Tariff threats have Michigan business communities on edge

DETROIT – President Donald Trump's tariff threats and the ongoing investigation has had a lot of the business community on edge.

Just a few weeks ago, General Motors' CEO Mary Barra wasn't especially concerned. She has since changed her tune. Ford Motor Company's Bill Ford is also worried about the prices of almost everything going up.

"I would say the level of concern is red alert," said Autotrader analyst Michelle Krebs. 

The auto industry is like an aircraft carrier; it can't turn on a dime. The Trump tariff uncertainty affects the entire industry. 

"This will affect car sales, and that will mean downsizing and less investment in the U.S.," Krebs said. "Probable job losses. Toyota said it would add $1,800 to the cost of a Camry."

The Trump Administration often says the tariff discussion is a negotiating position and that it doesn't want a trade war. Still, automobile manufacturing is Michigan's main industry, with agriculture being the third largest in the state, and the U.S. Chamber of Commerce believes more than $2 billion worth of economic impact could happen if the trade war comes to pass.

Michigan's direct impact would be more than $1 billion from Canada, where the state trades iron-steel and herbicides.

Michigan also stands to take a nearly $1 billion dollar hit on business with China, where companies sell cars and trucks and ship aluminum waste and scrap.

Michigan would take an $88 million dollar hit from the European Union, where residents ship kidney beans, white pea beans and even makeup preparations. 

Just under $300 million hit from Mexico because of alloy steel and automotive fan shipments.

"Car sales drop, production drops, jobs go away," Krebs said.

One of Krebs' concerns is the global supply chain. It's highly complex, highly integrated and can't be unraveled very easily. She fears the president isn't well-versed of just how complex the auto industry is.

About the Authors:

Rod Meloni is an Emmy Award-winning Business Editor on Local 4 News and a Certified Financial Planner™ Professional.