White House announces 30-day reprieve from tariffs for autos under free trade deal

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OTTAWA — The White House announced on Wednesday that the U.S. was providing a one-month exemption to automobiles covered by a free trade agreement with Canada and Mexico from the 25 per cent tariffs he slapped on both countries. 

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Spokeswoman Karoline Leavitt announced the 30-day exemption from the president during a press briefing that afternoon, saying it came at the request of the big three automakers, General Motors, Ford and Stellantis.

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“We are going to give a one-month exemption on any autos coming through USMCA. Reciprocal tariffs will still go into effect on April 2, 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 told reporters. 

The USMCA, which in Canada is known as CUSMA, is the free trade agreement Canada negotiated with the U.S. and Mexico under Trump’s first term in office, which replaced the North American Free Trade Agreement, known as NAFTA.

The auto-sector is one of the most vulnerable to job losses and shutdowns under the current Canada-U.S. trade war, given how many parts cross back and forth over the border. Leaders warned that work stoppages and layoffs could happen within a matter of days.

The announcement of Wednesday’s exemption follows a call between Prime Minister Justin Trudeau and Trump, which was the first the leaders held since Trump slapped 25 per cent tariffs on Canadian imports and Canada retaliated with its own 25 per cent tariffs, starting on $30 billion worth of U.S. goods.

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Levies on another $125 billion worth of U.S. products is set to kick in about 20 days.

A senior government source says the call between Trudeau and Trump lasted about 50 minutes and that Vice President JD Vance and Commerce Secretary Howard Lutnick also joined.

Following the call, Trudeau’s office released a brief two-sentence statement.

“The Prime Minister and President spoke today about trade and fentanyl,” it read. “Both countries will continue to be in contact today.”

A Canadian official, speaking on the condition they not be named, told Bloomberg that Trudeau was against any sort of scenario where Canada would be asked to roll back its retaliatory tariffs in exchange for the U.S. lifting only some of its levies.

As tariffs took effect Tuesday, Trudeau said his government’s focus was on getting all tariffs lifted and that conversations with the country’s 13 provincial and territorial leaders were lasered in on how to apply pressure so Trump is forced to back down.

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Many provinces have pulled U.S. alcohol from their shelves and said that when it comes to procurement contracts, they will look elsewhere than American businesses.

The prime minister confirmed on Tuesday that while his government was looking at ways to support individuals through making adjustments to unemployment insurance, he emphasized how the priority could not be on how to “manage” with the tariffs, but on how to end them.

Speaking Wednesday, Ontario Premier Doug Ford said he stands shoulder-to-shoulder with Trudeau on his position that Canada will not compromise, meaning the country will not lift its retaliatory tariffs until the U.S. lifts all of theirs.

Foreign Affairs Minister Melanie Joly said the goal is bring certainty back to Canada.

“We will be there to stand strong,” she said. “It’s not true that we will go through this psychodrama every 30 days.”

In Washington, Trump and members of his administration continued pushing their argument that the 25 per cent universal tariffs against Canada, which Mexico is also subject to, are related to the flow of fentanyl into the U.S. Canadian energy is only subject to a 10 per cent tariff.

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Trudeau has roundly rejected Trump’s assertion the trade war has anything to do with the deadly opioid, which has fuelled an overdose crisis on both sides of border.

He said Canada kept its promise to announce new measures on how the tackle the spread of fentanyl, including by appointing a so-called “fentanyl czar” and listing drug cartels as terrorist entities, which Trump had asked of Trudeau last month as a way to choke their financing.

Trudeau said what he believes Trump wants is to attack Canada’s economy so that it would be easier to turn into a state, as Trump often says he wants to do.

When it comes to the auto-sector, Leavitt said Trump expects its biggest makers to shift production to the U.S. to escape tariffs.

“He told them that they should get on it, start investing, start moving production here to the United States of America, where they will pay no tariff. That’s the ultimate goal,” she said.

Leavitt also said Trump was open to carving out other exemptions. One reporter at the White House mentioned eggs, which saw its prices soar in the U.S. because of the bird flu outbreak ravaging the poultry industry.

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“He’ll always do what he believes is right for the American people,” said Leavitt.

During an earlier announcement in Ottawa, Employment Minister Steven MacKinnon reiterated the government’s stance that the federal government would not accept lower or partial U.S. tariffs.

“I don’t think it is acceptable to Canada, in any way, that tariffs be imposed,” he said.

“They are unjustified, they are ill-considered, they will hurt Americans and they will hurt Canadians. So, Canada’s position is that there should not be tariffs at all.”

Following his conversation with Trudeau, Trump posted to Truth Social that the call ended in a “somewhat friendly manner.”

Trudeau called asking what could be done about the tariffs, according to Trump, who said he repeated his concerns about fentanyl.

“He was unable to tell me when the Canadian election is taking place,” Trump wrote. “I then realized he is trying to use this issue to stay in power. Good luck Justin!”

-With additional reporting from Bloomberg 

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