February 20, 2018
Interviewed by: Privcap
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Michigan Will Be Hit Hardest by a NAFTA Withdrawal

Privcap interviews Joe Brusuelas, chief economist for RSM on how withdrawal from NAFTA will harm Michigan and other states hardest hit from the recession. Based on volume 38 of RSM’s The Real Economy report, available for download here.

Privcap interviews Joe Brusuelas, chief economist for RSM on how withdrawal from NAFTA will harm Michigan and other states hardest hit from the recession. Based on volume 38 of RSM’s The Real Economy report, available for download here.

Michigan Will Be Hit Hardest by a NAFTA Withdrawal

Privcap: What states would get hit hardest by a NAFTA withdrawal?

Joseph Brusuelas, RSM:
There are 12 states that are at excessive risk from withdrawal; 11 of them voted Trump in the last election. The number one state at risk is Michigan, not consequentially, home of our auto production here in the United States and North America. They have more than 400,000 jobs at risk, significant numbers of products that would see large tariffs on exports. And, when I say that, that’s important, because your average component that goes into a car moves across one of the three borders 40 times before it ends up in a finished product. It’s to the point where it’s very difficult to estimate the actual origin of these products. And that does tell a tale of an economic evolution with respect to North America and the integration of the North American economy and the ways in which even our large multinational companies are embedded in that economy.

Is the average car owner unaware of the consequences of a NAFTA withdrawal?

Brusuelas: Yes. This is one that the consumer’s really going to be able to wrap their hands around. Due to the efficiency gains that have been wrought due to the development of those supply and value chains across North America, anyone who buys a car produced in North America essentially gets a $4,000 tax cut because of the NAFTA trade treaty. Should we withdraw from that, those supply chains begin to dissipate and that acts as a $4,000 tax on everybody who buys a car produced in North America. I don’t think Americans really understand that just doesn’t mean Ford, GM and Chrysler. It also means Japanese cars and German cars, specifically BMW and Mercedes. So, this is going to hit everybody across the wealth spectrum.

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