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President Donald Trump’s latest tariff announcement on Canadian and Mexican auto imports has drawn sharp criticism from major U.S. automakers and sparked diplomatic tensions with Canada.
Ford, General Motors, and Stellantis warned the administration that the 25% tariff could harm American businesses by giving foreign competitors an advantage. In response, Trump temporarily delayed the new tariffs for one month, a move White House Press Secretary Karoline Leavitt described as a gesture of goodwill.
However, the last-minute shift has created confusion in the market, with investors struggling to anticipate the administration’s next move.
The financial markets responded negatively to the initial tariff announcement, with the Dow Jones Industrial Average falling 670 points on Tuesday. Concerns over rising vehicle prices also grew, as an auto industry group predicted costs could increase by as much as 25% almost immediately.
Commerce Secretary Howard Lutnick hinted at the possibility of further tariff relief, appearing multiple times on Fox Business to reassure industry leaders. Still, Trump’s speech later that day signaled his continued commitment to aggressive trade measures.
“If you don’t make your product in America under the Trump administration, you will pay a tariff,” Trump declared.
While automakers secured a temporary reprieve, Canada’s Prime Minister Justin Trudeau received no such concession. Trump reportedly told Trudeau during a phone call that he had not done enough to curb fentanyl trafficking, despite data showing minimal amounts entering the U.S. from Canada.
The dispute has strained relations between Washington and Ottawa. Trudeau, visibly frustrated, addressed the press on Tuesday, calling the tariffs unfair and damaging to both economies.
In response, Ontario Premier Doug Ford threatened to retaliate by cutting electricity exports to the U.S.
As Trump prepares for his re-election bid, the tariff controversy has raised concerns among GOP lawmakers, particularly in states like Michigan, where auto industry jobs are critical. Some officials worry that economic pain in these regions could weaken Trump’s support.
Despite the backlash, Trump’s advisors believe tariffs remain a powerful negotiating tool. National Security Advisor Mike Waltz defended the policy, arguing that Canada must do more on border security and Arctic defense cooperation.
