On Monday, President Donald Trump indicated the possibility of temporarily exempting the auto industry from previously imposed tariffs to allow car manufacturers time to adjust their supply chains. Speaking to reporters in the Oval Office, Trump mentioned that automakers require time to relocate their production from countries such as Canada and Mexico, expressing the need for a transitional period to facilitate domestic production.
Matt Blunt, the president of the American Automotive Policy Council, which represents Ford, General Motors, and Stellantis, expressed support for Trump’s objectives to boost domestic manufacturing. Blunt highlighted growing awareness that broad tariffs on automotive parts might hinder the shared goal of a thriving U.S. auto industry, acknowledging that supply chain adjustments require time.
Trump’s comments come amid a potential reversal on his tariff policies, which have unsettled financial markets and raised concerns among Wall Street economists about the possibility of a recession. Originally announced on March 27 as “permanent,” the 25% auto tariffs have seen Trump’s firm trade policies become more flexible to avoid significant economic and political repercussions.
The previous week, following a bond market sell-off that increased U.S. debt interest rates, Trump stated that a broader set of tariffs would be reduced to a baseline of 10% for 90 days to allow for negotiations. Simultaneously, while increasing tariffs on China to 145%, Trump temporarily reduced tariffs on certain electronics to 20%.
Despite Trump’s assertion of consistency, his adaptability has introduced a sense of uncertainty regarding his objectives. On Monday, the S&P 500 increased by 0.8%, though it remains down nearly 8% for the year. Meanwhile, interest rates on 10-year U.S. Treasury notes remained elevated at approximately 4.4%.
Carl Tannenbaum, Northern Trust’s chief economist, remarked on the situation’s volatility, quipping about the potential need for a neck brace due to the frequent policy shifts. He cautioned that damage to confidence among consumers, businesses, and markets could be irreversible.
In Europe, Maroš Šefčovič, the European Commissioner for Trade and Economic Security, announced trade negotiations with U.S. Commerce Secretary Howard Lutnick and Trade Representative Jamieson Greer. Šefčovič reiterated the EU’s willingness to reach a fair agreement, including the potential for reciprocal 0-for-0 tariffs on industrial goods and efforts to address non-tariff barriers.
President Trump also disclosed recent discussions with Apple CEO Tim Cook, whom he reportedly “helped” during the ongoing tariff conflicts. Apple’s products, like the iPhone, are primarily assembled in China. Although Apple did not comment on the recent developments, the temporary exemptions on electronics provided some relief for the company, helping its stock price rise by 2% on Monday. However, the stock had initially surged by 7% before settling as investors considered the potential for future tariffs on Chinese-made products.
Wedbush Securities analyst Dan Ives recognized Apple’s improved position compared to the previous week but warned about ongoing uncertainty and confusion regarding future actions. A possible mitigation strategy for Apple could involve further shifting iPhone production from China to India, a move that began during Trump’s initial term.
The Trump administration has suggested that its tariff policy has isolated China, sparking U.S. negotiations with other countries. Concurrently, China aims to strengthen relations in Asia with nations affected by Trump’s tariffs. On Monday, China’s leader Xi Jinping met with Vietnam’s Communist Party General Secretary To Lam in Hanoi, promoting the idea that trade wars are mutually detrimental.
When questioned about the meeting, President Trump speculated that China and Vietnam might be conspiring economically against the U.S., suggesting they were plotting to harm American interests.
