President Donald Trump told autoworkers at a General Motors plant in Milford, Michigan, on July 27 that his "historic" tariffs are reinvigorating the auto industry and forcing companies to relocate their manufacturing operations to the U.S.
BBC News reports that job growth in Michigan, however, has slowed to a crawl, and the state has one of the highest unemployment rates in the country, at 5.1%.
"The rule is straightforward: Build your trucks or cars outside the United States and you'll pay a fee for the right to sell them here and profit," Trump said in a rally-like appearance at the plant. "Build your plant in Michigan or anywhere else in America and produce the vehicles right here at home, and you'll face no tariff at all," he added.
Trump has levied a 25% tariff on non-U.S. parts in cars assembled in Canada, as well as parts that don't fall under the current U.S.-Mexico-Canada free trade pact, or USMCA. There are also steel tariffs, which indirectly affect the industry.
These will only rise if Trump follows through with a planned increase to 50% on some Canadians goods, including autos, due to come into effect on August 19.
Car manufacturing and distribution has been integrated between the U.S. and Canada since the signing of the Automotive Products Trade Agreement of 1965, better known as the Canada-US Auto Pact, with Mexico added into the highly complex ecosystem since the North American Trade Agreement (Nafta) came into force in 1994. In essence, the agreements created a much larger market where economies of scale made auto manufacturing far more efficient and profitable while keeping prices down. Mexico accounted for around one-fourth of the North American production volume in 2023, and Canada one-tenth.
Earlier on July 27, the White House pointed to GM's $6 billion investment in U.S. manufacturing, as well as smaller investments by Ford, Stellantis and Detroit Diesel as evidence that Trump's economic policies are working.
"Now, at long last, Michigan finally has a president who stands up for Michigan autoworkers," Trump told the assembled GM employees, blaming any lingering woes on "globalist" U.S. politicians he believes "sold out" American workers.
But data from the Bureau of Labor Statistics shows that Michigan, which is at the heart of the U.S. auto industry, gained just 500 jobs in the 12 months leading up to June this year.
