WASHINGTON — President Donald Trump's latest round of tariffs and tariff threats could intensify challenges for Michigan's trade-reliant economy, though analysts noted the potential for both benefits and risks from the GOP leader's newest proposal.

Trump floated the idea Wednesday of a 100% import tax on semiconductors — crucial components of electronic devices, cars and trucks, and other machines omnipresent in modern life — unless foreign producers make commitments to invest and build manufacturing facilities in the United States.

“If that indeed is put in place, I think that opens the door to Michigan again for the simple fact that we design, engineer and make things here,” said Glenn Stevens, executive director of MichAuto, the automotive arm of the Detroit Regional Chamber. “The state, including the governor and bipartisan politicians and economic development, have all focused on that growth industry. We’re as poised as anybody to capitalize on that.”

Others, however, noted that there would be significant downsides to the president slapping taxes on semiconductors. They said manufacturers across Michigan are already being squeezed by Trump's oft-changing import taxes, including new levies that took effect Thursday on dozens of countries, and warned that a semiconductor levy could add another layer of cost and complexity at a time of rising economic concerns.

Michigan's unemployment rate of 5.3% in June ranked second-to-last among all U.S. states, and a massive economic development project that might have brought thousands of jobs to Genesee County fell through last month. The project, notably, was centered on a semiconductor fabrication facility on 1,400 acres for computer chip maker Sandisk Inc.

Several Democratic lawmakers, including U.S. Rep. Kristen McDonald Rivet of Michigan, suggested that the project was scrapped due to chaotic economic conditions caused by Trump's trade policies.

Michigan Gov. Gretchen Whitmer met privately with Trump on Tuesday to discuss, among other things, the impact of tariffs on the state and the future of the vacant "megasite" in Mundy Township. Her office, asked to respond Thursday to Trump's 100% semiconductor tariff threat, declined to comment. Instead, the governor's team emphasized that Whitmer has been "incredibly vocal" about bringing investment to Genesee County.

While Trump's stated goal of issuing a semiconductor tariff is boosting domestic production of the essential components, experts warned that there could be negative spillover effects for other areas of domestic manufacturing — like Michigan's signature auto industry.

"Semiconductors are such an increasingly large percentage of the value of a vehicle. So (a 100% tariff) is going to raise prices for consumers, and there's just no way around that," said Sam Abuelsamid, an auto industry veteran and vice president at communications firm Telemetry.

There are between 1,000 and 3,000 semiconductors in modern vehicles, according to several industry estimates. The COVID-19 pandemic, which disrupted supply chains around the world, demonstrated how damaging shocks in the availability of semiconductors are for the industry.

Because of a global shortage of microchips coming mostly from China and other Asian countries, automakers shut down plants, limited features on some vehicles or built them and held them until a semiconductor could be added. Abuelsamid noted that the effect of a tariff would be different than the COVID-era shocks, but still impactful.

"The availability is not going to be the issue. The cost is going to be the issue," the analyst said. "And even if manufacturers say, 'OK, we're going to move all of our chip manufacturing into the U.S.,' it still takes a long time to build chip fabs. These are not something you can build in three or six months, or even a year. It takes several years to get a chip fab up and running from scratch."

Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions LLC, also noted the long lag time for building semiconductor factories in the United States. He pointed to the CHIPS and Science Act, a key legislative accomplishment of former Democratic President Joe Biden.

“The old CHIPS Act was developed to encourage local production of chips," Fiorani said. "And if it's difficult and expensive to build an automotive plant, it's even more difficult and more expensive to build a chip plant."

The package directed about $280 billion in new funds to boost domestic research and manufacturing of semiconductors. It yielded several major projects, though all but one remain under construction or otherwise in development.

“A chip plant needs a lot of water and typically $10 billion to open, so it's much more difficult to make that move," Fiorani said. "But they were encouraged years ago to build locally, and it just takes a while for that to move to the next level."

Stevens of MichAuto, who on one hand was optimistic about potential semiconductor manufacturing in Michigan, also acknowledged the potential for a COVID-like disruption for the auto sector.

"That definitely would be a concern,” he said.

New tariffs, new data

Beyond the semiconductor threat, Thursday marked the effective date of new import tax rates on dozens of countries, including several major U.S. trade partners.

Just after midnight, goods from more than 60 countries and the European Union became subject to tariff rates of 10% or higher. Products from the EU, Japan and South Korea are taxed at 15%, while imports from Taiwan, Vietnam and Bangladesh are taxed at 20%.

"President Trump is seeking to strengthen our supply chains, create economic growth and power our future," said U.S. Rep. Tim Walberg, R-Michigan, in a statement. "We’ve already witnessed companies begin to make significant investments in the United States, and we must continue to protect the future of American industry.”

The new rates apply to vehicles and auto parts imported from Japan, South Korea and the EU, which were previously subject to 27.5% tariffs. The change has prompted backlash from Ford Motor Co. and some Michigan lawmakers.

“Just because you get a deal, doesn’t mean it is a good deal for America. Right now, a Japanese car is subject to a lower tariff than a car made in Canada, with American parts and some American labor,” U.S. Sen. Elissa Slotkin, D-Michigan, said in a social media post.

She echoed Ford’s argument that the company, which has a highly integrated supply chain between the United States, Canada and Mexico, now has a competitive disadvantage against rivals that import more of their vehicles from overseas.

Current tariff rates on vehicles from Canada and Mexico max out at 27.5%, but the actual duties paid are complicated because of partial exemptions granted to vehicles and parts that comply with the United States-Mexico-Canada free trade agreement.

Auto imports from Mexico and Canada have so far been subject to a lower duty rate than products other major automotive countries, according to a Detroit News analysis of federal data released on Tuesday. The analysis calculated rates by comparing assessed duties on auto imports to the total value of imports for June, which is the latest month with available data.

But Mexico, thanks to a high volume of auto exports to the United States, still ranked as a close second behind Japan in total duties paid in June.

Importers brought in $4.2 billion worth of automotive goods from Japan and paid about $1.15 billion in duties, good for a rate of 27.5%. By contrast, $14.2 billion in goods came from Mexico and were subject to $1.14 billion in duties, which came out to an 8% duty rate.

Industry experts said Ford and other automakers with heavily North American manufacturing bases — including foreign companies like Toyota Motor Corp. — have a legitimate argument that the new lower rates on Japan, South Korea and the EU could undermine any advantages that previous tariff structures conferred on American operations.

“The reason why the supply chain (in North America) is set up the way it is, it’s because of NAFTA and USMCA. We've developed a trade policy with our neighbors based on low or no tariffs,” Abuelsamid said. “And now, Trump is turning that up and expecting people to pivot on a dime. And it just doesn't work that way.”

Patrick Anderson, CEO of the Lansing-based Anderson Economic Group, also noted the auto industry upheaval.

“It’s a completely different world than we have been operating in for most of the past quarter-century,” Anderson said in a phone interview. “This is a very fraught time for the American auto industry, as well as the Canadian and Mexican auto industries that are deeply connected to the American auto industry.”

Anderson also suggested that Trump — who often changes his tariff policies even after they take effect — could make adjustments in light of backlash from a domestic auto industry he has sought to boost.

"This is a shift from which there is no easy turning back," the economist said. "I expect that some of the tariff rates that are imposed as of August 7 will have changed by September 7."

More lawmakers weigh in

Members of the Michigan congressional delegation were split along party lines over Trump's latest tariffs.

“I’m constantly hearing from Michiganders and our business leaders about how Donald Trump’s reckless tariffs are hurting our state — from causing costs to skyrocket for our families, to cutting manufacturing jobs, to threatening pensions for our auto workers, and costing our auto industry billions of dollars," U.S. Rep. Haley Stevens, D-Michigan, said in a statement.

She continued: "Michigan doesn’t need Donald Trump’s chaotic, shoot-from-the-hip tariffs, and I’m going to keep working to lower costs for Michiganders, protect our jobs, and make sure we are protecting investments in our manufacturing economy.”

U.S. Sen. Gary Peters, D-Michigan, who Stevens is running to replace when he retires from the chamber at the end of his term, had a similar message.

“If President Trump was serious about strengthening our domestic semiconductor supply chain we would have seen an actual plan by now. Instead, he has been attacking the CHIPS and Science Act that took historic steps to bring home semiconductor manufacturing and American jobs," he said in a statement. "He is also continuing his chaotic tariff strategy that, instead of targeting trade cheaters, has only caused instability and uncertainty for Michigan businesses.”

U.S. Rep. Lisa McClain of Michigan, a fierce Trump supporter and the No. 4 Republican in the U.S. House, defended the president's tariff agenda.

“American manufacturers are ready to Make in America again thanks to President Trump leveling the playing field and his One Big Beautiful Bill," she said, referencing the massive tax cut and spending bill Trump signed into law in July.

McClain continued: "This transformational legislation delivered historic tax relief for manufacturers and small businesses, which empowers manufacturers to invest in workers and produce here in America. Hundreds of billions of dollars are pouring into U.S. manufacturing — from semiconductors to AI — just look at Apple's recent announcement to increase their initial $500 billion investment by $100 billion to design and (manufacture) in America.

"These historic investments are creating real jobs. And it’s just getting started,” she added.

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