On Monday, President Donald Trump indicated a potential temporary exemption for the auto industry from tariffs previously imposed on the sector, allowing carmakers additional time to adjust their supply chains. Speaking to reporters in the Oval Office, Trump, a Republican, mentioned that automakers needed some time to relocate production from countries like Canada and Mexico, adding that the goal was for manufacturing to occur domestically, but some time was necessary to facilitate this transition.
Matt Blunt, the president of the American Automotive Policy Council, which represents Ford, General Motors, and Stellantis, expressed alignment with Trump’s objective of boosting domestic production. Blunt noted an awareness of the risk that broad tariffs on parts could pose to their shared goal of a thriving U.S. auto industry, emphasizing that supply chain adjustments would require time.
Trump’s remarks suggested another potential shift in his tariff policy. The tariffs he imposed have concerned financial markets and Wall Street economists, with fears of a possible recession. Initially announced as “permanent,” the 25% tariffs on autos implemented on March 27 have seen adjustments, as Trump appears to navigate the economic and political implications of his policies.
Last week, a bond market sell-off raised U.S. debt interest rates, prompting Trump to announce a 90-day reduction in broader tariffs to a baseline 10% to allow for negotiations. However, import taxes on China rose to 145%, with a temporary exemption for electronics maintaining a 20% rate.
Trump stated his consistent yet flexible stance, although this flexibility has created uncertainty about his intentions. The S&P 500 saw a rise of 0.8% on Monday, despite a nearly 8% decrease over the year, and 10-year U.S. Treasury note interest rates remained high at approximately 4.4%.
Carl Tannenbaum, Northern Trust’s chief economist, commented on the significant changes, likening the situation to needing a “neck brace.” He warned of potential irreversible damage to consumer, business, and market confidence.
Maroš Šefčovič, the European commissioner for trade and economic security, announced via social media that he was involved in trade negotiations with U.S. officials, emphasizing the EU’s willingness to reach a fair deal, including reciprocal tariff options on industrial goods.
Additionally, Trump mentioned a discussion with Apple CEO Tim Cook, offering some assistance. Apple’s products, notably the iPhone, are primarily assembled in China. While Apple did not respond to requests for comment, the temporary tariff exemption provided brief relief, helping lift Apple’s stock by 2% on Monday. However, some gains were lost amidst potential future tariffs on Chinese-made products.
Dan Ives, a Wedbush Securities analyst, observed that while Apple’s position had improved, significant uncertainty and confusion about future actions remained. A potential strategy under consideration by Apple is further shifting iPhone production from China to India, where Apple had been expanding operations as Trump pursued a trade war during his first presidential term.
The Trump administration has suggested that its tariffs isolated China as the U.S. pursued negotiations with other countries. However, China is also endeavoring to strengthen its ties in Asia with countries affected by U.S. tariffs. On Monday, China’s leader, Xi Jinping, met with Vietnam’s Communist Party General Secretary in Hanoi, discussing the notion that trade wars are not beneficial.
When questioned about this meeting, Trump suggested that the two countries were conspiring against the U.S., allegedly plotting economic harm.
This story was originally featured on Fortune.com.
