The target was Canada. The casualty is Michigan.
President Trump's tariffs on Canadian imports were designed to pressure Ottawa on trade negotiations. Instead, they're hammering American auto suppliers who spent 30 years integrating their supply chains across the border under NAFTA.
Michigan auto parts manufacturers are facing a brutal choice: absorb higher input costs and kill margins, or pass prices to automakers and lose contracts. Either way, they're bleeding.
The integrated supply chain built since NAFTA's 1994 passage means a single car part might cross the US-Canada border six times during manufacturing. Each crossing now triggers tariff exposure. What was once seamless logistics is now expensive friction.
Consider a typical Detroit tier-one supplier making seats. They source foam from Ontario, ship it to Michigan for cutting, send covers to Quebec for sewing, return them to Michigan for assembly, then deliver to automakers. That's four border crossings, each now subject to tariffs.
The political irony is sharp. Michigan voted Republican in the presidential election partly on promises of bringing manufacturing jobs home. But the tariff strategy assumes supply chains can be quickly rewired. They can't. Rebuilding domestic capacity for every component would take years and billions in capital investment.
Meanwhile, Canada is retaliating with its own tariffs on American goods. Michigan exports $29 billion worth of manufactured goods to Canada annually. Those sales are now at risk as Canadian buyers look to domestic alternatives.
The trade war's economic logic was simple: pressure Canada to make concessions. But NAFTA's integration means American manufacturers feel the pain first and worst. By the time feels economic pressure, suppliers will already be laying off workers.
