Trump pauses Mexico, Canada auto tariffs for 30 days in push to shift production to U.S.

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U.S. President Donald Trump is granting automobiles assembled in Canada or Mexico a 30-day reprieve from the steep tariffs he imposed on both countries this week.

But the temporary pause is only so automakers can get started on shifting production to the United States from Canada and Mexico, White House press secretary Karoline Leavitt said.

At the request of the Big Three automakers in the United States, she said, “we are going to give a one-month exemption on any autos coming through the United States-Mexico-Canada Agreement.” She was referring to the 2018 trade deal that governs the North American auto sector.

A source at the White House said the reprieve also covers auto parts originating in Canada or Mexico. The Globe and Mail is not identifying the source because they were not authorized to discuss the matter publicly.

The President is also considering exempting certain agricultural products from the 25-per-cent tariffs imposed on Canada and Mexico.

U.S. Agriculture Secretary Brooke Rollins told Bloomberg News that “everything is on the table” and she is “hopeful” that the administration could decide on providing relief for the agricultural sector.

The announcement on the auto industry was issued after Mr. Trump spoke with Prime Minister Justin Trudeau by phone Wednesday. The conversation lasted about 50 minutes but yielded no agreements to end the massive trade war that began Tuesday when the United States imposed tariffs on Canadian imports and Canada countered with an initial round of retaliatory levies on $30-billion of U.S. imports.

Mr. Trump and Mr. Trudeau were joined on the call by Vice-President JD Vance and U.S. Commerce Secretary Howard Lutnick and discussion focused on trade and fentanyl.

Mr. Trump has justified his use of emergency powers to impose tariffs on Canada by alleging that the country has played “a central role” in the fentanyl overdose crisis plaguing the United States. Statistics do not support his allegations and rather suggest a very tiny fraction of illegally produced fentanyl is smuggled into the United States – far less than comes from Mexico.

During the call, Mr. Trump and Mr. Vance pushed back hard on Ottawa’s main line of defence: that the amount of fentanyl smuggled into the United States is extremely minor, a source said. The two men told Mr. Trudeau that they believe U.S. Customs and Border Patrol (CBP) seizure data does not reflect the full quantity of fentanyl that is entering the United States from Canada. They did not provide any evidence to back up their assertion. The Globe is not identifying the source who was not authorized to discuss the matter publicly.

Mr. Trump also used the call to list his trade beefs with Canada including the Canadian tariffs that prevent American dairy farmers from selling more product to Canada.

More than 100,000 Canadians work in the auto-parts industry including tooling, according to Flavio Volpe, president of Canada’s Automotive Parts Manufacturers’ Association.

Mr. Volpe said Mr. Trump should take the next 30 days to study the USMCA and the tougher local content rules for auto parts that he negotiated for that agreement six or seven years ago “to understand how successful that deal has been for U.S. interests.” The best outcome he said would be for the White House to maintain the tariff reprieve on the auto sector and instead start renegotiations early on the USMCA, which is up for renewal in 2026.

Linda Hasenfratz, the executive chair of auto-parts maker Linamar Corp., told an earnings call Wednesday that automakers will not make a decision to move plants in the 30-day window based on tariffs that threaten to upend decades of integrated manufacturing.

“We have developed incredible efficiencies in terms of, ‘We’re gonna make this, you’re gonna make that, we’ll come together to maximize volume, minimize costs, maximize technologies and innovation and really get the best of the supply base,’ ” she said. “So trying to dismantle that in 30 days sure can’t happen, you can’t even dismantle it over multiple years.”

Foreign Affairs Minister Mélanie Joly said Mr. Trump’s fentanyl rationale for imposing tariffs is based on a “bogus argument.”

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The minister told a Toronto business audience Wednesday that Canada must find a way to avoid a continuous cycle of threats and pauses and tariffs from Washington, or as she put it, “another psychodrama every 30 days” with Mr. Trump.

“We need to find a way to get to predictability: to reduce the risk of doing business in Canada.”

Canada has already unveiled retaliatory tariffs on $155-billion of U.S. imports, $125-billion of which is delayed for 21 days.

She said Canada can still put export taxes on Canadian products such as potash that the United States is highly dependent on.

But, she said, Ottawa has to make sure that there is sufficient Canadian support for this.

In a post on Truth Social after the phone call with Mr. Trudeau, Mr. Trump said he told the Canadian leader that Ottawa has failed to do enough to stop the flow of fentanyl. Since Mr. Trump was elected, Canada has announced $1.3-billion to be spent over six years for acquiring helicopters, drones and other surveillance gear to patrol the shared border and has appointed a fentanyl czar to oversee Canadian efforts to combat the opioid.

“Justin Trudeau, of Canada, called me to ask what could be done about Tariffs” Mr. Trump posted. “I told him that many people have died from Fentanyl that came through the Borders of Canada and Mexico, and nothing has convinced me that it has stopped. He said that it’s gotten better, but I said, “That’s not good enough.”

Mr. Trudeau is planning to quit as Prime Minister after the Liberal Party leadership race ends March 9 but Mr. Trump erroneously alleged that he is exploiting Canada-U.S. tensions to stay in power.

He said Mr. Trudeau “largely caused the problems we have with them because of his Weak Border Policies, which allowed tremendous amounts of Fentanyl, and Illegal Aliens, to pour into the United States.”

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Citing U.S. CBP data, the White House has asserted that 43 pounds of fentanyl was intercepted at the border last fiscal year, marking a “massive 2,050-per-cent increase” compared with the year prior, when two pounds of the deadly synthetic drug was seized.

However, a recent Globe investigation determined that the northern-border data set doesn’t reveal anything about the origin of the drugs and, in fact, includes fentanyl that came from Mexico.

Ms. Leavitt, the White House press secretary, said Mr. Trump talked to three major automakers, Stellantis, Ford and General Motors, who asked for the 30-day reprieve from tariffs.

She noted that the President plans another raft of what he calls “reciprocal tariffs” for April 2 to remedy what the Republican White House considers unfair treatment for U.S. businesses in foreign countries, including value-added taxes, digital sales taxes and other levies or trade barriers. This will likely stack more tariffs on Canadian and Mexican goods.

“We spoke with the Big Three automakers. 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,” Ms. Leavitt said.

Ms. Leavitt later added that Mr. Trump is receptive to tariff carveouts. “The President is open to hearing about additional exemptions,” she told reporters.

The White House press secretary also played down the impact on U.S. markets and reiterated Mr. Trump’s belief in the power of tariffs.

She said Canada could avoid the tariffs if they agree to annexation by the United States.

“He feels strongly that it would be very beneficial for the Canadian people to be the 51st state of the United States,” Ms. Leavitt said of Mr. Trump.

Ontario Premier Doug Ford says Canada isn’t going to budge on retaliatory moves until all U.S. tariffs are withdrawn.

He said Canada should now move toward talks on a new trade deal. He said Americans have just woken up to the potential economic fallout from U.S. tariffs, with markets sinking and warnings of rising prices.

“They put a reprieve for 30 days, but we’re going to stand solid for zero tariffs,” Mr. Ford said.

“I always worry when someone says 30-day reprieve. That gives them a chance to start, you know, lining things up and planning their next move,” Mr. Ford said. “And we all know that what the President says today may change tomorrow.”

With reports from Eric Atkins and Jeff Gray