Trump’s tariffs could mean higher prices for Michigan businesses and consumers

Michael Howard prides himself on the custom-made tables, bookshelves and cabinets he sells at Howard Family Designs, the furniture business he owns with his wife in Warren.

But Howard, who uses wood imported from Canada, says they are having to reevaluate the cost of manufacturing high-quality furniture following President Donald Trump’s announcement that he will impose tariffs on foreign goods imported into the United States.

“I can’t swallow that as a small business owner,” Howard said. “It’d crush my business.”

The Trump administration is on the cusp of a trade war with Mexico, Canada, and China after Trump threatened in January to impose 25% tariffs on imports from Mexico and Canada, and 10% tariffs on Chinese products.

Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum said they would retaliate with their own tariffs on U.S. goods. On Feb. 4, the day the tariffs were set to take effect, Trump set a 30-day pause on tariffs against Canada and Mexico after claiming he had received concessions on border enforcement from the two nations’ leaders. The Chinese tariffs went into effect as scheduled. But less than a week after pausing tariffs against the United States’ largest trading partners, Trump announced that he would impose 25% tariffs on all steel and aluminum imports, including from Canada and Mexico, beginning March 4.

Howard’s dilemma is not unique among Michigan business owners who are bracing for the economic fallout of Trump’s policies. For some, it could mean cutting back store hours, laying off employees or, in Howard’s case, raising prices for his furniture and delivery services.

“For a small business like us, as much as we would love to maintain our prices, a 25% increase in the cost of goods is not something that we have the bandwidth to absorb,” Howard said.

Before winning the November election, Trump campaigned on the promise that tariffs would incentivize manufacturers to return to the U.S. and create domestic jobs. However, a U.S. Federal Reserve study of Trump’s tariffs on steel and aluminum imports during his first term found that manufacturing jobs dropped by 1.4% as a result of rising input costs and retaliatory tariffs.

Trump had also inaccurately stated that other countries pay the tariffs. U.S. companies pay tariffs in the form of import taxes to the federal government, and those costs get passed down to customers at the point-of-sale.

Most recently, Trump has said that Americans could suffer from a trade war, posting on social media: “WILL THERE BE SOME PAIN? YES, MAYBE (AND MAYBE NOT!). BUT WE WILL MAKE AMERICA GREAT AGAIN, AND IT WILL ALL BE WORTH THE PRICE THAT MUST BE PAID.”

Many industries in Michigan will be affected by the imposition of tariffs, but the state’s automotive and manufacturing sector will suffer the most direct hit. The U.S. imported almost $471.6 billion worth of motor vehicles and motor vehicle parts in 2024, with Canada and Mexico among its top suppliers, and Michigan accounts for more U.S. auto production than any other state.

Chris Douglas, an economics professor at the University of Michigan-Flint, told the Michigan Independent in November that, because auto manufacturers would still need to rely on imported parts to assemble their vehicles, imposing tariffs would only drive up car prices, and importers would pass those costs on to consumers.

“It’s a guarantee that consumers see higher prices because of a tariff because a tariff is a tax, and, like any tax, consumers pay that tax in the form of a higher price,” Douglas said. “The question is, just how much does the price go up by?”

Felicia Wiseman, a Detroit resident who works as a recruitment officer for Local 58 of the International Brotherhood of Electrical Workers, dismissed tariffs as “trickle-down economics,” the unsupported theory that tax cuts for the wealthy stimulate economic growth, and wealth is subsequently passed down to those with lower incomes. She said there’s no real assurance coming out of the White House: “If you’re living paycheck to paycheck at a job that doesn’t pay this much, any little bit makes a difference. It’s easy for you to say, ‘Yeah, it’s not going to be OK for a minute but it’s going to get back there.’ But there’s no assurance.”

As a consumer, Wiseman said, she believes she’s in a better place compared to others because she’s a bargain shopper who makes a good income and has no young children. She is a vegan, though, and many of the foods she eats are imported.

“I don’t buy eggs, I don’t buy milk, but the products I do buy, I can see the fluctuation in those prices,” Wiseman said. “A lot of fruits and vegetables that I buy come from Mexico.”

Nayana Ferguson, co-founder and owner of the Michigan-based brand Anteel Tequila, said they would be put in a bind financially and logistically if they were unable to import their product from Mexico. Unlike other spirits, such as whiskey and vodka, authentic tequila can only be sourced from Mexican blue agave plants and can only be manufactured in Mexico. Ferguson partners with a distillery in Mexico, which assists in bottling and shipping Anteel Tequila’s line of Blanco, Reposado and Añejo tequilas.

“It’s so many things that are happening and that will happen, that we have to kind of see the trends on what’s going on, but it’s going to affect us either way,” Ferguson said.

It may be possible for bigger tequila brands to offset the costs of the tariffs because they have a larger volume of product and bring in more profits, Ferguson said, but her business’ future will depend on how consumer behavior shifts if prices go up. She said consumers nowadays are looking for more natural products; tequila contains no carbs or sugar, and her brand doesn’t use additives, so she thinks those features may keep consumers buying Anteel.

If Howard is forced to raise his prices and customers look for cheaper products elsewhere, he said, a loss of revenue would significantly affect his ability to pay for help in his shop. He runs an apprenticeship program through which he pays workers as they receive mentorship and on-the-job experience.

“I don’t believe in unpaid internships, and so that decreases those opportunities for me to be able to reach and help folks in a way that I think is meaningful,” Howard said.