LANSING — As a trade war heats up between the U.S. and its North American neighbors, economic experts say Michigan’s auto industry could take a hit from President Trump’s proposed tariffs.
Last week, the president said he would put a month-long pause on tariffs for cars and auto parts, later extending it to include all products that were already covered under free trade agreements.
“We don’t know what’s going to happen at the end of March here,” said Glenn Stevens Jr., executive director of the MichAuto industry group. “Could we have another reprieve? Could we have more tariffs? Could we have less tariffs?”
Michigan economic experts say the pause will likely give little opportunity for any significant shifting of production methods in the coming weeks.
“That, in and of itself, does not feel or sound like sufficient time to set up alternative structures for car manufacturers,” said Marcel Zondag, a supply chain management professor at the Wester Michigan University Haworth School.
Trump critic and UAW president Shawn Fain is supporting the president on his tariff policy.
He echoed trump’s criticisms of free trade agreements and said the current trade system leaves American workers worse off.
Supply chain and automotive experts say that any new investments in production or shift in the supply chain would take much more than a few weeks to implement.
“In a very short period of time, it’s almost impossible to move production of parts and certainly vehicle manufacturing,” Stevens said. “It takes months, multiple months, in fact, sometimes a year or more, to move production. It’s a very complex supply chain.”
Stevens says that there are numerous factors to consider when planning manufacturing investments.
“Even if you were to move production, is there labor available for where you’re doing that? So it’s an industry that thrives on stability and long range planning, and right now it doesn’t have that,” he said. “Do we want more manufacturing in Michigan and the U.S.? Absolutely. But again, it has to be done in a very methodical, planned out manner.”
Stevens says free trade agreements have incentivized Mexican and Canadian production investments since the 1990s, and that disrupting that balance could cause short-term harm to the competitiveness of American makers.
“That means costs and prices do go up for the suppliers to manufacture parts if they’re hit with those tariffs, and eventually it could cause the increase of a vehicle,” Stevens said.