By David Shepardson and Nora Eckert
WASHINGTON/DETROIT (Reuters) -Michigan Governor Gretchen Whitmer warned on Wednesday that potential 25% tariffs on imports from Mexico and Canada suggested by President-elect Donald Trump could harm the U.S. auto sector, increase vehicle prices and benefit China.
The Democratic governor said in a speech in Detroit that imposing tariffs would damage supply chains and slow production lines and would cut "jobs on both sides of the border.
"Think about this: 70% of all the auto parts we make in Michigan go directly to our neighbors.... The only winner in this equation is China. They would love nothing more than to watch us cripple America’s auto ecosystem all by ourselves. This is a matter of national security," Whitmer said.
She noted that many auto parts cross the border multiple times before they are part of a finished vehicle, and a quarter of the $700 billion of annual trade between Canada and the United States crosses the Detroit-Windsor frontier.
"Every time a Michigan auto part crosses over the border and gets taxed, those costs will be passed on to you at the dealership," Whitmer said. "Sometimes, it happens a couple times throughout production. That means you’ll pay more to buy a Silverado, fix the engine in your Mustang, or replace the fender on your Jeep Grand Cherokee."
The top 10 car manufacturers with Mexican plants collectively built 1.4 million vehicles over the first six months of 2024, with 90% heading across the border to U.S. buyers.
Ford (NYSE:F) CEO Jim Farley said last week that "a lot of our supply chain depends on countries from around the world, and so tariffs are really challenging for any company".
Whitmer said she and her office had been in active discussions with Ontario's premier and other Canadian officials "to explore ways we can collaborate on tariffs, lower the cost of doing business, and protect Michigan industry and consumers."
The Trump transition team did not immediately comment.
In November, Trump said on social media that immediately after his Jan. 20 inauguration, he would sign "all necessary documents" to begin charging Mexico and Canada 25% tariffs unless illegal immigration and fentanyl trafficking are halted.