A new 25% tariff on imported goods from Canada and Mexico is due to take effect Tuesday.
Many economists and business leaders fear the new tariffs will have a negative effect on Michigan’s economy.
Back in January, President Donald Trump spoke of his love of tariffs…
“Tariffs is the most beautiful word in the dictionary,” the president told an enthusiastic crowd in Washington, D.C. for his inauguration.
The stated goal of the Trump tariffs on Canada and Mexico is to get more cooperation on immigration and illegal drug trafficking across the U.S. border.
While the southern border with Mexico has documented issues with unauthorized crossings, the Canadian border accounts for less than 2% of border apprehensions and fentanyl smuggling.
Economists at the University of Michigan have said in recent months that increased tariffs pose risks to Michigan’s trade-dependent economy:
“The impact of tariffs on the local manufacturing sector likely will hinge on the extent of retaliation from U.S. and Michigan trading partners.”
Economists in East Lansing are also warning of negative economic effects from the Trump tariffs.
Jason Miller is a supply chain management expert at Michigan State University. He says tariffs on Canadian and Mexican auto parts and finished vehicles will be highly detrimental to Michigan.
“For example, over 50% of imported auto parts from Canada have a final destination in Michigan, where they are used by automakers as inputs into either other auto parts (e.g., broader assemblies) or directly put into finished vehicles,” said Miller.
On a call with investors last month, Ford CEO Jim Farley said a 25% tariff would “blow a hole” in the U.S. auto industry.
It’s not just the auto industry that may be affected by new 25% tariffs on Canada and Mexico. The affect may soon be seen in Michigan grocery stores.
“From Canada alone, Michigan imports around $1.5 billion worth of agricultural and food products,” said David Ortega, a food economics and policy expert at MSU. “We also rely on imports of fresh produce from Mexico to meet year-round consumer demand for fresh fruit and vegetables”
The MSU economists speculate that retaliatory tariffs could hurt Michigan exports.
Still, President Trump remains undeterred.
“Tariffs are going to make us rich as hell….it’s going to bring our country’s businesses back that left us,” said Trump.
