US Postpones Auto Tariffs on Mexico and Canada

The Donald Trump administration has decided to postpone the 25% tariff on automobiles from Mexico and Canada for one month. While the 25% tariff on products from these two countries began on the 4th, they have temporarily granted an exception specifically for automobiles.

White House spokesperson Karoline Levitt said on the 5th (local time), "We have spoken with the Big 3 automakers," adding, "We will exempt tariffs for one month on automobiles entering the United States through the United States-Mexico-Canada Agreement (USMCA)." She explained, "This measure is in response to the request from the US auto industry to ensure they don't suffer economic disadvantages." This indicates the measure was taken in consideration of pushback from the US auto industry rather than giving special treatment to Canada and Mexico.

In fact, many US automakers assemble cars in Mexico, where labor costs are lower, and import them to the US under the tariff exemptions provided by the USMCA. Because of this, imposing a 25% tariff on Mexican automobiles would ultimately pass the burden onto American consumers. Currently, Mexican-made vehicles account for approximately 26%, 18%, and 24% of US sales for the three major American automakers General Motors (GM), Ford, and Stellantis, respectively.

This measure allows not only US automakers but also automotive companies from other countries like Korea that have operations in Mexico and Canada to breathe a sigh of relief for now. However, critics point out that the problem hasn't been fundamentally resolved since tariffs could be reimposed after one month.

Kim Dong-hyun Reporter 3code@hankyung.com