Opinion: Trump’s tariffs hurt Michigan industry

Tyler Groenendal

President Donald Trump’s continued embrace of tariffs spells danger for Michigan.

Though noted for his “America First” refrain, his call for tariffs will ultimately hurt America the most. Michigan is particularly vulnerable to the consequences of protectionism. According to estimates by the U.S. Census Bureau of Economic Analysis, imports and exports accounted for 38.9 percent of the Michigan’s gross domestic product in 2017. In layman’s terms, businesses in Michigan buy and sell a lot from businesses outside of the United States.

Groenendal writes: "President Trump should understand the immense costs of these tariffs before pushing for them so strongly."

By restricting international trade, Trump’s tariffs will harm industry and commerce statewide, who rely on foreign trade, while also forcing millions of consumers to pay higher costs on everything from whiskey to cars.

Trump’s call for tariffs on aluminum and steel is particularly troubling for the state. These tariffs, though they may create more jobs in the short term for domestic smelters and refiners of steel and aluminum, will hurt almost every other manufacturer. By placing tariffs on steel and aluminum, it becomes more expensive to buy, and more difficult to produce, anything made with these metals.

Steel, in particular, is a major input in the production of cars. Michigan auto manufacturers, forced to pay more for the steel needed to make a car or a truck, will face falling profits and job losses. Likewise, all Michigan residents will have to shell out more for a new car.

Even beyond steel, the Michigan automotive industry relies on foreign trade to supply a major portion of parts for the cars they produce. According to the 2018 Made in America Auto Index, a Ford F-150 relies on foreign trade for more than 30 percent of its parts, while a Chevrolet Cruze sources over half of its parts from beyond the United States and Canada.

Tariffs have a deeper threat beyond threatening to cut off a vital source of manufacturing inputs for Michigan industry. The onset of a trade war between the United States and major trading partners, including Canada, Mexico, Japan, China, and the European Union, is inching closer to dangerous reality.

Already in response to aluminum and steel tariffs, Canada unleashed a flurry of retalitatory tariffs on a vast number of goods, from appliances like dishwashers and laundry machines to food, pens, and toilet paper.

Trade wars make tariffs worse. Exports to Canada accounted for 41 percent of all Michigan exports in 2017, making Canada our largest trading partner. Michigan industry stands to lose the most from a trade war with Canada, and lose even more from similar trade wars with Mexico and China.

Even at this early stage, Trump’s tariffs threaten industry and economic growth in Michigan, and show no signs of stopping. Trump recently claimed he’s prepared to enact further tariffs on $267 billion worth of goods from China alone. There’s little doubt that similar plans for new tariffs on Canada, and dozens of other countries, are coming down the pipeline as well.

Trump’s tariffs will hurt Michigan consumers, commerce, and industry. President Trump, and supporters of his tariffs in Michigan, should understand the immense costs of these tariffs before pushing for them so strongly.

Tyler Groenendal is foundation relations coordinator at the Acton Institute.