Mexico tariffs would hit Michigan hard, study finds

Keith Laing
The Detroit News
In this April 9, 2019, file photo, trucks wait to cross the border with the U.S. in Ciudad Juarez, Mexico.

Washington — President Donald Trump's threat to place tariffs on Mexican goods that could reach as high as 25% will cost Michigan companies as much as $14 billion, making Michigan the second-hardest hit state in the nation, according to the U.S. Chamber of Commerce.

Trump has signaled his intention to place tariffs on all goods imported from Mexico that would start at 5% on June 10 and rise in increments to 25% by October if Mexico doesn't curtail the flow of immigrants from Central America. The analysis by the business group found that Michigan imported $56 billion worth of goods from Mexico in 2018, and tariffs could range from $2.8 billion with 5% tariffs, to $14 billion with 25% tariffs.

Those Michigan tariffs would fall largely on autos and auto parts, some of which would be taxed multiple times as they move back and forth across the border.

The only state that would be harder than Michigan under the proposed tariffs is Texas, which would face levies that range from $5.3 billion to $26.7 billion, according to the study. California, Illinois and Ohio round out the top five states that would be hit hardest under Trump's proposed Mexico tariffs.

Nationally, the impact would range from $17.3 billion under 5% duties to $86.6 billion if they hit 25%.

Neil Bradley, executive vice president and chief policy officer for U.S. Chamber of Commerce, said the new data illustrates the heavy price American families and consumers would have to pay under Trump's proposed tariffs. 

"Imposing tariffs on goods from Mexico is exactly the wrong move," Bradley said. "These tariffs will be paid by American families and businesses without doing a thing to solve the very real problems at the border."

Vehicles and auto parts are by far the biggest export from Mexico to the United States, totaling $93.3 billion last year, according to the U.S. Census Bureau. In 2018, Mexico assembled 2.5 million vehicles that were sold in the U.S., according to Cox Automotive. The top two brands by Mexican share, GMC and Ram, see about 40% of their retail vehicles assembled on the other side of the border.

Higher auto prices — which would almost certainly be spread across lineups regardless of where they are built — could result in 3 million fewer vehicles sold annually in the U.S., an 18% reduction, Deutsche Bank estimated. 

Trump has defended his proposed tariffs as an effort to put pressure on Mexico to address long-standing immigration issues. 

"Mexico is sending a big delegation to talk about the Border. Problem is, they’ve been 'talking' for 25 years," he tweeted Sunday. "We want action, not talk. They could solve the Border Crisis in one day if they so desired. Otherwise, our companies and jobs are coming back to the USA!"

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