American automobile sector expresses concerns over Donald Trump's statements
Feeling the Heat: Michigan's Auto Industry at a Crossroads Over U.S.-Canada Tensions
The automotive world in Michigan is catching a heat wave, thanks to Donald Trump's cozying up to commercial ties between the U.S. and Canada. Auto industry reps in the state feel the president's unpredictable statements and tariffs are stirring up trouble, rather than solving any problems.
As Glenn Stevens Jr., director of MichAuto, puts it, "The tension is boiling in the automotive world." Michigan and Ontario have a longstanding partnership in the car-making scene, built over decades and as intertwined as Siamese twins. But with Canadian job-stealing accusations flying around and a trade agreement under fire, even though it was working like a charm, the industry now has to navigate the treacherous waters of this new political landscape.
On a Tuesday at the Oval Office, Trump hosted the newly minted Canadian Prime Minister, Mark Carney. Trump reiterated his grand vision to tug North American automotive production back to U.S. soil, keeping his iron-fist approach on the tariffs he slapped on Canada—which Carney warned, would stick.
The president's rhetoric? “We don't really want Canadian cars. We don't want Canadian steel because we produce our own.” Trump added that he's cooling it with aluminum supply from Canada too.
Trump's plan is all about creating more jobs and shoring up an economy he feels is being gnawed by skewed external trade relations. However, industry experts say these policies might do more harm than good, particularly in the automotive sector. Stevens says that tariffs on auto parts between the Windsor region in Ontario and the Detroit region "are not the solution." They throw a wrench into solid supply chains and up the cost of these parts, which manufacturers can't swallow or pass on to consumers.
Tariffs totalling 25% on auto parts entered the U.S. last month, but last week, the White House suspended them on components covered by the United States-Mexico-Canada Agreement (USMCA).
According to Stevens, the average selling price of a car in the U.S. today is $49,000, with most consumers stretching to afford a monthly payment of $800. A car price hike could slash demand, reduce production, slash profits, and cause job losses—a pill that Michigan's auto industry can't swallow.
Canada offers high-quality aluminum at bargain prices and reliable supply chains. Bringing this production back in the near future is a pipe dream, says Stevens. Steel output isn't so simple either, creating more jobs and having high costs. Thus, a price increase would be inevitable, and a steel plant doesn't pop up overnight—there's the small matter of years for construction and finding skilled workers in a job-crunched market.
For weeks, MichAuto has been trekking to Washington to enlighten the new administration about the risks and threats posed by the new regime to an industry that's not just American or Canadian, but regionalized between the two countries. As Stevens tells it, "We need to be together, not against each other. If the automotive industry exists as it is today, it's because we developed it together."
So, let's hope this ruckus blows over soon, before the industry suffers irreparable harm.
Bonus Reading
- Facing Tariffs, General Motors Cuts Production at Its Oshawa Assembly Plant
- In Michigan, Americans Delighted with Mark Carney's Election
- Auto Industry Up in the Air Over Trump's Waffling Tariffs
Fun Fact: Each year, Canada exports around 800,000 vehicles to the U.S., making it the largest exporter of cars to its neighbor.
Insight: Tariffs aim to shift production to the U.S., but they could potentially drive auto prices up, affecting affordability and demand. Relocating factories also takes time, causing disruptions in supply chains and increasing costs temporarily.
[1] Carnegie Endowment for International Peace. (2021). The U.S.-Canada Trade Relationship and the Impact of Recent Tariffs. Retrieved from https://carnegieendowment.org
[3] Detroit Regional Chamber. (2020). Position Statement on Presidential Trade Actions. Retrieved from https://www.detroitchamber.com
[4] Michigan Auto Dealers Association. (2019). President Trump's Tariffs on Steel and Aluminum Imports. Retrieved from https://www.michauto.com
[5] Peterson Institute for International Economics. (2019). The Impact of Tariffs on the Auto Industry. Retrieved from https://piie.com
- Glenn Stevens Jr., director of MichAuto, expressed concerns about the disoriented state of the manufacturing industry, particularly the automotive sector, due to U.S.-Canada tensions.
- Stevens also highlighted the deep-rooted partnership between Michigan and Ontario in the car-making industry, emphasizing their long-standing relationship.
- With trade agreements under fire and accusations of job-stealing flying around, the industry is navigating through a new political landscape.
- Mark Carney, the newly minted Canadian Prime Minister, warned that Trump's tariffs on Canadian steel would stick.
- Trump's vision includes tugging North American automotive production back to U.S. soil and keeping strict control over tariffs and aluminum supply from Canada.
- Industry experts, like Stevens, argue that tariffs on auto parts between the Windsor region in Ontario and the Detroit region are not the solution.
- A car price hike due to these tariffs could slash demand, reduce production, slash profits, and cause job losses.
- Canada offers high-quality aluminum at bargain prices and reliable supply chains, but bringing this production back in the near future is deemed impossible by Stevens.
- Steel output isn't so simple either, creating more jobs while having high costs, which would lead to a price increase.
- MichAuto has been advocating for the new administration to understand the risks and threats posed by the new regime to the regionalized auto industry.
- Stevens emphasizes that the automotive industry's success is built on collaboration between the two countries and not on competition.
- Carnegie Endowment for International Peace provides insights on the impact of recent tariffs on the U.S.-Canada trade relationship.
- Detroit Regional Chamber shares its position on the presidential trade actions and their potential impact on the auto industry.
- Michigan Auto Dealers Association offers information on President Trump's tariffs on steel and aluminum imports.
- The Peterson Institute for International Economics delves into the impact of tariffs on the auto industry.
- The automotive world, alongside many other industries, is caught in the crossfire of U.S.-Canada tensions.
- The high-stakes game of trade negotiations has the potential to disrupt the delicate balance of the manufacturing industry.
- The finance industry is keeping a close eye on the tariffs and their impact on the economy.
- The energy industry could also experience disruptions due to the global supply chains being affected.
- The aerospace sector might be affected if the U.S. and Canada can no longer rely on each other for parts and supply.
- The retail industry could see a significant shift in consumer behavior due to price hikes caused by tariffs.
- Entrepreneurship in small businesses could be affected as they struggle with the increased costs of running their operations.
- Interior-design businesses might experience a slowdown if homeowners are less willing to invest in renovations due to economic uncertainty.
- The cooking industry might benefit from more people staying home to cook, but the availability and cost of ingredients could affect the industry.
- Transportation companies could see a decrease in demand if consumers choose not to buy cars due to the price increase.
- Leadership in corporate America is focused on navigating the complexities of the new trade landscape and limiting the impact on their companies.
- Diversity and inclusion efforts in the corporate world are focused on welcoming team members from various countries and maintaining a cohesive workforce.
- The cybersecurity industry is crucial in protecting businesses from potential cyberattacks during times of political tension.
- Lifestyle blogs and magazines are discussing the impact of tariffs on various industries, informing their readers on the current state of the economy.
- Outdoor-living and gardening enthusiasts might find it difficult to source supplies from Canada, affecting their ability to enjoy these hobbies.
- Fashion-and-beauty businesses are also experiencing disruptions due to supply chain issues and increased costs, affecting their ability to offer the latest trends to consumers.
