Michigan could pay bigly for Trump's trade war

Yahoo

08-02-2025

Former President Donald Trump speaks at a rally on Saginaw Valley State University campus in Michigan on Oct. 3, 2024 ahead of the presidential election | Photo: Anna Liz Nichols
It's not about the fentanyl.
President Donald Trump backed off threats to slap 25% tariffs on goods from Canada and Mexico starting Tuesday, saying the two countries had agreed to measures designed to address the flow of the deadly drugs and unauthorized immigrants into the United States.
Trump paused the tariffs for 30 days, giving a reprieve to Michigan's auto and agricultural industries that were expected to take direct blows from the tariffs. A 10% tariff on Chinese goods took effect Tuesday.
Michigan Gov. Gretchen Whitmer said the tariffs on Mexican and Canadian goods would have put more than a million jobs at risk and 'hit working-class, blue-collar families especially hard.' Those are the folks whose votes Trump relentlessly sought during numerous visits to Michigan in his two election campaigns.
Trump postpones big tariffs against Canada and Mexico for one month
The tariff delay was classic Trump: wring out a few seemingly important new concessions from trading partners and declare a victory.
But much of what Canada Prime Minister Justin Trudeau and Mexico President Claudia Sheinbaum agreed to was already underway.
Trump's real goal is to destroy a valuable, decades-long trading relationship with two trusted allies as part of his chauvinistic America First strategy. He's off to a great start.
On Monday, the president dismissed Canada's economic importance to the U.S. at the same time the two countries agreed to enhanced border security measures. Trump said the U.S. doesn't need Canadian energy, lumber or its cars, many of which are built there by Ford, General Motors and Stellantis.
'We don't need them for anything,' he said.
Yet Trump wants to annex Canada and make it 'our Cherished 51st State.' Normally good-natured Canadians have responded by booing the 'Star-Spangled Banner' at hockey games.
Trump hasn't made the same offer to Mexico, a country the president demeaned when he first ran for president by calling Mexicans rapists and drug dealers.
He recently disrespected the country by declaring that the Gulf of Mexico will be known in the U.S. as the Gulf of America.
Republicans were once ardent free traders but have become increasingly isolationist under the Trump regime.
GOP former Gov. John Engler was among the earliest and most enthusiastic backers of the North American Free Trade Agreement, having taken a trade mission to the country months before NAFTA took effect on Jan. 1, 1994. (I covered that trip to Mexico City).
In 2012, Republican former Gov. Rick Snyder sought to boost trade with Canada by negotiating an agreement with then-Canadian Prime Minister Stephen Harper to build the $6.4 billion Gordie Howe International Bridge linking Detroit and Windsor.
Canada agreed to pay the full price of the bridge after the Republican-controlled Michigan Legislature refused to share the cost, a precursor to what we're seeing now. The bridge is expected to open this fall.
Trade among the U.S. Canada and Mexico exploded from $290 billion to $1.1 trillion from 1993 to 2017. But NAFTA was criticized for the loss of tens of thousands of American jobs as U.S. companies moved production to Mexico.
Trump renegotiated the trade pact with Canada and Mexico, which is called the United States-Mexico-Canada Agreement (USMCA), in 2018. It addressed NAFTA's shortcomings by boosting domestic content requirements for cars and trucks built in the region and raised wages for many Mexican workers.
'The USMCA is the largest, most significant, modern and balanced trade agreement in history,' Trump gushed when the trade pact took effect in 2020. 'All of our countries will benefit greatly.'
But Trump doesn't think the U.S. has benefitted enough, casting doubt on the future of the USMCA. The pact is up for review in 2026. He repeatedly complains that Canada and Mexico are 'ripping us off' because those countries run large trade surpluses against the U.S.
The surpluses aren't going to disappear in the next 30 days, leaving the threat of tariffs against our neighbors very much alive.
Trump is obsessed with trade deficits, a complicated issue that economists say isn't necessarily an indication of a country's wealth. The U.S. runs deficits with most of its trading partners, yet has the strongest economy in the world.
The president insists that tariffs are paid by other countries that export goods to the U.S., a view that hardly any economist holds.
Not content to attack Canada, Mexico and China, Trump said Sunday he'll slap punitive tariffs on the European Union later this month. The U.S. runs a trade deficit with Europe in cars, agriculture and other products.
Trump is playing a dangerous game. His tariff mania is harming relationships with allies we need to combat provocations from Russia and China.
His actions also threaten the future of 'nearshoring,' an effort to move supply chains away from hostile countries like China closer to home to Mexico and other friendly trading partners. The concept took hold during the COVID pandemic when the U.S. found itself dependent on masks and other low-cost medical products from China.
The biggest threat of expanding tariffs is the potential for a brutal trade war that could cost millions of jobs, boost inflation through higher prices on consumer goods and ignite a deep recession.
And Michigan, with its outsized dependence on manufacturing, could be one of the biggest victims.
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