Nine years of job growth for Michigan positions the state well to absorb changes in the North American Free Trade Agreement, according to University of Michigan economists.
The overall 2018-19 forecast for Michigan sees steady job growth, low unemployment, tame inflation and an economy that continues to diversify.
Focusing on potential NAFTA effects lets the state consider how that move could affect its ongoing recovery, which has regained 80 percent of the jobs lost from the mid-2000s through the Great Recession.
While a full NAFTA withdrawal may be unlikely as the fifth round of talks begin this month, the researchers said, “(Michigan) would likely absorb a negative shock related to a pull-out or weakening of the North American Free Trade Agreement fairly well.”
At issue is whether Mexico and the United States placed additional tariffs on each other’s exports after withdrawal.
A “soft withdrawal” with no additional tariffs would “only (cause) slight harm to the U.S. economy.”
However, they said, retaliatory tariffs on both sides — or a “hard withdrawal” — could cut U.S. growth by 0.2 percent and slash 300,000 jobs by the year 2020.
Auto assembly work would likely not return to the U.S., the researchers said. However, light truck production would.