Donald Trump is to exclude carmakers across North America from the pain of US tariffs levelled against Mexico and Canada, following apparent pressure from motor bosses.
The White House confirmed the concession was made after the president spoke to the bosses of Ford, General Motors and Stellantis in a call on Wednesday.
Each company has manufacturing operations and suppliers in Canada and Mexico.
There will be a tariff exemption of at least a month on vehicles made across the continent though “reciprocal” tariffs are still planned from April, the president’s spokesman said.
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Manufacturers have complained of being worst affected by the imposition of 25% tariffs against both Canada and Mexico since Tuesday because flows of parts between the three countries can be hit by tariffs multiple times.
The complicated nature of their operations can mean a single component crosses a border more than once during the production process.
Such a big spike in costs from tariffs poses a big risk to sales as customers are asked to pay more to help compensate for the sanctions.
Automakers’ share prices have been among the worst hit since Mr Trump took office again in January.
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The car bosses, according to Reuters news agency sources, pledged additional US investment but wanted clarity on tariffs ahead and pushed for rules of origin to limit costs from cross-border transit.
Mr Trump urged them to shift their operations to the United States, according to a White House statement.
The tariff concession marked the first compromise on the trade issue since the president signalled, on Tuesday, that there would be no U-turns and only more tariffs after Canada said it would respond in kind.
There have been growing signs this week that corporate America is uneasy, at best, with the tariff policy against both Mexico and Canada
Those US neighbours, along with China, which is facing 20% tariffs, are the country’s three biggest trading partners.
The imposition of tariffs on all goods has been received badly by financial market investors, worried that US profitability is at risk.
One closely-watched forecast for US growth suggested that the threat of tariffs since Mr Trump’s election victory was confirmed had hammered activity and plunged the country into recession.
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There are mounting reports of boycotts against US goods in Mexico and Canada.
The nerves were publicly admitted by the boss of Jack Daniel’s maker Brown Forman, Lawson Whiting, on Wednesday when he described Canadian provinces taking American-made alcohol off shop shelves as “worse than a tariff”.
US stock market values are sharply down since the inauguration and the dollar has lost more than three cents against rivals including the euro and the pound just this week amid the tariff turmoil.
Such is the growing investor concern for the health of the US economy, the tariff implications have been partly blamed for a steep fall in oil prices.
Brent crude was trading at $68 a barrel earlier on Wednesday – its lowest level for more than three years.
