Auto Shares Rally During Pre-Market Hours as Trump Administration Considers Tariff Relief

Key moments

Shares оf Major Automakers, Including Ford, General Motors, Toyota, аnd Stellantis, Soared In Premarket Trading Wednesday

Shares of major automakers, including Ford Motor (F), General Motors (GM), Toyota Motor (TM), and Stellantis (STLA), surged in premarket trading Wednesday, fueled by Commerce Secretary Howard Lutnick’s announcement that President Trump is considering tariff relief for imports compliant with the U.S.-Mexico-Canada Agreement (USMCA).

Ford shares saw an increase of over 2%, General Motors climbed more than 4%, and both Toyota and Stellantis experienced gains of nearly 6% in early premarket activity.

Secretary Lutnick revealed on Tuesday that the Trump administration is exploring the possibility of exempting Canadian and Mexican imports from the recently implemented 25% tariffs, provided these products adhere to the trade pact negotiated during Trump’s first term.

Sources familiar with discussions between the Trump administration and Canadian and Mexican officials indicated that the talks are primarily focused on granting exemptions to companies that comply with the USMCA’s rules of origin, particularly within the automotive sector. Automaker sources disclosed that one potential scenario involves a 30-day tariff exemption, contingent upon automakers demonstrating plans for increased investment in U.S. auto production to maintain their exempt status.

However, details regarding potential tariff modifications remain preliminary, with no firm agreements in place. Ultimately, President Trump will make the final decision, and his past actions suggest a preference for imposing tariffs when given the option.

The 25% tariffs on Mexican and Canadian goods pose significant challenges for automakers, who face substantial cost increases for parts and vehicles manufactured in Mexico and Canada destined for the U.S. market.

An exemption for vehicles complying with USMCA’s complex North American content rules for duty-free access to the U.S. market would significantly benefit Detroit automakers Ford, General Motors, and Stellantis.

This potential relief would also extend to foreign automakers with substantial U.S. production, such as Honda and Toyota, while potentially putting competitors assembling vehicles in Mexico at a disadvantage as they would be subject to the full 25% U.S. tariffs.

Furthermore, the proposed deal would eliminate the 10% tariff on Canadian energy imports, including crude oil and gasoline, that comply with USMCA’s rules of origin, as confirmed by sources familiar with the ongoing discussions.