As President Trump gears up to roll out fresh tariffs on foreign metals this week, he’s taken a firm stance, indicating that this time around, there won’t be the usual exclusions and exemptions that marked his initial trade war efforts.
Yet, Trump has already softened his position on other tariffs. Following pressure from influential sectors like automakers and farmers, he swiftly retracted the broad tariffs announced on Tuesday against all imports from Canada and Mexico. By Thursday, he had indefinitely postponed those tariffs for items in compliance with the North American free trade agreement, known as U.S.M.C.A., covering about half of Mexico’s imports and nearly 40% of those from Canada.
This change presents an opportunity for various industries and foreign governments to lobby the administration ahead of the impending metal tariffs which are set to take effect at 12:01 a.m. on Wednesday, along with other duties planned for April 2.
Foreign diplomats have been actively seeking exemptions for their countries’ steel and aluminum. On Monday, Japan’s trade minister was anticipated to request an exemption for automobiles during meetings in Washington, with Trump having hinted at car tariffs arriving in April.
Matt Blunt, the president of the American Automotive Policy Council, which represents major U.S. automakers, expressed concern. He noted that Ford, General Motors, and Stellantis primarily source their steel and aluminum from North America, and they feared the tariffs could significantly increase costs for their suppliers.
While waiting for specifics on the proposed tariffs, these companies have expressed worry, particularly over costs associated with Canada and Mexico.
Whether Trump will eventually relent and grant exemptions to these metal tariffs—or to the looming car tariffs slated for April—remains uncertain. Nonetheless, the appealing opportunity to make deals might prove tempting for him. After all, tariffs provide the president with direct leverage—something he reportedly enjoys.
Using the threat of tariffs and then retracting them has consistently placated affected businesses and nations, allowing Trump to receive favorable responses and cooperation. Foreign governments have consequently offered to initiate trade talks and align with some of Trump’s domestic priorities, like enhancing U.S. border security—power he’s unlikely to easily relinquish.
“This is a classic move by authoritarians—manipulating public policy with whimsical decisions to garner political support,” commented Rick McGahey, an economist at the New School.
Last week, the CEOs of General Motors, Stellantis, and Ford warned Trump in a phone call that tariffs on Canadian and Mexican vehicles might be catastrophic, with potential billions in extra costs eradicating their profits.
After granting a 30-day reprieve on Wednesday, the automakers publicly thanked Trump. General Motors lauded the president’s strategy, which allows American manufacturers to compete at home. Ford expressed gratitude for Trump’s efforts on behalf of the industry.
Yet by Thursday, following a tumultuous week for the stock market, the president had carved out exclusions for products traded under U.S.M.C.A., including agricultural goods, and reduced tariffs on Canadian potash from 25% to 10%.
Resistance from farmers appeared to influence this decision. Organizations representing corn and soybean producers voiced anxiety over tariffs’ impact on key fertilizers from Canada. In meetings organized by the Farmers for Free Trade group, farmers aired concerns about increased costs and reduced incomes due to the tariffs.
Senator Charles E. Grassley from Iowa expressed gratitude in a statement, acknowledging Trump’s sensitivity to farmers’ needs by dialing back the potash tariffs.
Despite muted objections from Republicans, figures within the party are signaling they won’t remain passive unless there’s a clear timeline for abolishing the tariffs.
Trump’s administration has adamantly suggested it won’t weaken its tariff agenda with exemptions. An official remarked during a press session last month that prior deals diminished the intended effects of metal tariffs.
Trump has made similar commitments regarding copper tariffs, promising “No exemptions, no exceptions!” in his reciprocal tariff plan, asserting that these would universally apply “to everyone.”
In his initial term, Trump imposed steel and aluminum tariffs on nations like China and Russia but spared key partners, instead inviting them to negotiate. Countries like South Korea, Argentina, and Brazil agreed to export quotas, while Canada, Mexico, and the EU faced tariffs and retaliated.
Eventually, Canada and Mexico secured arrangements as part of U.S.M.C.A., and under President Biden’s administration, deals were struck with the EU, UK, and Japan for tariff relief.
It’s likely that Trump will reserve the option for personal deal-making, steering clear of the widespread exemption system from his first term, which had companies filing countless requests through costly legal routes in Washington’s K Street.
The U.S. Trade Representative and the Commerce Department processed thousands upon thousands of exemption requests for the China and metal tariffs, respectively.
Lawyers and some companies argue that exemptions remain necessary, as key components and materials aren’t produced domestically.
Nevertheless, Trump’s advocates continue opposing exemptions, aiming to uphold tariff strength. Nick Iacovella, from the Coalition for a Prosperous America, asserted that comprehensive tariffs on steel and aluminum, including downstream products, are essential.
Recent analyses indicate preceding exemptions weakened American producers, hurt jobs, and jeopardized economic security, according to Iacovella.
Five steel organizations have echoed this sentiment, opposing exclusions as they view them as loopholes for foreign producers to dodge tariffs.
Assisting in the reporting was Jack Ewing.
