Tariffs Could Cut 13,000 Michigan Jobs, Economists Estimate

(Source: MIRS.news, Published 05/16/2025) Economic researchers from the University of Michigan said Friday during the May 2025 Consensus Revenue Estimating Conference (CREC) that, according to their estimates, the implementation of tariffs on auto manufacturing materials could lead to 3,300 auto jobs lost in Michigan and about 13,000 total jobs lost in the state.

Yinuo Zhang, senior economist for U-M’S Research Seminar in Quantitative Economics (RSQE), said they expect 25 percent tariffs on vehicle imports, steel and aluminum to remain in place.

While tariffs on imported vehicles can have a protective effect on domestic vehicles by driving consumers to purchase the latter, Gabriel Ehrlich of RSQE said the cost of importing manufacturing materials will increase the cost of production.

Tariffs imposed on other nations may lead to retaliatory tariffs on U.S. exports. and consumers will also see their purchasing power weakened.

Additionally, Kristin Dziczek, policy advisor for the Federal Reserve Bank of Chicago, said 20,000 to 30,000 parts are needed to make a car, and a few of them not showing up or being in shortage due to cost strains will mean production gets shut down.

If production is shut down, jobs will go away. Michigan’s auto industry has a “statewide jobs multiplier” of almost four percent, those 3,300 lost auto jobs will result in 13,000 job losses in the state in other parts of the supply chain and economy.

House Appropriations Committee Chair Ann Bollin (R-Brighton) told reporters after CREC that 13,000 is a large number of jobs to lose, but “it’s also just a projection.”

“We also saw potentially that in the near future, it’s going to be a little more painful than long term,” Bollin said.

Ehlrich said there will be a 5.7 percent effective cost increase on domestic production of light vehicles and a 13.2 percent average price increase, or about $6,200. RSQE also forecasts a 12.7 effective average retaliatory rate on exported vehicles.

Ehrlich said since tariffs and foreign economic policies are fluid right now, it challenges researchers with an inherent complexity in assessing potential outcomes for the economy.

Zhang said tariff revenues ramping up over two years will lead to a permanently higher level of $270 billion per year.