Tariff Update: What MichAuto is Watching

Since the “America First” trade policy was issued on Jan. 20, MichAuto has been a voice for the industry that provides clarity on a very fluid policy landscape and continues to stress the importance of the United States-Mexico-Canada Agreement (USMCA) as an effective tool for the U.S., Canada, and Mexico to collectively compete on the global stage. MichAuto and the Detroit Regional Chamber have continued to monitor and bring the latest key issues to the forefront of the discussion, keeping a focus on Michigan’s automotive industry and economic future. There are three key issues that we are watching closely:

A series of legal challenges to President Donald Trump’s authority to impose unilateral tariffs will be heard at the U.S. Supreme Court (SCOTUS) starting Nov. 5. This began when the Federal Circuit Court of Appeals ruled in late August 2025 that the President did not have the sole power to impose the tariffs under the International Emergency Economic Powers Act (IEEPA). Should SCOTUS uphold the lower court’s decision invalidating the President’s unilateral IEEPA tariffing powers, the consequences would be complex and far-reaching. A myriad of industries would be owed rebates on the IEEPA tariffs they had already paid. Yet, more uncertainty could be injected into the domestic and global economy as the Trump administration would likely pivot to a different legal basis for imposing tariffs. A decision is expected by the end of the year.

The USMCA will enter a joint review process between the U.S., Mexico, and Canada in July 2026. The joint review will allow all three countries to recommend revisions or amendments to the agreement. By statute in the federal legislation enabling the USMCA, the Office of the U.S. Trade Representative (USTR) is required to initiate a public comment period to solicit views from businesses and other stakeholders. The USTR is now accepting written comments and requests to testify by Nov. 3, with a subsequent USTR hearing on Nov. 17. The USMCA Enabling Act also requires that at least 180 days prior to the review commencing, Therefore, in early January 2026, the USTR must report to U.S. Congress its plans for the review, including the revisions the Trump administration plans to recommend, and its intentions as to whether it will seek to extend the agreement beyond its current 2036 sunset. This is important as, per the original agreement between the three countries, the joint review process is the first opportunity for the USMCA to be extended beyond 2036. If no deal on an extension is reached, the joint review process will continue on an annual basis until an extension is agreed upon or the USMCA terminates in 2036.

The world’s two largest economies entered another tense standoff this week as China imposed new restrictions on exports of rare earth minerals to the U.S. and Trump responded by threatening a 100% tariff on Chinese goods. Rare earth minerals are a vital part of production for a variety of high-tech products, including EV motors. The trade war escalation comes at a tenuous moment for the U.S. economy, as hiring slows, manufacturing contracts, and prices remain high. The sharp stock market drop at the end of last week, triggered by the two nations’ dueling trade gambits, demonstrated yet again current volatility on Wall Street and economic vulnerability that China may seek to exploit as it maneuvers for a stronger negotiating position with the Trump administration.