Michigan’s top three industries are automakers, manufacturers and farmers. One policy has left those Michigan sectors hurting.
MICHIGAN — Farms are going bankrupt in Michigan and Ford had a devastating first quarter that came off the end of a rough 2019. But the coronavirus pandemic isn’t the only factor causing Michigan businesses to struggle.
They were going bankrupt long before the coronavirus came to Michigan. And the reason traces back to President Donald Trump.
Michigan’s biggest industries — automotive, manufacturing and agricultural — were groups Trump worked hard to woo during his 2016 campaign, and the blue-collar moderates working in those industries helped tip the state in Trump’s favor.
But these exact industries are hurt by his trade policies.
How Tariffs Hurt Manufacturing
“We don’t have the money to buy our way out problems like this,” said Bob Roth, owner of Michigan-based manufacturer RoMan, in a Reuters interview. “In the long run we can’t afford to absorb the extra cost of tariffs.”
Trump has spent much of his tenure in office so far engaging in trade policies that have relied heavily on tariffs, a form of import tax on specific types of items, which he intended to help promote the U.S. production of things like aluminum and steel.
This has a large number of unintended consequences, however. The Washington Post reports that American consumers have spent nearly $1 million for every job Trump trade policies have created. But that isn’t the most troubling side-effect.
As PBS Newshour explains, tariffs have downstream effects on Michigan businesses like manufacturing and the auto industry. The increased cost of the steel and aluminum being imported is carried primarily by the manufacturer purchasing the materials. PBS reported that the more industries used steel, the more likely they were to lay off employees as a result of the sharp rise in materials prices caused by the tariffs.
So while the trade policies might have created around 1,000 steel jobs, they’ve cost around 75,000 manufacturing jobs.
How Tariffs Hurt Automakers
And as Automotive News reports, auto manufacturers united in a push to resist the continued escalation of tariffs from the Trump administration’s plans to expand tariffs to include automotive products in an attempt to provide relief that the industry thinks is misguided.
“Nobody in the auto industry supports a 25 percent import tariff, unlike in the steel and aluminum tariff situation where you had the steel industry advocating for relief,” Jennifer Thomas, vice president of federal affairs at the Alliance of Automobile Manufacturers, told reporters in 2019.
But downstream effects of tariffs aren’t the only concern. There’s also how retaliation affects Michigan businesses.
How Tariffs Hurt Farmers
Agriculture is Michigan’s third largest business, and the American Farm Bureau Federation reports that 15 farms closed in Michigan in 2019. That’s a rise of over 50% from 2018. U.S. exports of agricultural products to China decreased by 63% between 2017 and 2018, from $15.8 billion to $5.9 billion, PBS Newshour reported.
“China’s announcement that it will not buy any agricultural products from the United States is a body blow to thousands of farmers and ranchers who are already struggling to get by,” said Farm Bureau president Zippy Duvall. “Exports ensure farmers will continue to supply safe, healthful and affordable food for families here and around the world.”
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As PBS noted, there are ways Trump’s tariffs have hit industries that have little to do with steel or aluminum. This is because a trade war, like any war, is a matter of action and retaliatory reaction.
And where China aimed one retaliatory strike was squarely at the agricultural industry.
Farms also are downstream consumers of steel and aluminum products. The costs of farm equipment have been impacted by the trade war as well. This is at a time when, as The ‘Gander reports, farms were already struggling to adapt to growing technological divides.
The aggregate affect of all this is a rise in bankruptcies the industry hasn’t seen in over 30 years and a disturbing spike in the rise of the suicide rate among farmers reports Forbes.
There are programs designed to address these struggles The ‘Gander reported on, but as Duvall notes no crisis support can last forever.