Canada Exempts from Retaliatory Tariffs for Certain US Cars

TMTPOST -- Canada would grant exemptions from certain retaliatory tariffs on automobiles made by American companies as U.S. President Donald Trump is considering further tariff reprieve on the auto industry.

Credit：China Central Television

Canadian Finance Minister François-Philippe Champagne on Tuesday announced auto manufacturers will be allowed to import a certain number of U.S.-assembled vehicles — ones that comply with the United States-Mexico-Canada Agreement (USMCA) — free of the countermeasure tariffs Ottawa imposed in response to Trump's levies. USMCA is a trade agreement that Trump's first administration negotiated to replace the decades-old North American Free Trade Agreement.

The exemption will be granted through a performance-based remission framework for automakers, designed to incentivize continued production and investment in Canada, according to a statement of the Department of Finance of Canada. The remission framework will allow automakers that continue to manufacture vehicles in Canada to import a certain number of U.S.-assembled, USMCA-compliant vehicles into Canada, free of the countermeasure tariffs that Canada has imposed.

The remission granted to these companies is contingent on these automakers continuing to produce vehicles in Canada and on completing planned investments. The number of tariff-free vehicles a company is permitted to import will be reduced if there are reductions in Canadian production or investment.

Champagne also announced the Canadian government intends to provide temporary 6-month relief for goods imported from the U.S. that are used in Canadian manufacturing, processing and food and beverage packaging, and for those used to support public health, health care, public safety, and national security objectives. This provides immediate relief to a broad cross-section of Canadian businesses that must rely on U.S. inputs to support their competitiveness as well as to entities integral to Canadians’ health and safety.

The exemption came a week after Canada’s countermeasures against U.S. auto tariffs came into force on April 9. New levies include 25% tariffs on non- USMCA compliant fully assembled vehicles imported into Canada from the United States. Those non-Canadian and non-Mexican content of USMCA compliant fully assembled vehicles imported from the U.S. will also faced 25% tariffs imposed by the Canadian government.

Canadian Prime Minister Mark Carney earlier this month signaled Ottawa’s decision is to copy the U.S. government, but noted Canada won’t put new tariffs on auto parts as Trump had done. And vehicle content from Mexico under the USMCA will not be targeted, because, according to Carney, the Mexican government is respecting the USMCA agreement.

The Trump administration last week has exempted from tariffs on certain products including semiconductors. The U.S. Customs and Border Protection (CBP) announced in an updated guidance late Friday that the government has exempted smartphones, computers and other electronic products from its reciprocal tariffs.The document stated that the exemption applies to electronic products entering the United States after April 5, and reciprocal tariffs already paid can be refunded upon request.

The White House said on Saturday the exemptions were made because Trump wants to ensure that companies have time to move production to the U.S. Trump “has made it clear America cannot rely on China to manufacture critical technologies such as semiconductors, chips, smartphones, and laptops”, said White House deputy press secretary Kush Desai in a statement.

The 20 product categories listed in the CBP guidelines are apparently exempt from the 125% tariff imposed by Trump on Chinese imports and the 10aseline tariff on imports from other countries.

Trump on Monday said he is weighing possible exemptions from tariffs on auto parts. "I'm looking at something to help some of the car companies, where they're switching to parts that were made in Canada, Mexico and other places," Trump told reporters in the Oval Office. "And they need a little bit of time, because they're going to make them here."