WASHINGTON — Michigan's economy has more to lose than that of any other state from President Donald Trump's reopening of NAFTA, the free-trade agreement between the U.S., Canada and Mexico, a credit rating agency's report said today.

Fitch Ratings, a global provider of credit ratings and research based in New York, said Michigan would likely be impacted most by potential changes to the North American Free Trade Agreement because "its economy is the most interconnected" with the trading partners.

Negotiations between the partners on how to rewrite NAFTA began this month after Trump repeatedly threatened to dump the free-trade agreement and enact tariffs on imports to address what he sees as a bad deal for the U.S. and a loss of jobs to Mexico.

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While labor unions, especially those representing manufacturing employees in the industrial Midwest, have long argued for reopening NAFTA, Fitch Ratings' report said that the Trump administration's "adoption of a tougher line on trade policy" could rattle local markets and the tax base, especially in Michigan.

The state's proximity to the northern border — with three major ports of entry, including the one in Detroit — means that any tariff or other significant change to NAFTA could impact the more than $70 billion in imports and exports the state has with Canada. No other state in the U.S. does more business with Canada, the report said.

Meanwhile, Michigan's auto industry relies on an interconnected supply and distribution chain across the Canadian and Mexican borders that could be hurt by changes to NAFTA. Nearly a quarter — 22% — of Michigan's exports cross the Mexican border, and more than a third — 36% — of the state's imports come across the southern border.

"Taken together, 65% of Michigan's exports went to Canada and Mexico, accounting for a combined 7.4% of its gross state product in 2016," the report said. "Without question, Michigan would be uniquely exposed if NAFTA's terms changed dramatically."

Ever since Trump began criticizing NAFTA and threatening tariffs, there have been counterarguments from economists and others noting that hiking prices could hurt the auto industry by making exports less competitive.

The report noted that the state's sales and income taxes account for 42 cents of every $1 of Michigan's government revenues and 88 cents out of every $1 in school aid funds, "highlighting the state's vulnerability to economically sensitive revenues."

Michael D'Arcy, the lead analyst and author of the report, said Michigan could "theoretically" benefit if NAFTA negotiations somehow led to an increase in the volume of trade with Canada and Mexico. But since trade between the countries is already largely tariff-free, it's more likely that changes could slow trans-border trade.

"The risks are probably more weighted to the downside," he said. "If tariffs are enacted, I think they (Michigan) are very exposed."

Contact Todd Spangler: 703-854-8947 or tspangler@freepress.com. Follow him on Twitter: @tsspangler.