How Much Costs Are Rising for Michigan Businesses—By Industry

In a previous report, MITechNews detailed how companies across the state are facing a “triple threat” of rising fuel costs, tariffs, and new taxes converging at once. That broader trend is now translating into real, measurable cost increases across industries.

This story is part of an ongoing MITechNews series examining how those pressures are reshaping Michigan’s business landscape in 2026.

The key question now:

👉 How much more are businesses actually paying?

The answer varies by sector—but the trend is consistent: costs are rising across the board.

Logistics & Transportation: +15% to +30%

For logistics companies, the impact is immediate and unavoidable.

Fuel is the largest variable expense, and rising diesel prices are pushing operating costs sharply higher.

“Higher oil prices have led to higher gasoline prices and increased transportation costs,” according to the University of Michigan Research Seminar in Quantitative Economics.

A regional carrier operating between Detroit, Lansing, and Grand Rapids can now see hundreds to more than a thousand dollars in additional weekly fuel costs per truck.

Those increases don’t stay isolated—they ripple through the supply chain, raising costs for manufacturers, retailers, and ultimately consumers.

Restaurants & Hospitality: +8% to +18%

Restaurants are being squeezed from multiple directions at once.

Higher fuel costs are increasing delivery expenses, while food prices are rising due to transportation and supply chain pressures. At the same time, wage demands remain elevated in a tight labor market.

A restaurant operator in Ann Arbor may now face:

• steady increases in food costs
• higher utility bills tied to energy volatility
• ongoing labor pressures

The result is a difficult balancing act: raise menu prices and risk losing customers, or absorb costs and see margins shrink.

Manufacturing & Automotive: +10% to +22%

Michigan’s manufacturing sector—especially its automotive supply chain—is particularly sensitive to both tariffs and logistics costs.

“Tariffs… can be both a plus and a minus,” said Gabriel Ehrlich, noting that while they may support domestic production, they also risk pushing prices higher.

For manufacturers, the impact includes:

• higher input costs for imported materials
• increased shipping expenses
• longer lead times

A supplier outside Detroit may see material costs rise significantly while still facing pressure from automakers to keep pricing competitive.

Cannabis Industry: 20%+ Margin Pressure

Michigan’s cannabis industry is facing one of the most immediate and dramatic cost increases.

A new 24% wholesale tax—layered on top of existing excise and sales taxes—comes at a time when market prices are already declining due to oversupply.

“This comes at a time when prices are already falling, which puts additional pressure on operators,” said Robin Schneider.

Industry leaders warn the added tax burden could accelerate consolidation, reduce investment, and force some operators out of the market altogether.

Agriculture: +12% to +25%

Michigan farmers are also seeing significant cost increases tied to fuel and global commodity markets.

Key drivers include:

• higher diesel prices for equipment and transport
• rising fertilizer costs linked to energy markets
• increased equipment and parts expenses

A farm operation in Saginaw or Kalamazoo may face double-digit increases across core inputs—costs that often flow directly into grocery prices statewide.

Retail & Small Business: +5% to +

Retailers are feeling the ripple effects from every other sector.

Wholesale costs are rising, shipping is more expensive, and utilities continue to trend upward.

A small retailer in Grand Rapids may see inventory costs climb while facing resistance from customers to price increases.

The result is a narrowing path to profitability—especially for smaller operators with limited pricing power.

The Bigger Picture: Layered Cost Pressure

The most important takeaway is not just that costs are rising—it’s how many cost pressures are hitting at once.

“We forecast local inflation to rise to 2.8 percent in both 2026 and 2027,” Ehrlich said, pointing to sustained economic pressure.

He has also warned of a potential “soft patch” in employment, suggesting businesses may slow hiring as costs increase.

This layered pressure reflects the same “triple threat” outlined in MITechNews’ earlier report:

• fuel costs
• tariffs
• taxes

Together, they are reshaping business decisions across the state.