President Donald Trump still appears poised to impose broad tariffs on U.S. trade partners in the coming weeks, some of which could heavily impact Michigan.
Trump most recently floated a 25% fee on Mexico and Canada following his Monday inauguration.
Economic and supply chain experts say that any tariffs placed on Michigan’s northern neighbor would likely have a severe effect on the state economy.
“There is likely no industry that is more intertwined across the borders in North America than the motor vehicle sector,” said Jason Miller, interim chair of Michigan State University’s Supply Chain Management department.
“If we do see a 25% across the board Canada-Mexico tariff, Michigan will be the most affected state in the United States, likely followed by states like Texas and California,” he added.
According to the U.S. International Trade Administration, Michigan exports about $28 billion in goods to Canada annually, while Canada imports over $50 billion to Michigan.
Motor vehicles and parts make up more than half of each of these figures.
And according to Bureau of Labor Statistics data from September, nearly 117,000 Michigan residents work in vehicle part manufacturing, while just under 50,000 work in full vehicle manufacturing.
Higher vehicle costs could lead to a contraction of the industry, and bring with it economic challenges for Michigan.
“Long term, as the tariffs progress and things keep going back and forth across the border, those costs increase, and they will ultimately get passed on to the consumer,” said Jeff Rightmer, a global supply chain management professor at Wayne State University. “There’s really no way around that.”
Experts say that any significant shift in U.S. production — much less reaching a level that would satisfy American consumers — may not be seen for years.
plus, they say that companies may be hesitant to invest America given the political volatility of the issue.
“It’s very difficult when we’re talking multi billion dollar investment decisions, to make a decision on four years, because what happens if there’s a major change in Washington’s attitude towards tariffs in 2029?” said Miller. “And all of a sudden, you may have made investments in the United States that are no longer cost-competitive.”
Experts added that even if U.S. facilities are technologically prepared to manufacture new goods, they may not have the room for additional production.
“They have capacity constraints,” Rightmer said. “They have customers already. So are they able to take on more business?”
Trump has directed federal authorities to review the country’s trade practices with Canada and Mexico, and says a decision could come on Feb. 1.