Ford CEO Jim Farley, investors at a conference last month. “They bring 1.5 million to 2 million vehicles in the United States which would not be subject to these Mexican and Canadian prices. It would be one of the greatest manifolds for these companies of all time. »»
Canadian car factories produced 1.3 million vehicles last year, according to data from S&P Global Mobility, while Mexican factories produced 4 million vehicles. About 70% of these cars were sold in American dealers to American buyers. Meanwhile, American automotive factories have produced 10.2 million vehicles.
Last year, the United States imported a value of $ 217 billion in tourist vehicles, according to data from the Commerce Department. More than a fifth of these cars came from Mexico, the main source of automotive imports last year. Behind Mexico were Japan, South Korea, Canada and Germany, which exported a total of $ 131 billion in passenger cars in the United States last year.
Valued at $ 50 billion, passenger cars were the main exports from Mexico to the United States last year. Behind crude oil, passenger cars were the main exports of Canada to the United States last year, worth $ 28 billion.
In addition, Canada and Mexico have sent a combined value of $ 47 billion in automotive parts in the United States last year, according to federal commercial data.
Without automatic exemption, the 25% price on Mexican and Canadian imports could increase the cost of manufacturing car throughout North America between $ 3,500 and $ 12,000, according to Anderson Research Group analysis, a Michigan -based reflection group.
The Swift Face of the Administration on the Automobile Prices adds to the commercial chaos which took place since Trump took office. Leavitt noted that the president was “open to hearing about additional exemptions”.
This leaves many companies in limbo.
A new survey by the Institute for the Management of the offer published on Wednesday has shown that respondents noted “great uncertainty about future commercial activities due to the risk of potential prices and other actions”. Others have indicated that “the prices will have a decrease in ripple that could seriously harm our business”.
American actions increased Wednesday after the announcement, the DOW increasing by 540 points. The wider S&P 500 increased by 1.2% and the NASDAQ composite increased by 1.49%. Automobile actions also increased news on Wednesday, with Ford (F) up 5.7%, Stellantis (STLA) up 9.3%and GM (GM) up 7.7%.
This story has been updated with additional developments and context.