Michigan and other Midwest states will feel the pain of what’s now a trade war before the rest of the country, according to Ball State University economist Michael Hicks.
President Donald Trump on Saturday signed an order to impose stiff tariffs on imports from Mexico, Canada and China, drawing swift retaliation from the country's North American neighbors in the emerging trade war.
The Republican president posted on social media that the tariffs were necessary “to protect Americans," pressing the three nations to do more to curb the manufacture and export of illicit fentanyl and for Canada and Mexico to reduce illegal immigration into the U.S. The action fulfilled one of Trump’s commitments to voters but threw the global economy and Trump’s own political mandate to lower prices into turmoil.
“The pain of this is going to be rather broad,” but the first to feel the effects will be in states like Michigan, Indiana, and Ohio, said Hicks, who directs Ball State's Center for Business and Economic Research.
“After the 2018 tariffs [imposed by Trump], it took six to nine months for the Midwest to slip into a manufacturing recession," Hicks said. "So by middle of 2019, Indiana, Michigan, most of the Midwest was already bleeding manufacturing jobs."
Trump declared an economic emergency in order to place duties of 10% on all imports from China and 25% on imports from Mexico and Canada. But energy imported from Canada, including oil, natural gas and electricity, would be taxed at a 10% rate.
Hicks said things that the U.S. imports from Canada that are already expensive will become even more so, like hardwood lumber and other building materials.
“If you like home prices spiking, if you like your kids living in your basement because they can't afford a home, this is exactly what type of policy you would enact to try to ensure that through 2025 and 2026,” Hicks noted wryly.
Hicks said Mexico and Canada won’t need to implement across-the-board tariffs to engage in a trade war with the U.S.; they can just impose limited tariffs against products produced by vulnerable sectors, like soybeans and corn, that they can get at a reasonable price from other countries like South America.
“So that they're going to really carefully target those to impose pain on, you know, those states that are manufacturing and agricultural intensive like Michigan and much of the Midwest,” he said.
Michigan Governor Gretchen Whitmer said the tariffs will function as a tax on the middle class and will put more than a million Michigan jobs at risk.
“Michiganders are already struggling with high costs — the last thing they need is for those costs to increase even more. A 25% tariff will hurt American auto workers and consumers, raise prices on cars, groceries, and energy for working families and put countless jobs at risk. Trump’s middle-class tax hike will cripple our economy and hit working-class, blue-collar families especially hard."
Michigan Department of Agriculture and Rural Development Director Tim Boring said farmers and rural communities should brace for economic difficulties. "We have to expect tariffs will immediately threaten agriculture jobs, our rural economies and ultimately what it costs to put food on the table," Boring said in an emailed statement.
Leaders of the North American countries targeted by the tariffs responded quickly.
“The actions taken today by the White House split us apart instead of bringing us together,” Canadian Prime Minister Justin Trudeau said in a somber tone as he announced that his country would put matching 25% tariffs on up to $155 billion in U.S. imports, including alcohol and fruit.
He channeled the betrayal that many Canadians are feeling, reminding Americans that Canadian troops fought alongside them in Afghanistan and helped respond to myriad crises from wildfires in California to Hurricane Katrina.
“We were always there standing with you, grieving with you, the American people,” he said.
Mexico’s president also ordered retaliatory tariffs. China did not immediately respond to Trump’s action.
"We categorically reject the White House’s slander that the Mexican government has alliances with criminal organizations, as well as any intention of meddling in our territory,” Mexican President Claudia Sheinbaum wrote in a post on X while saying she had instructed her economy secretary to implement a response that includes retaliatory tariffs and other measures in defense of Mexico’s interests.
“If the United States government and its agencies wanted to address the serious fentanyl consumption in their country, they could fight the sale of drugs on the streets of their major cities, which they don’t do and the laundering of money that this illegal activity generates that has done so much harm to its population.”