LANSING – Tariffs would be worse for the U.S. auto industry than a UAW strike, a notable Michigan economic group is predicting, and would harm the industry for a much longer period.
Patrick Anderson, CEO of Michigan-based Anderson Economic Group, said Friday on an Automotive Press Association webcast that tariffs would add punishing costs for American automakers.
Patrick Anderson
“This is why Jim Farley said tariffs could blow a hole” in the U.S. auto industry, he said. “You cannot absorb those costs and stay in business making the same products.”
The Ford CEO warned investors on Feb. 11, the night before traveling to Washington, D.C. to meet with members of Congress on President Donald Trump’s proposed tariffs. Trump also put 25% tariffs — the taxes charged on goods as they cross country borders — on steel and aluminum imports, but the proposed tariffs on goods from Canada and Mexico threatened earlier in his administration have yet to be enacted. He said earlier this week that he expected auto tariffs of 25% to be imposed April 2.
To assess the impact, Anderson Economic Group looked at selected models assembled abroad, the content likely within vehicles and then the direct costs of each layer of tariffs — 25% on Canada and Mexico and 10% tariffs on China. The result would turn today’s already egregious auto affordability concerns into a joke.
Analysts have already projected new-vehicle costs could rise to a range of $1,000 to $9,000 per vehicle but Anderson’s updated forecast sees the industry threat closer to the higher end of that spectrum.
“It’s almost $9,000 per car for a full-size SUV with substantial Mexican content,” Anderson said. “If you don’t make production adjustments or shut down lines, it could be above $10,000.”
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