trade deficit with the Asian nation by $25 billion, but the gains would be “undone” by slower investments and consumption as China retaliates with similar tariffs, said Daniil Manaenkov, a forecasting specialist with U-M’s Research Seminar in Quantitative Economics.
“Information processing equipment is suddenly going to get a lot more expensive,” he said, “and naturally there will be less investment.
Some consumer goods will also get more expensive.”
The forecast predicts overall consumer price levels would increase by 0.
Most of the products China exports to the United States are assembled there using products imported from other countries, Manaenkov told state lawmakers Wednesday during a biannual revenue estimating conference at the Michigan Capitol.
“A lot of Chinese imports will still make it here,” Manaenkov said. “Raising trade barriers against just one company is probably not going to produce a sizeable effect.
While Trump has touted his budding relationship with Chinese President Xi Jinping, his plan to impose tariffs on $50 billion in Chinese products has sparked retaliatory threats that pose risks for American industries, including farmers in Michigan who grow soybeans or other agricultural export products.
NAFTA risk for autos
While Trump has suggested reciprocal tariffs, America could only do so “temporarily” without pulling out of the World Trade Organization, said Kristin Dziczek, vice president of research at the Center of Automotive Research in Ann Arbor.
Michigan is in a “very dangerous” position as the Trump administration works to negotiate the North American Free Trade Agreement with Canada and Mexico, Dziczek said, noting Trump has threatened to pull out of the agreement without new terms.
The 1994 agreement eliminated import tariffs on most products between the three countries, and Michigan is the top state in the country for auto exports, according to CAR data. Phase-in timelines in a recent U.
S. proposal to increase the “regional value content” required for cars to avoid U.
Parts of a single car can cross borders multiple times, Dziczek said.
9 million in 2019, they said.
Michigan’s prolonged economic recovery is projected to continue but jog growth will be “slower than earlier phases of the economic recovery,” said UM’s Research Seminar in Quantitative Economics director Gabe Ehrlich.
Experts in the Michigan Legislature and state Treasury are projecting similar economic growth for Michigan, but “obviously the potential tariffs and trade wars … do produce some uncertainty for our forecast,” said Jim Stansell of the House Fiscal Agency.
3 percentage points in 2019 and 0.1 percentage point in 2020 — assuming Congress approves an enabling spending bill, Manaenkov said.
National consumer and business sentiment indexes, which measure optimism in the economy, are “sky high” and “rival what we saw in the late ’90s,” he said.