Escalating tariff clashes between the United States and Canada have deepened into a full-scale trade confrontation, piling pressure on businesses as duties spread across autos, steel, lumber and consumer goods.
The tit-for-tat measures have disrupted cross-border supply chains and eroded profits, stoking concern over jobs and industrial stability in North America.
The impact of prolonged tariff tensions is now deeply felt across Michigan's industrial and small business sectors, a core hub tightly linked to Canada's cross-border supply chains.
Founded as a family business and expanded into a multinational enterprise, Detroit Axle, a Michigan-based auto parts manufacturer with global operations, now employs nearly 1,000 workers, generating over 500 million U.S. dollars in annual revenue. According to its CEO Mike Musheinesh, the company has witnessed drastic cost spikes over the past 18 months amid the ongoing trade dispute.
In April last year, the US announced a 25-percent tariff on all imports of non-US made automobiles and auto parts from Canada. Added to that, there is also a 50-percent tariff on steel and aluminum products.
"If I imported a million dollars' worth of product, once upon a time we'd pay the government 25,000 U.S. dollars in tariffs. Now it went up to 725,000 U.S. dollars in tariffs overnight," said Musheinesh.
The automotive industries of Michigan and Ontario are highly interdependent, with auto parts frequently crossing the U.S.-Canada border multiple times before final assembly.
"96 of the top 100 suppliers have a facility or a headquarters in Michigan. Those are global suppliers. 13 assembly plants. It's a 348-billion-dollar economic contribution. It is our signature industry," said Glenn Stevens Jr., executive director of the trade association MichAuto.
He emphasized that the sophisticated automotive supply chain operates on thin profit margins, leaving little room to absorb extra expenditures.
"The auto industry is an extremely complex, highly developed supply chain, and the margins are not huge. They're pretty thin, right? So every step counts. Every piece of equipment, every investment, every cost, every gasoline increase, everything adds to the cost of the system and tariffs do that too," he continued.
Beyond the automotive sector, local small businesses are also bearing the brunt of tariff escalation. In nearby Warren, Michael Howard busily works on a new piece of furniture. He began a wood furniture company after moving into a home without any and has grown his business to include everything from bookcases to chopping boards.
But he has been hit by a roughly 45-percent tariff on Canadian lumber.
"There was a medical facility that we were doing the receptionist desks for, and hopefully some other cabinets inside of their facility. And they gave us a budget, and we were already at the upper limits of that budget, and when the tariffs went into place, even the threat of those, we had to reach back out and say, this incoming increase in costs on supplies is going to be applied. And they decided not to go forward. And that one project alone cost our family 3,000 U.S. dollars in sales," said Michael Howard, Owner of Howard Family Designs.
The various tariffs and retaliatory tariffs between the US and Canada have already caused economic stresses on both sides. The two economies are deeply intertwined, exchanging some 720 billion dollars' worth of goods last year. But there is a concern that the situation could get even worse.
That is because U.S. President Donald Trump is threatening a further 50-percent tariff on all Canadian automotive and steel imports beginning January 1.
"It's not tenable. That's not something the industry can absorb. That's just something that would make things cost prohibitive to make. And it would really be quite paralyzing," said Glenn Stevens Jr.
US-Canada tariff conflict casts shadow over businesses on both sides
