US President Donald Trump has announced a temporary exemption for North American carmakers from the newly imposed 25% import tax on Canada and Mexico, just a day after the tariffs took effect.

The White House stated that Trump granted a one-month reprieve following appeals from Ford, General Motors, and Stellantis, whose supply chains span the continent.

The exemption applies to cars that comply with existing North American free trade rules.

Despite this concession, Trump has continued to criticize Canada for failing to curb drug trafficking into the US, rejecting Canadian Prime Minister Justin Trudeau’s assurances of improvement.

The announcement boosted US auto stocks, with Ford, General Motors, and Stellantis posting gains of over 5%, 7%, and 9%, respectively. 

The Canadian Chamber of Commerce warned that the exemption approach undermines long-term trade stability, while Ontario Premier Doug Ford maintained plans for retaliatory measures, including a halt to US liquor sales.

Additionally, China has retaliated against heightened US tariffs by targeting agricultural products.

Trump acknowledged the short-term economic strain but justified the tariffs as a necessary measure to protect US industry, linking them to border security and drug control efforts.

White House officials confirmed that Trump still intends to introduce further reciprocal tariffs on April 2.