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Michigan economy wobbles from tariffs, as Whitmer prepares budget push

Michigan Gov. Gretchen Whitmer is prepared Tuesday to deliver a message about the state economy, as inflation and job worries grow. Photo credit: Simon Schuster/Bridge Michigan.

Editor note: This story was originally published by��Bridge Michigan��(bridgemi.com), a nonprofit and nonpartisan news organization. To get regular coverage from Bridge Michigan, sign up for a free Bridge Michigan newsletter����().”��

by Paula Gardner (Bridge Michigan)

Michigan unemployment is among the��, incomes are�������Ի�����could be felt hard in a state dominated by manufacturing.

Add uncertainty over newer federal tariffs and “volatility is very high” in Michigan economy, said��, economist at Grand Valley State University.

All told, the recent economic picture generates “concerning signs for our economic future,” Gov. Gretchen Whitmer warned last week as she announced an address Tuesday called “Protect and Defend Michigan Economy.”

Whitmer hopes to use the speech at the state Capitol��to break a deadlock on talks for a state budget, which must be approved before the fiscal year ends Sept. 30.

While the Democratic governor blamed Republican tariffs, her comments also conveyed elevated concern over the national economy:

• Inflation is��, according to data released Thursday. That reflects the biggest monthly jump since January.
• New weekly unemployment claims are the��.
• Consumer sentiment this month dropped 5% from August and consumer expectations are 30% lower than a year ago, University of Michigan��
• Job growth����showed nearly 1 million fewer jobs created for the year ending in March. More recent figures bounce from 22,000 jobs gained to 13,000 jobs lost, essentially flat in a country with over 170 million jobs.

The situation has created “massive job loss, instability in our nation manufacturing sector,” said Whitmer, adding that lawmakers should “do their job and pass a state budget.

Michigan could be particularly hit when the auto industry feels the effects of tariffs, said Patrick L. Anderson, principal & CEO of Anderson Economic Group in Lansing.

The number of tariff-free vehicles dropped from 91% to 21% percent in July, increasing the likelihood of price increases.

For auto suppliers, dealers and consumers, “the price shock will become impossible to ignore,” Anderson said in a recent statement.

The “heightened uncertainty” extends beyond autos and manufacturing, said Sandy Baruah, CEO of the Detroit Regional Chamber.

“I don’t care what kind of business you’re in, you are or will be impacted by tariffs. They are increasing your costs.”

Lansing budget stalemate isn’t helping, he added.

“This budget crisis is certainly draining confidence from the business community,” Baruah said.

Tariff warnings

Whitmer in July����to assess the potential impact of tariffs on Michigan, saying as much as 60% of costs could be passed along to consumers.

She also��that tariffs could have an��, home to the Detroit Three automotive companies and����Tariffs have been��

The����pointed to price increases among tariff-sensitive products, such as apparel, audio equipment and groceries, along with auto parts.

The state lost 6,300 manufacturing jobs since February, the month Trump��, including fromMichigan trade partners Canada and Mexico. The state 1% decline during that time is three times the��������Ƶ 595,000 workers are employed in manufacturing in Michigan as of July, down 28,000 since summer 2023, according to��

“Manufacturing employment has been extremely weak,” Isely said, pointing to federal electric vehicle policy changes along with tariffs.

Republicans including Rep. Matt Maddock from Milford said Whitmer targeting of tariffs is misguided.

“Tariffs are working and allowing Americans to rebuild the companies, capacity and manufacturing that was sold out to China by the Bidens,” he told Bridge. “Tariffs will take a couple years to work, not a couple weeks.”

Expiring tax credits for EVs are blamed for the����of investments including Fortescue plan to to build a $210 million EV factory in Detroit. Sandisk also����its potential semiconductor manufacturing complex planned for the Flint area when it did not obtain federal funding.

“Factors Michigan has no control of are having a very real impact on business decisions here in the state,” said Danielle Emerson, spokesperson for the Michigan Economic Development Corp.

West Michigan is home to many smaller auto suppliers and hit particularly hard, Isley said. In Ottawa County, unemployment is now 5.2% compared to a state-leading 3.1% in early 2024.

“I haven’t seen this type of weakness in west Michigan ever,” Isely said.

The job market “is obviously not what it was two years ago,” Baruah )

While some businesses are struggling, others are doing well as the tariffs create contract opportunities, Isely said. That one reason that some economists hesitate to read too much into monthly data so that anomalies — like EV sales surges ahead of the tax cut deadline —��are smoothed out.

Still, other Trump policies will benefit business as they navigate tariffs, Baruah of the Detroit chamber noted, such as some tax provisions in the��

Meanwhile, Republicans have blamed spending and economic policies of the Biden administration.

“Biden economy was much worse than originally reported, and his promises to create jobs through massive government spending programs clearly failed,” US House Ways and Means Committee Chair Jason Smith, R-Missouri,

Looking ahead

Whitmer economy-themed speech on Tuesday comes as her administration is preparing for a��if a budget deal isn’t reached by Sept. 30.

Officials have acknowledged the threat of a shutdown is real.

The governor had been��on a trade mission early in the month, leaving legislative leaders at an impasse over competing spending plans.

House officials have proposed��, Senate officials����and Whitmer��. At the same time, estimates indicate federal spending cuts will eliminate��from the state budget next year.

“Entrepreneurs today are weary and frustrated,” Brian Calley, president and CEO of the Small Business Association of Michigan, told Bridge. “New and costly regulations, year-over-year double digit��, high interest rates, rising costs, uncertainty in trade policy, and misaligned labor markets are really taking a toll.”

The state economic well-being goes beyond the budget, the Detroit Chamber Baruah added.

“There are things that we can and should be doing in a bipartisan manner to better our competitive position,” Baruah said, like improvements to innovation, education, and a comprehensive economic development strategy.

But if lawmakers can’t “complete their basic responsibilities for the budget, it gets hard to imagine how they can come together on some even bigger things.”

by Marsha Chartrand

Marsha Johnson Chartrand, a founder, writer, and copy editor with the Manchester Mirror, is a 50-year resident of Manchester. She has a long history of volunteer and community involvement.