In response to requests from top executives at General Motors, Ford, and Stellantis, President Donald Trump has postponed tariffs on automobile imports from Canada and Mexico for a period of one month. The decision is contingent upon the automakers relocating their offshore operations to the United States by April 2.

According to a report by Politico, this reprieve comes less than 48 hours after Trump imposed 25% tariffs on all goods from the US’s neighboring countries, which were previously exempt under the United States-Mexico-Canada Agreement (USMCA). As reported by The Wall Street Journal, the exemption applies to automakers that comply with the USMCA.

The Big Three automakers, along with several other manufacturers, have complex global supply chains and operate multiple manufacturing facilities in both Mexico and Canada. For instance, General Motors produces the Chevy Equinox in both Mexico and Canada, while Ford manufactures the Lincoln Nautilus SUV in Ontario, and Stellantis produces the Dodge Charger in the same region. Furthermore, numerous automotive suppliers have factories in these two countries.

The current tariffs pose a significant threat to the automotive industry, as car prices are already at historic highs. According to Jeff Schott, senior fellow at the Peterson Institute for International Economics, the tariffs could lead to a substantial increase in sticker prices, potentially by as much as $12,000, as reported by the Detroit Free Press. This could result in decreased demand, leaving dealers with unaffordable vehicles on their lots.

In a recent address to Congress, Trump urged manufacturers to bring their operations back to the US. White House press secretary Karoline Leavitt stated in a briefing that Trump expects General Motors, Ford, and Stellantis to shift their production to the US before the tariffs take effect at the end of the month.

Leavitt quoted Trump as saying, “He told them that they should get on it.”

Ford CEO Jim Farley stated last month that the company lacks excess capacity at its plants to shift production. Farley noted that while Ford could withstand tariffs in the short term, prolonged tariffs would have a devastating impact on the US industry, saying they “would blow a hole in the U.S. industry that we’ve never seen.”

According to data from Edmunds.com, nearly half of all new vehicles sold in the US through February were built in the US, while 17.4% were manufactured in Mexico, and 7.4% in Canada.

In a statement, Ford said, “Since President Trump’s successful USMCA was signed, Ford has invested billions in the United States and committed to billions more in the future to both invest in American workers and ensure all of our vehicles comply with USMCA.” The statement continued, “We will continue to have a healthy and candid dialogue with the Administration to help achieve a bright future for our industry and U.S. manufacturing.”

This article has been updated with information from the White House press secretary and a statement from Ford.