Stock markets are recoiling from last week’s announcements of across-the-board tariffs on U.S. imports from many of the world’s countries, but nowhere is more prone to potential economic hardship as a result than Michigan.
With almost 20 percent of its economy married to the auto industry, the Great Lakes State is dependent on parts from Canada, Mexico, and China, although some of those components and vehicles have been spared from new tariffs.
Tariffs also pose a threat to Michigan’s agricultural sector, according to some reports. The state is among the nation’s leading producers of tart cherries, asparagus, and squash.
“I just don’t see tariffs (as a positive development),” says Timothy G. Nash, director of the McNair Center for the Advancement of Free Enterprise and Entrepreneurship at Northwood University in Midland. “There are so many automotive and agricultural connections that are problematic and detrimental to Michigan.”
Nash notes that while the U.S. imports $4.1 trillion in goods and services from around the world and export $3.2 trillion, “what are they going to do when they try to export corn, soybeans, sugar beets from Michigan?”
Anderson Economic Group (AEG), an East Lansing consulting firm, estimates tariffs will add $2,500 to $12,000 to the price of several new cars, and up to $20,000 for luxury imports.
“This is going to have a dramatic negative effect on car sales in the United States,” says Patrick Anderson, CEO of AEG.
Gabriel Ehrlich, a University of Michigan economist, forecasts the new steel and aluminum tariffs will cost Michigan 600 auto manufacturing jobs by the end of next year, and an additional 1,700 jobs in industries that serve auto workers.
Ford Motor Co. in Dearborn says it’s ready to withstand the tariff storm.
“We assemble more U.S. vehicles, and we employ more U.S. hourly autoworkers than any other (original equipment manufacturer),” said Andrew Frick, president of Ford Blue and Model e, recently on the FOX Business Channel’s “Varney & Co.” program. “And we want to do more, not less, here in the U.S.
“You know, 80 percent of what we sell in the U.S. is assembled right here in the United States. And it would be helpful to have certain parts here in the U.S., and the White House gets that.”
As an added reaction to the tariffs, Ford announced it will offer its employee discount to all customers from April 3 through June 2.
The program, which it’s calling “From America, For America,” excludes some larger vehicles like the Ford Raptor, 2025 Ford Expedition, Ford Super Duty trucks, and Lincoln Navigator SUVs.
“We understand that these are uncertain times for many Americans,” the company said in a statement. “We have the retail inventory to do this and a lot of choice for customers that need a vehicle.”
Stellantis, which has its North American headquarters in Auburn Hills, said it is pausing production at two assembly plants in Canada and Mexico as the company attempts to navigate President Trump’s new round of 25 percent automotive tariffs.
Detroit-based General Motors Co. says it plans to temporarily increase pickup truck production at a plant in Indiana.
Interestingly, Trump has found a supporter for his tariff strategy in Shawn Fain, president of the United Auto Workers, who campaigned vigorously against the president in the leadup to last November’s presidential election.
“We applaud the Trump administration for stepping up to end the free trade disaster that has devastated working class communities for decades,” Fain says. “Ending the race to the bottom in the auto industry starts with fixing our broken trade deals, and the Trump administration has made history with today’s actions.
“These tariffs are a major step in the right direction for autoworkers and blue-collar communities across the country, and it is now on the automakers, from the Big Three to Volkswagen and beyond, to bring back good union jobs to the U.S.”
Overseas automakers also are reacting to the tariffs.
Jaguar Land Rover (JLR) announced plans over the weekend to pause shipments of its British-made vehicles to the U.S. for a month as it figures out the implications of the 25 percent tariff.
“As we work to address the new trading terms with our business partners, we are taking some short-term actions, including a shipment pause in April, as we develop our mid- to longer-term plans,” JLR said.
According to U-M, consumers started bracing for the potential ill effects of tariffs even before the announcement was made in the White House Rose Garden.
U.S. auto sales in the first quarter came in higher than expected as consumers bought cars ahead of auto tariffs taking effect, which many expect will lead to higher vehicle prices.
The specter of higher overall prices as a result of the tariffs led consumer sentiment to fall 12 percent in March, dropping for the third straight month, according to the University of Michigan.
While current economic conditions were little changed, U-M’s forward-looking expectations index plunged 18 percent and now has lost more than 30 percent since November 2024, says economist Joanne Hsu, director of the University of Michigan’s Surveys of Consumers.
“Overall, consumers perceive a tremendous amount of uncertainty in the economy — policy uncertainty, market uncertainty, general economic uncertainty, among others,” Hsu says. “The fact that expectations worsened across the board suggests that consumers perceive more downside than upside risk for the foreseeable future; these views will likely dampen consumers’ willingness to spend or make investments.”
If the end result of the tariffs is to decrease the import-export deficit between the U.S. and the rest of the world, the mere threat seems to have started the pendulum swinging the other way.
The U.S. Census Bureau and the U.S. Bureau of Economic Analysis says the goods and services deficit was $122.7 billion in February, down $8 billion from $130.7 billion in January.
February exports were $278.5 billion, $8 billion more than January exports. February imports were $401.1 billion, less than $0.1 billion than January imports.
The February decrease in the goods and services deficit reflected a decrease in the goods deficit of $8.8 billion to $147.0 billion and a decrease in the services surplus of $0.8 billion to $24.3 billion.
Year-to-date, however, the goods and services deficit increased $117.1 billion, or 86 percent, from the same period in 2024. Exports increased $24 billion or 4.6 percent. Imports increased $141.2 billion or 21.4 percent.
