The United States economy is set to see some "disturbance" from tariffs, President Donald Trump says, but he touts levies as a tool that would help domestic industries boom.
Carmakers received a temporary reprieve from US President Donald Trump’s tariffs targeting Canada and Mexico, as concerns mounted over consumer impacts and talks with Canadian Prime Minister Justin Trudeau yielded no immediate breakthrough.
Following discussions with the “Big Three” US automakers - Stellantis, Ford and General Motors - Trumpdecided to “give a one-month exemption on any autos coming through USMCA,” White House Press Secretary Karoline Leavitt said, referring to the North American free trade pact.
“They made the ask, and the President is happy to do it,” Leavitt told reporters.
But prospects of wider relief were dampened after Trump’s call with Trudeau, with the US leader saying he was unconvinced Ottawa had done enough to address Washington’s concerns over illicit fentanyl.
Canada contributes less than 1% of fentanyl to the United States’ illicit supply, according to Canadian and US government data.
On social media, Trump accused Trudeau of using the dispute to “stay in power,” but said their discussion ended in a “somewhat” friendly manner.
Trump’s sharp 25% tariffs on US imports from Canada and Mexico, with a lower rate for Canadian energy, kicked in on Tuesday, sending global markets tumbling and straining ties between the neighbours.
Justin Trudeau and Donald Trump talked on the phone, after this meeting back at the White House last month. Photo / Saul Loeb, AFP
Ottawa swiftly announced retaliatory levies, while Mexican President Claudia Sheinbaum plans to unveil her response at a mass rally on Sunday.
The US president has cited illegal immigration and fentanyl trafficking in imposing tariffs, though he frequently lambasts alleged trade imbalances when discussing levies.
Price hikes possible
Various consumer items appear poised for price hikes after Trump’s fresh tariffs on Canada, Mexico and China this week.
They include products like avocados, strawberries, electronics and gasoline.
Of the agricultural products imported from Mexico to the United States in 2023, more than 72% were fresh fruit and vegetables, as well as beer and other alcohol, government figures showed.
In an address to Congress on Tuesday, Trump said tariffs would bring “a little disturbance” to the world’s biggest economy.
Leavitt defended Trump’s remarks Wednesday as “realistic,” saying that standing up to foreign nations “requires a little bit of disruption.”
Earlier on Wednesday, US Commerce Secretary Howard Lutnick dismissed the possibility of lifting America’s levies completely but said Trump was mulling market segments where he could provide temporary relief.
Trump’s tariffs on Mexico and Canada are a heavy blow given that the three countries have a trade pact.
The US president renegotiated the agreement in his first term, touting the reworked deal at the time as the “fairest, most balanced, and beneficial trade agreement” in America’s history.
Sheinbaum, at a news conference Wednesday, said Mexico has to take key decisions for its future, adding that “if necessary, other trading partners will be sought.”
Expressing a preference for a negotiated solution, she has said she anticipates speaking to Trump by phone on Thursday about tariffs on Mexican goods.
She earlier vowed retaliatory action and called for supporters to gather in Mexico City’s main square on Sunday to hear details on her government’s response.
Beyond the Canada and Mexico tariffs, Lutnick told Bloomberg Television on Wednesday that broader reciprocal levies, tailored to all US trading partners, are still coming on April 2.
Trump has vowed reciprocal tariffs targeting friend and foe to remedy practices deemed as unfair, slamming the European Union especially.
Some of these duties could come immediately, although Lutnick said others could take a month or longer.
France’s President Emmanuel Macron called planned US tariffs on European products “incomprehensible”, saying he hoped to “dissuade” Trump from imposing them.
This week, Trump also inked an order doubling an additional tariff rate on Chinese imports from 10% to 20%, similarly over the country’s alleged role in illicit fentanyl entering the United States.
The duties pile atop existing ones on Chinese products.
Beijing hit back, promising 10% and 15% tariffs on a range of US agricultural imports.
Economists warn that tariff hikes stand to bog down economic growth and add to US inflation.
