A 25% tariff on Canada and Mexico is set to take effect tomorrow. Read on to learn about the harmful economic impact for Michigan and its signature automotive and mobility industry.
The MichAuto Perspective
“Not only will the enactment of 25% tariffs on Canada and Mexico threaten Michigan’s business climate and its signature automotive and mobility industry, but it also represents bad-faith trade policy. Unilaterally imposing tariffs before United States-Mexico-Canada Agreement (USMCA) renegotiations even begin will undermine diplomatic processes and risk damaging Michigan’s relationships with its closest trading partners.
As MichAuto has continued to advise, the tariffs’ harmful effects will extend beyond trade relationships and will cause businesses to purchase and produce fewer products, hire fewer employees, and increase prices to the detriment of consumers. Michigan’s economic viability and business attractiveness will be reduced to collateral damage.
MichAuto urges the administration and policymakers to prioritize constructive engagement over punitive measures that ultimately hurt state and nationwide businesses and consumers. ”
Glenn Stevens Jr., Executive Director, MichAuto; Vice President, Automotive and Mobility Initiatives, Detroit Regional Chamber
The Economic Impact
In 2023, Michigan imported $46 billion in goods from Canada and $69 billion from Mexico, with a significant portion of this trade tied to the automotive industry. Enacting the 25% tariff on these goods will now cause substantial price increases for both consumers and businesses, negatively impacting Michigan’s signature industry and the thousands of companies and more than one million workers that are a part of it.
Beyond the immediate cost burdens, these tariffs expose Michigan to significant economic risk. With 43% of Michigan’s total exports going to Canada and another 23% to Mexico, our state is particularly vulnerable to retaliatory tariffs, which will have a devastating effect on our manufacturing sector and broader economy.
The Path Forward
Next year, the United States-Mexico-Canada Agreement (USMCA) will be up for renegotiation. This process presents an opportunity to address key economic and national security concerns, including new content requirements, labor value rules, border security, drug trafficking, and the increasing influx of Chinese-made vehicles and technologies into North America. These critical issues should be resolved through these scheduled negotiations that respect all three nations’ interests.
Unilaterally imposing tariffs before renegotiations even begin undermines this process and risks damaging Michigan’s relationships with its closest trading partners. Such actions are not only economically harmful but also represent a bad-faith approach to trade policy. MichAuto urges policymakers to prioritize constructive engagement over punitive measures that ultimately hurt American businesses and consumers.
