The trade war waged by President Trump against U.S. allies — Canada, Mexico and the European Union — have generated retaliatory tariffs on American goods that will affect the Michigan economy more than any other state.

News reports in recent days have pointed out that the reciprocal tactics by Canada will bear the second-most severe impacts on Michigan, only behind Ohio among the 50 states. But the newest analysis shows that the punitive reaction by the European Union (EU)  will place Michigan second as the state most damaged by this EU trade war, only behind Hawaii.

So, overall, Michigan is the biggest loser in this tit-for-tat trade policy, introduced by Trump executive orders, with substantial tariffs (taxes on consumer goods) imposed on steel and aluminum imports. Our longtime allies in North America and Europe are especially incensed because Trump’s trade barriers are based on the idea that the trade war is necessary to protect U.S. national security concerns.

Prime Minister Justin Trudeau announced last week that Canada will impose retaliatory tariffs on $12.8 billion worth of U.S. goods in response to Trump’s metals tariffs.

The wide-ranging list of goods set to get hit by the Canadian tariffs varies from industrial steel to sleeping bags. Trudeau said the tariffs were not designed to hurt the American people, but rather defend Canada’s interests and send a message to the Trump administration.

American companies affected by this fight with Canada would include beer distributors, bourbon distilleries, food products such as yogurt, pizza and cucumbers, as well as household products like mattresses and refrigerators.

The biggest losers from the U.S.-Canada trade fight are industrial states in the Midwest.  Ohio would be hit hardest, followed by Michigan, New York, Pennsylvania and Illinois.

The tariffs will go into place on July 1, Canada’s government said, and will stay in place until the U.S. removes the steel and aluminum restrictions.

Mexico’s government said it would levy taxes on imported U.S. products including pork bellies, apples, grapes and cheese, along with some types of steel.

As for the EU retaliation, the numerous targeted products will most damage the total exports of Hawaii, Michigan, Missouri and Maine. The economic impact in those four states will be three times the U.S. average. Michigan is particularly exposed, with the second largest share of its exports in the scope of the EU commission.

The EU plans punitive tariffs on U.S. goods including everything from corn and tobacco, to T-shirts, Levi’s jeans, bourbon, motor boats and various forms of steel. Secondary goods facing new European tariffs range all the way to $674 million worth of rear-view mirrors for vehicles.

 

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