An escalating trade fight between the United States and Canada could drive up prices for Michigan consumers, disrupt the state\u2019s auto industry and weaken North America\u2019s ability to compete with China, Detroit Regional Chamber President and CEO Sandy Baruah said Wednesday.<\/p>\n
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.<\/p>\n
For Michigan families, Baruah said the most immediate impact would likely be felt in their wallets.<\/p>\n
\u201cHigher prices for, you know, home remodels, home building, with paper products, plywood, furniture,\u201d Baruah said. \u201cWe\u2019re gonna see higher prices for automobiles at a time when we have, you know, the highest automobile prices, new car prices that we\u2019ve ever seen.\u201d<\/p>\n
Michigan\u2019s auto industry could feel the impact<\/p>\n
Michigan could be particularly vulnerable because of the deeply integrated automotive supply chain that has developed between the U.S. and Canada.<\/p>\n
Auto parts and raw materials can cross the border multiple times during the manufacturing process before a finished vehicle reaches a dealership.<\/p>\n
Baruah pointed specifically to aluminum, which is increasingly important to automakers seeking to reduce vehicle weight.<\/p>\n
\u201cThe percentage of aluminum that goes into automobiles is increasing and increasing every year because aluminum is lightweight and it helps with fuel efficiency,\u201d Baruah said.<\/p>\n
Canada\u2019s abundant hydropower allows the country to produce aluminum with relatively inexpensive energy, he said, making Canadian aluminum important to U.S. automakers.<\/p>\n
\u201cSo we really need that aluminum to build our cars here in the United States,\u201d Baruah said.<\/p>\n
Could tariffs eventually help U.S. manufacturing?<\/p>\n
Trump has argued tariffs can encourage companies to move manufacturing and jobs back to the United States.<\/p>\n
Baruah said tariffs themselves are not inherently harmful and noted the U.S. has long used them to protect certain industries.<\/p>\n
\u201cTariffs are not universally bad. Let\u2019s be completely clear about this,\u201d Baruah said. \u201cThe United States puts tariffs on lots of products, including sugar, including lots of other agricultural products.\u201d<\/p>\n
But Baruah cautioned against assuming a resurgence in domestic manufacturing would recreate the kinds of middle-class factory jobs that powered Michigan\u2019s economy generations ago.<\/p>\n
\u201cManufacturing jobs today are not the manufacturing jobs of the 1970s, the 1980s,\u201d Baruah said. \u201cManufacturing 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.\u201d<\/p>\n
Automation has also eliminated many of the jobs once associated with increased industrial production, he said.<\/p>\n
Baruah argued the more important reason to preserve American manufacturing is maintaining the country\u2019s industrial capacity.<\/p>\n
\u201cIt\u2019s really not about the jobs in manufacturing,\u201d Baruah said. \u201cIt\u2019s about making sure that we have a manufacturing base to protect our industrial and defense industries.\u201d<\/p>\n
Baruah: China could benefit from North American trade fight<\/p>\n
Baruah said another potential consequence of a prolonged U.S.-Canada dispute is weakening North America\u2019s competitive position against China.<\/p>\n
\u201cChina is the second largest economy on the planet, and they\u2019re coming on fast. There\u2019s just no doubt about it,\u201d Baruah said. \u201cTheir technology is super, super advanced. In many ways, they\u2019re actually ahead of us, which is a super scary thing.\u201d<\/p>\n
Baruah said the United States would be in a stronger position confronting China\u2019s trade practices if it worked alongside Canada and Mexico.<\/p>\n
\u201cThe only way we\u2019re going to combat China is if the North American market \u2014 Canada, the United States, and Mexico \u2014 work together,\u201d Baruah said. \u201cWe don\u2019t have to be on the same page every day all the time. But as long as we\u2019re coordinated and we coordinate with our Asian allies and our European Union allies, we can work together to combat China\u2019s unfair trade practices, which is a huge priority for the Western world.\u201d<\/p>\n
Michigan and Canada have a century of economic ties<\/p>\n
Trump has also suggested the United States may substantially reduce business with Ontario.<\/p>\n
Baruah said such a dramatic economic separation would be particularly consequential for Michigan because Canada is the state\u2019s largest international trading partner.<\/p>\n
\u201cWe do more business with Canada than we do with any other nation and frankly just about any other state,\u201d Baruah said. \u201cOur 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.\u201d<\/p>\n
Baruah also questioned what specific Canadian trade practices warrant such sweeping U.S. tariffs.<\/p>\n
He acknowledged longstanding disputes over industries including dairy and softwood lumber but said both countries protect politically or strategically important industries.<\/p>\n
\u201cEvery country on the planet, regardless how free trade they may purport to be, protects some industries for political reasons,\u201d Baruah said.<\/p>\n
For Michigan, Baruah\u2019s broader concern is that a trade relationship built across generations could be disrupted quickly \u2014 leaving businesses and consumers on both sides of the Detroit River paying the price.<\/p>\n
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