GRAND RAPIDS, Mich. — As steel and aluminum tariffs are set to take effect Wednesday, Michigan’s auto industry is bracing for significant challenges. The tariffs, which will impose a 25% tax on imported steel and aluminum, are expected to raise material costs for manufacturers across North America. However, the situation has been further complicated by recent changes in tariff discussions.
On Tuesday, President Donald Trump scaled back his plan to double the tariffs from 25% to 50% for Canada. This adjustment came after Ontario’s provincial government suspended planned surcharges on electricity sold to the U.S. Despite this change, the 25% tariffs on steel and aluminum are still set to begin Wednesday, leaving the auto industry with an uncertain future.
Mike Wall, an auto industry analyst at S&P Global Mobility, explained that the unpredictable nature of these tariff changes has already created significant pressure for the sector. “There is tariff pressure that’s already upon us,” Wall stated. “Both automakers and suppliers are having to wrestle with this now because we have an integrated supply chain all across the broader North American region.”
Wall highlighted that the added cost of tariffs would be particularly difficult for auto suppliers, especially those without a local supply chain for steel and aluminum. These suppliers are already feeling the strain of price increases as domestic sources for these materials face inflationary pressures. The immediate impact is likely to be felt more acutely by suppliers than by automakers themselves.
“The auto industry doesn’t have the financial wherewithal to absorb 25% tariffs like that,” Wall said, noting that the industry’s slim margins make it challenging to absorb such significant increases in material costs.
Beyond the direct effects on production, the tariffs could have a ripple effect on the car market. Wall suggested that as new cars become more expensive due to the higher cost of materials, consumers might shift their focus to used vehicles. This shift in demand could drive up prices in the used car market, creating a secondary impact on consumers.
“We could be looking at at least a couple hundred dollars in price point pressure as it relates to these steel and aluminum tariffs, and that’s just on the first wave,” Wall said. “It won’t appear outwardly on your sticker price when you get it, but it’s in there.”
As the tariff situation continues to evolve, the auto industry faces a difficult balancing act: trying to plan for the future while contending with ongoing uncertainty. Wall emphasized the challenge of making decisions in such a volatile environment. “Keep the news feed refreshed, because it seems to be changing hour by hour,” he said. “That level of volatility is what makes it really tough for businesses of all stripes, not just auto, but all businesses to adapt and try to plan for.”
With the future of tariffs and trade negotiations still uncertain, the auto industry remains in a state of flux, navigating a complex landscape of rising costs and shifting market dynamics.
