Detroit City Wire

The automotive industry is deeply intertwined with the global economy, sourcing and manufacturing components worldwide. Michigan, a hub for this industry, faces challenges when trade barriers disrupt supply chains. However, it is crucial for Michigan's leaders to remember that while some tariffs persist, most do not. The state's economic health should not be reliant on decisions made in Washington, D.C., Ottawa, Mexico City, or Beijing.

Michigan must enhance its manufacturing processes and invest in innovation to stay competitive. Cooperation between industry and state government is essential to address the complexities of new tariffs and seize opportunities in the evolving global auto market.

New tariffs could increase business costs and weaken American competitiveness due to penalties on imports from Asia, Mexico, and Canada. This could lead to supply chain disruptions and delayed investments. The increased cost of doing business between the U.S. and Canada could be significant as the Gordie Howe Bridge opens this year.

Restructuring integrated supply chains remains a major concern for companies. Lessons from the COVID-19 pandemic showed that rerouting supply chains leads to inefficiencies and costs passed on to consumers. These factors reduce the global competitiveness of American brands.

The North American market operates under the U.S.-Mexico-Canada Agreement (USMCA), which facilitates cross-border production with minimal tariffs. This agreement will remain until 2036 but includes a six-year review set for 2026. President-elect Donald Trump has indicated potential steep tariffs on Canadian and Mexican goods ahead of this review.

American negotiators aim to block Chinese companies from entering the North American market and promote critical mineral development for EV manufacturing. Public consultations by the U.S. Trade Representative will allow industry input on USMCA changes this year.

In the short term, navigating tariff complexities poses challenges; long-term success requires competing effectively in the new automotive world order. Tariffs may raise consumer prices gradually but could prompt accelerated purchases initially due to uncertainty.

MichAuto warns that significant new tariffs on Asian, Mexican, and Canadian goods could result in higher prices, smaller margins, and disrupted supply chains over time. MichAuto will continue updating investors and industry leaders on these developments.