Detroit Axle, a family-owned automotive supply company employing about 300 people in Southeast Michigan, is suing the Trump administration over import tariffs that the owner says threaten the business and its workforce.
Mike Musheinesh, owner of Detroit Axle, said the 72.5% tariffs on imported goods have significantly increased costs, forcing the company to pay $725,000 in tariffs for every $1 million worth of goods imported.
“There was a possibility of a 40/50% reduction in sales so given that equation, we decided we may have to idle this operation,” Musheinesh said. Last month, he informed the Michigan Department of Labor that the tariffs would lead to the permanent loss of 102 jobs at the Ferndale location. “Pleasant surprise the market accepted the increase,” said Musheinesh who says they also started taking on the customers of other auto supply businesses that didn’t survive the tariffs. “Many people are starting to exit the industry meaning there are shortages in the market, along with everyone else raising their prices.”
James Johnson, who has worked at Detroit Axle for 10 years, shared his thoughts. “I don’t think the tariffs are fair, if you call yourself trying to help America how is you raising these tariffs and hurting America in actuality,” he said.
Despite strong retail demand and taking on customers from other businesses that closed due to the tariffs, Detroit Axle’s profits have declined sharply.
Musheinesh has filed a lawsuit in the Court of International Trade, arguing that the tariffs and their implementation are unconstitutional.
He is following the example of VOS Selections, another small business that successfully challenged the tariffs in May. The U.S. Court of International Trade ruled unanimously in favor of VOS Selections and it’s co-plaintiffs, saying President Trump overstepped his authority with sweeping global tariffs. This invalidated the global tariffs, but the ruling was paused by the Federal Circuit, allowing the tariffs to remain in effect. The U.S. Court of Appeals will hear the case tomorrow, a day before new tariffs are set to go into effect.
Musheinesh and his attorney will be closely watching the outcome, which could give them early indications of the direction of their lawsuit may take.
Meanwhile, the United States will impose a 25% tariff on goods from India, plus an additional import tax because of India’s purchasing of Russian oil, Trump said Wednesday.
Trump’s announcement comes after a slew of negotiated trade frameworks with the European Union, Japan, the Philippines and Indonesia — all of which he said would open markets for American goods while enabling the U.S. to raise tax rates on imports. The president views tariff revenues as a way to help offset the budget deficit increases tied to his recent income tax cuts and generate more domestic factory jobs.
While Trump has effectively wielded tariffs as a cudgel to reset the terms of trade, the economic impact is uncertain as most economists expect a slowdown in U.S. growth and greater inflationary pressures as some of the costs of the taxes are passed along to domestic businesses and consumers.
There’s also the possibility of more tariffs coming on trade partners with Russia as well as on pharmaceutical drugs and computer chips.