How Canada's retaliatory tariffs could impact prices for Michiganders

Canada's retaliatory tariffs are now in effect, raising concerns about their impact on Michigan businesses with strong ties to the Canadian market.

The tariffs come in response to tariffs imposed by the Trump administration last month. While the long-term impact remains uncertain, experts say Michigan could be among the states most affected because of its close economic relationship with Canada.

Kevin Peacock, principal of Peacock Tariff Consulting, said Michigan suppliers may be among the first to feel the effects.

"I think you'll see them take a haircut of margin, which means that they aren't making as much. Do they need to lay people off? Is there other demands that happen? The Canadian vendors, you'll see that they don't take as much, and then some's passed on, and then consumers."

Peacock said Michigan's unique manufacturing relationship with Canada makes the state especially vulnerable to higher trade costs.

"With Michigan, it's really location-based. So you'll see products being produced in Michigan, crossing the border into Windsor, being further produced, shipped back into Michigan, further produced, and back and forth, but now every time that product crosses the border, they're adding 50% tariff," Peacock said. "That, unfortunately, is why Michigan is really being affected from this."

Many Michigan-made products cross the border multiple times before reaching consumers, particularly in the manufacturing sector. Peacock said those repeated crossings could significantly increase costs throughout the supply chain.

Consumers are unlikely to see those effects immediately, however. "For the most part, you won't see it immediately," Peacock said. "You look at a lot of supply chains, they have that six- to 12- to 18-week inventory in their locations." He said many businesses still have inventory that moved through the supply chain before the tariffs took effect.

"I think you'll see a lot of pain on both sides of the border closer to the holiday season," Peacock said.

Peacock also advised businesses to closely monitor Canada's tariff list, noting that it could continue to change as policymakers evaluate the impact of the measures.

"You may not be on the list today, but you may be on it tomorrow, and you may be on the list today, and you may be off tomorrow, so please be your own best advocate, and be aware of what is on the list."

Peacock said he expects the tariffs to remain in place for the foreseeable future as trade tensions between the United States and Canada continue.