Jul 24, 2019 - 12:30pm

Michigan’s Auto Industry Needs USMCA Now


Intern, Strategic Communications

Congress is gearing up for a vote on the U.S.-Mexico-Canada Agreement (USMCA) – a trade decision that will impact Michigan’s economy and significantly affect the state’s farmers and auto manufacturers.

On a national scale, Canada and Mexico are by far the two largest U.S. export markets. In 2018, trade with the two countries reached nearly $1.4 trillion. Currently, trade with our North American neighbors supports 12 million American jobs across the country.

But for Michigan, the stakes are especially high. According to the American Enterprise Institute, 38.9% of Michigan’s GDP depends on trade – the highest in the nation – and a staggering 65% of the state’s exports are bound for Canada and Mexico. Trade with Canada and Mexico supports 338,300 Michigan jobs.

Michigan’s $39 billion in export sales to Canada and Mexico are topped only by Texas and California. The Detroit metropolitan region’s exports to Mexico are greater in both absolute value and in share than those of any other U.S. city, according to the U.S. Department of Commerce. Of note, 91% of the state’s steel exports are also bound for Canada and Mexico.

“Auto-related exports represented nine of the top 10 state export categories for Michigan in 2016,” according to AEI. The state’s auto sector depends on continental value chains that would be devastated by a return to pre-NAFTA tariffs and other trade barriers. “Michigan’s high concentration of engineering and automotive-related employment could be at risk to foreign countries if production shifts outside the NAFTA region,” according to the Center for Automotive Research.

Vice President Mike Pence visited Michigan back in April to promote the benefits of USMCA and to discuss the importance of the agreement for auto manufacturers in the state. USMCA is critical for Michigan’s manufacturing sector, which plays a key role in the state’s economy. Nationwide, U.S. manufacturers export more American-made goods to Canada and Mexico than to the next 11 largest export markets combined.  

The Great Lakes State’s top exports to Canada and Mexico include the following: 

Canada

  • Vehicles and Parts
  • Nuclear Reactors and Boilers Machinery
  • Mineral Fuel and Mineral Wax

Mexico

  • Vehicles and Parts
  • Boilers Machinery and Electrical Appliances
  • Electrical Machinery and Equipment

Automobile manufacturing is a critical component of the Michigan economy, and the state is committed to sustaining and growing the industry. USMCA is front and center in this effort.

In a joint op-ed for The Detroit News, Reps. Paul Mitchell of Michigan's 10th Congressional District, John Moolenaar of Michigan's 4th Congressional District, Tim Walberg of Michigan's 7th Congressional District, Bill Huizenga of Michigan's 2nd Congressional District, and Jack Bergman of Michigan's 1st Congressional District described the benefits USMCA will provide Michigan’s auto industry.

“The United States Trade Representative and major automotive manufacturers agree that ratifying the USMCA will lead to more than $30 billion of investment in new automotive manufacturing in the United States, as well as the creation of more than 75,000 well-paying jobs for American workers,” they wrote. 

The congressmen also said they were already seeing enthusiasm and potential investment from car manufacturers over the growth USMCA is positioned to provide the industry.

“We are already seeing the excitement among automotive manufacturers – just last week Fiat Chrysler Automobiles received the green light to build a new $1.6 billion plant in the Detroit area that at full capacity will support 4,950 new permanent, full-time positions with full benefits,” the op-ed states.

But the auto industry isn’t the only sector of Michigan’s economy that stands to benefit. The success of produce and dairy farms in Michigan is contingent on access to Canadian and Mexican markets. USMCA locks in that market access and even improves access to the Canadian market, which is limited by that country’s “supply management” scheme.

Michigan dairy farmer James Rubingh, whose business has been in his family for 110 years, commented on the benefits of the agreement to Michigan’s 9&10 News back in October.

“Anytime there’s trade, both sides win…this agreement is better than NAFTA, President Trump did a really good job,” he told the news station.

Throughout the country, the U.S. business and agriculture communities are rallying to make the case for USMCA approval. This week, more than 600 national trade associations and state and local business and agriculture groups representing every sector of the economy sent a letter to Congress calling for swift approval of the agreement.

The case for the agreement’s approval is strong and the voices supporting its passage are growing stronger. Join us as we urge Congress to approve USMCA as soon as possible.

About the Author

About the Author

Intern, Strategic Communications

Jared studies international affairs and history as an undergraduate at The George Washington University.