President Donald Trump on Monday suggested that he might temporarily exempt some auto manufacturers from tariffs he previously imposed on the sector, to give carmakers time to adjust their supply chains.
“I’m looking at something to help some of the car companies with it,” Trump told reporters gathered in the Oval Office.
The Republican president said automakers needed time to relocate production from Canada, Mexico and other places, “and they need a little bit of time because they’re going to make them here, but they need a little bit of time. So I’m talking about things like that.”
The statement hinted at yet another round of reversals on tariffs as Trump’s onslaught of import taxes has panicked financial markets and raised deep concerns from Wall Street economists about a possible recession.
U.S. President Donald Trump announced the possibility of additional tariff exemptions on certain car parts made in Canada following ambiguity around tariffs on electronic imports from China. Trump said on Monday that further tariffs are expected to target pharmaceuticals and semiconductors.
When Trump announced the 25 per cent auto tariffs on March 27, he described them as “permanent.” His hard lines on trade have become increasingly blurred as he has sought to limit the possible economic and political blowback from his policies.
Last week, after a bond market sell-off pushed up interest rates on U.S. debt, Trump announced that for 90 days his broader tariffs against dozens of countries would instead be set at a baseline 10 per cent to give time for negotiations.
At the same time, Trump increased the import taxes on China to 145 per cent, only to temporarily exempt electronics from some of those tariffs by having those goods charged at a 20 per cent rate.
“I don’t change my mind, but I’m flexible,” Trump said Monday.
Trump’s flexibility has also fuelled a sense of uncertainty and confusion about his intentions and end goals. The S&P 500 stock index was up slightly in Monday afternoon trading, but it’s still down nearly nine per cent this year. Interest rates on 10-year U.S. Treasury notes were also elevated at roughly 4.4 per cent.
Carl Tannenbaum, chief economist for the Northern Trust global financial firm, said the whiplash had been so great that he might have to “get fitted for a neck brace.”
Tannenbaum warned in an analysis: “Damage to consumer, business, and market confidence may already be irreversible.”
The U.S. president also said that he spoke with Apple CEO Tim Cook and “helped” him recently. Many Apple products, including its popular iPhone, are assembled in China.
Apple didn’t respond to a Monday request for comment about the latest swings in the Trump administration’s tariff pendulum.
Even if the exemptions granted on electronics last week turn out to be short-lived, the temporary reprieve gives Apple some breathing room to figure out ways to minimize the trade war’s impact on its iPhone sales in the U.S.
That prospect helped lift Apple’s stock price by about three per cent during Monday’s afternoon trading. Still, the stock gave up some of its earlier seven per cent increase as investors processed the possibility that the iPhone could still be jolted by more tariffs on Chinese-made products in the weeks ahead.
