WASHINGTON/DETROIT, Jan 15 (Reuters) - Michigan Governor Gretchen Whitmer cautioned on Wednesday that potential 25% tariffs on imports from Mexico and Canada proposed by President-elect Donald Trump could jeopardize the U.S. auto industry, raise vehicle prices, and favor China.
In a speech in Detroit, the Democratic governor stated that levying tariffs would disrupt supply chains, slow down production, and lead to job losses "on both sides of the border."
"Think about this: 70% of all the auto parts we produce in Michigan are sent directly to our neighbors.... The sole beneficiary in this scenario is China. They would be delighted to witness us undermining America's auto ecosystem all alone. This is a matter of national security," Whitmer remarked.
She pointed out that many auto parts cross the border multiple times before being integrated into a final vehicle, and a quarter of the $700 billion in annual trade between Canada and the United States passes through the Detroit-Windsor border.
"Each time a Michigan auto part crosses the border and undergoes taxation, those expenses will be transferred to you at the car dealership," Whitmer explained. "At times, this occurs numerous times during production. As a result, you will pay more to purchase a Silverado, repair the engine in your Mustang, or replace the fender on your Jeep Grand Cherokee."
During the initial six months of 2024, the top 10 car manufacturers with plants in Mexico collectively manufactured 1.4 million vehicles, with 90% being sold to U.S. consumers.
Ford CEO Jim Farley expressed last week that "a significant portion of our supply chain relies on countries around the world, making tariffs extremely challenging for any company."
Whitmer mentioned ongoing discussions with Ontario's premier and other Canadian officials "to explore opportunities for collaboration on tariffs, reduce business costs, and safeguard Michigan's industry and consumers."
The Trump transition team did not provide an immediate response.
In November, Trump announced on social media that immediately after his Jan. 20 inauguration, he would authorize "all necessary paperwork" to start imposing 25% tariffs on Mexico and Canada unless illegal immigration and fentanyl trafficking are halted.