Trump says it’s full speed ahead with tariffs. It will cost US jobs.
Trump’s Tariffs Will Punish Michigan
A new study shows Trump’s Tariffs Will Punish Michigan
A new analysis by the Anderson Economic Group examines the potential tariff damage.
Start with auto prices. The study estimates that a 25% tariff on the U.S. neighbors would increase the cost of a full-size SUV assembled in North America by $9,000 and a pickup truck by $8,000. The cost of an electric-vehicle cross-over would increase by $12,200. Canada is the biggest supplier to the U.S. of nickel, a key critical mineral in lithium-ion batteries.
Such higher prices owe partly to the compounding effects of tariffs on auto parts that sometimes cross the border multiple times. Mexico exports some $136 billion of vehicles and parts to such auto-manufacturing states as Michigan ($53.8 billion), Texas ($26.9 billion), Tennessee ($8.1 billion), Ohio ($2.4 billion), South Carolina ($2.2 billion) and Alabama ($1.8 billion). Canada exports $50.4 billion in vehicles and parts, with large amounts going to Michigan ($22.1 billion) and Texas ($14.8 billion).
Mr. Trump says tariffs will force auto makers to make more cars in the U.S. Not likely, and that would take time in any case. Domestic demand for some vehicle models—especially sedans—isn’t sufficient to justify the cost of building new U.S. factories. Auto makers will have to absorb the tariff, increase prices on cars, or stop selling some models because they are too expensive.
U.S. auto workers will pay, too, if auto sales drop as a result of higher prices. Note that new U.S. vehicle sales last year were about 1.2 million lower than in 2019, largely because inflation and higher interest rates have made cars less affordable. One result is that U.S. plants produced 340,000 fewer cars last year than in 2019.
There are about 17,000 fewer U.S. workers employed in motor vehicles and parts than there were six years ago. Average weekly hours worked in the industry have fallen. The President can’t blame imports, which have fallen even more than U.S. car production.
Mr. Trump says tariffs will force auto makers to make more cars in the U.S. Not likely, and that would take time in any case. Domestic demand for some vehicle models—especially sedans—isn’t sufficient to justify the cost of building new U.S. factories. Auto makers will have to absorb the tariff, increase prices on cars, or stop selling some models because they are too expensive.
U.S. auto workers will pay, too, if auto sales drop as a result of higher prices. Note that new U.S. vehicle sales last year were about 1.2 million lower than in 2019, largely because inflation and higher interest rates have made cars less affordable. One result is that U.S. plants produced 340,000 fewer cars last year than in 2019.
There are about 17,000 fewer U.S. workers employed in motor vehicles and parts than there were six years ago. Average weekly hours worked in the industry have fallen. The President can’t blame imports, which have fallen even more than U.S. car production.
The country is already decelerating rapidly. And consumer confidence is weakening. If Trump wants a recession, tariffs will help.
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