The 30-day postponement on the 25 percent U.S. tariffs on Canadian and Mexican imports offered a sigh of relief to automakers and suppliers who feared these tariffs would lead to increased costs and factory shutdowns, Automotive News said.
However, the threat of tariffs remains, and the future of North American free trade is still as uncertain as it has been since the North American Free Trade Agreement was enacted in 1992. As a result, automakers and suppliers are holding off on significant spending decisions until they have more clarity on how trade rules will evolve, according to CNBC.
On February 3, President Donald Trump agreed to delay the 25 percent tariffs on goods from Canada and Mexico after securing last-minute deals on border policy and fentanyl trafficking with both countries, Automotive News said.
Just days earlier, on February 1, Trump had signed executive orders directing federal agencies to begin enforcing the tariffs on February 4.
Click here to read Trump’s latest tariff plans.
Auto manufacturers, especially suppliers with fewer financial resources than automakers, expressed concerns that the tariffs would disrupt their intricate supply chains and drive up the cost of new vehicles and parts, AP News said.
Many smaller suppliers warned they would have no choice but to pass the added costs onto customers or face halting production, leading to potential parts shortages.
Although the delay provides some relief, the looming threat of significant tariffs starting in March continues to hang over the industry.
Companies are dedicating substantial time and resources to analyzing potential trade and tariff outcomes in the weeks, months, and even years ahead, Automotive News said.
