An escalating trade fight between the United States and Canada could drive up prices for Michigan consumers, disrupt the state’s auto industry and weaken North America’s ability to compete with China, Detroit Regional Chamber President and CEO Sandy Baruah said Wednesday.
The warning comes as President Donald Trump threatens 50% tariffs on Canadian vehicles, auto parts and steel beginning next year, while Canada has threatened dollar-for-dollar retaliatory tariffs beginning Sept. 8.
For Michigan families, Baruah said the most immediate impact would likely be felt in their wallets.
“Higher prices for, you know, home remodels, home building, with paper products, plywood, furniture,” Baruah said. “We’re gonna see higher prices for automobiles at a time when we have, you know, the highest automobile prices, new car prices that we’ve ever seen.”
Michigan’s auto industry could feel the impact
Michigan could be particularly vulnerable because of the deeply integrated automotive supply chain that has developed between the U.S. and Canada.
Auto parts and raw materials can cross the border multiple times during the manufacturing process before a finished vehicle reaches a dealership.
Baruah pointed specifically to aluminum, which is increasingly important to automakers seeking to reduce vehicle weight.
“The percentage of aluminum that goes into automobiles is increasing and increasing every year because aluminum is lightweight and it helps with fuel efficiency,” Baruah said.
Canada’s abundant hydropower allows the country to produce aluminum with relatively inexpensive energy, he said, making Canadian aluminum important to U.S. automakers.
“So we really need that aluminum to build our cars here in the United States,” Baruah said.
Could tariffs eventually help U.S. manufacturing?
Trump has argued tariffs can encourage companies to move manufacturing and jobs back to the United States.
Baruah said tariffs themselves are not inherently harmful and noted the U.S. has long used them to protect certain industries.
“Tariffs are not universally bad. Let’s be completely clear about this,” Baruah said. “The United States puts tariffs on lots of products, including sugar, including lots of other agricultural products.”
But Baruah cautioned against assuming a resurgence in domestic manufacturing would recreate the kinds of middle-class factory jobs that powered Michigan’s economy generations ago.
“Manufacturing jobs today are not the manufacturing jobs of the 1970s, the 1980s,” Baruah said. “Manufacturing jobs today are essentially entry-level jobs, and they are not the jobs that paid what they paid in the 1970s and the 1980s, where you could raise a family, send a kid to college, maybe even get a house up north, et cetera, et cetera.”
Automation has also eliminated many of the jobs once associated with increased industrial production, he said.
Baruah argued the more important reason to preserve American manufacturing is maintaining the country’s industrial capacity.
“It’s really not about the jobs in manufacturing,” Baruah said. “It’s about making sure that we have a manufacturing base to protect our industrial and defense industries.”
Baruah: China could benefit from North American trade fight
Baruah said another potential consequence of a prolonged U.S.-Canada dispute is weakening North America’s competitive position against China.
“China is the second largest economy on the planet, and they’re coming on fast. There’s just no doubt about it,” Baruah said. “Their technology is super, super advanced. In many ways, they’re actually ahead of us, which is a super scary thing.”
Baruah said the United States would be in a stronger position confronting China’s trade practices if it worked alongside Canada and Mexico.
“The only way we’re going to combat China is if the North American market — Canada, the United States, and Mexico — work together,” Baruah said. “We don’t have to be on the same page every day all the time. But as long as we’re coordinated and we coordinate with our Asian allies and our European Union allies, we can work together to combat China’s unfair trade practices, which is a huge priority for the Western world.”
Michigan and Canada have a century of economic ties
Trump has also suggested the United States may substantially reduce business with Ontario.
Baruah said such a dramatic economic separation would be particularly consequential for Michigan because Canada is the state’s largest international trading partner.
“We do more business with Canada than we do with any other nation and frankly just about any other state,” Baruah said. “Our trade with Canada is really no different than our trade with Ohio or Indiana and for the last hundred years we have built an integrated manufacturing supply base across this binational border which for some reason is being undone.”
Baruah also questioned what specific Canadian trade practices warrant such sweeping U.S. tariffs.
He acknowledged longstanding disputes over industries including dairy and softwood lumber but said both countries protect politically or strategically important industries.
“Every country on the planet, regardless how free trade they may purport to be, protects some industries for political reasons,” Baruah said.
For Michigan, Baruah’s broader concern is that a trade relationship built across generations could be disrupted quickly — leaving businesses and consumers on both sides of the Detroit River paying the price.
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