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US President Donald Trump said he will temporarily spare carmakers from a new 25% import tax imposed on Canada and Mexico.
Trump also accused Canada of not doing enough to stop drugs from entering the US, after a phone call with Prime Minister Justin Trudeau about the disruption caused by new trade tariffs.
“Nothing has convinced me that it has stopped,” Trump wrote on social media after the call.
Word of the relief helped to boost US shares, after two days of declines that wiped out gains the S&P 500 had seen since the US election in November.
The tariff exemption is for cars made in North America.
Canada and Mexico responded with their own retaliatory import levies on US goods after Washington’s 25% tariffs on its two neighbours came into effect on Tuesday.
Goods worth billions cross the borders of the US, Canada and Mexico each day and their economies are deeply integrated.
The White House said it would grant a one-month exemption to the tariffs for the car industry after pleas from Ford, General Motors and Stellantis, which have supply chains that stretch across the continent.
Trump says he wants to protect American industry and boost manufacturing, while casting his actions against America’s two neighbours as intended to stop the flow of migrants and drugs across the border.
Writing on social media, Trump said he had told Trudeau that the situation was not improving.
“He said that it’s gotten better, but I said, “That’s not good enough,” he said.
Trudeau has called Trump’s claims about drugs a “completely bogus” justification for tariffs. The US seized less than 50 pounds of fentanyl at its northern border last year.
Economists have warned such tariffs are likely to lead to prices rising for consumers in the US, as well as potentially painful economic downturns in Mexico and Canada.
In interviews earlier on Wednesday, Commerce Secretary Howard Lutnick said tariffs would go forward but that some goods could be “left out”.
“There are going to be tariffs – let’s be clear – but what he’s thinking about is which sections of the market that maybe he’ll consider giving them relief until we get to, of course, April 2,” Lutnick told Bloomberg on Wednesday.
“It will be 25% but there will be some categories left out – it could well be autos. It could be others as well,” he added.
A day earlier on Fox News, Lutnick had raised the possibility of a compromise and reduction of tariffs for Mexico and Canada, saying Trump was weighing offers to meet his allies “in the middle”.
The White House has said Trump still intends to move ahead on 2 April with plans for reciprocal tariffs on other countries around the world that he sees as treating the US unfairly.
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