Chamber: Tariffs could cost Michigan $2.3 billion

Keith Laing | The Detroit News

Washington — President Trump's plan to put tariffs of up to 25 percent on imports of cars and other foreign products could expose $2.3 billion worth of exported Michigan goods to retaliation, according to a new analysis from the U.S. Chamber of Commerce.

Among the Michigan products that could be hit by retaliatory tariffs are cars and scrap aluminum exported to China; herbicides and steel exported to Canada; and boats, kidney beans and white pea beans exported to European Union countries.

Michigan ranks ninth among states in exposure to potential lost exports, according to the Chamber, trailing Washington, Louisiana, California, Texas, Illinois, Alabama, Ohio and South Carolina.

"The administration's new tariffs threaten to spark a global trade war," the chamber said in a statement. "Canada, Mexico, the EU, and China have already retaliated or announced plans to retaliate with billions of dollars in tariffs on American-made products.

"Tariffs imposed by the United States are nothing more than a tax increase on American consumers and businesses, including manufacturers, farmers, and technology companies, who will all pay more for commonly used products and materials," the organization continued. "Retaliatory tariffs imposed by other countries on U.S. exports will make American-made goods more expensive, resulting in lost sales and ultimately lost jobs here at home. This is the wrong approach, and it threatens to derail our nation's recent economic resurgence."

Sandy Baruah, president and CEO of the Detroit Regional Chamber, said Michigan is particularly vulnerable in a trade war because of its proximity to Canada.

"Canada is obviously our nation’s largest export market, and year over year we’ve seen increases in U.S.-Canada trade," Baruah said. "Anything that would decrease that is particularly damaging to Michigan because Michigan as a whole trades more with Canada than the entire nation of China does."

Michigan exported more than $24 billion worth of goods to Canada in 2017, according to the U.S. Department of Commerce's International Trade Administration.

Rich Studley, president and CEO of the Michigan Chamber of Commerce, said the national organization's numbers show Michigan is at risk of suffering higher economic losses than most states under the proposed tariffs.

“The federal government should be a strong advocate for free and fair trade," he said in a statement, adding that several major Michigan industries would be exposed to potential retaliation from foreign countries. "Two of Michigan’s leading industries, manufacturing and agriculture, are major exporters. Travel and tourism in Michigan also relies on visitors from other countries."

At the request of the president, the U.S. Commerce Department is investigating the national security impact of allowing imported cars to come into the U.S. In making the request, Trump cited a section of federal law that allows the president to impose tariffs if he determines a security threat exists.

The Trump administration already has imposed tariffs on foreign steel and aluminum.

The U.S. Chamber of Commerce is usually a reliable ally of Republican administrations on trade issues. The organization supported the Trump administration's efforts to cut taxes in 2017, but it has diverged with the president on tariffs.

The group is encouraging companies to contact members of Congress to urge them to pass legislation to limit Trump's ability to impose tariffs.

Trump has dismissed claims from groups that lobby for automakers in Washington that tariffs would result in higher prices for imports at U.S. car dealerships.

"What's going to really happen is, there's going to be no tax," Trump said during an interview with Fox News on Sunday. "You know why? They're going to build their cars in America. They're going to make them here."

The tariff investigation process initiated by the Trump administration, known as a Section 232 investigation in reference a trade law passed in 1962, was used recently by the Trump administration to propose tariffs on imported aluminum and steel. The administration has argued that auto imports pose a similar threat.

The investigation and implementation could take up to a year, if the example of the metals tariff is any indication.

klaing@detroitnews.com

(202) 662-8735

Twitter: @Keith_Laing