Detroit Mayor Mike Duggan said the Motor City's economy remains resilient but warned that tariffs are starting to hit automakers and their suppliers.

"The Canadian tariffs are the issue," Duggan told Yahoo Finance at Ford's Pro Accelerate conference in Detroit. "When you put a tariff on Canada, you’re putting a tariff on cars made in Michigan. And we're starting to feel that, and I hope the president gets that sorted out."

Detroit has three operating vehicle assembly plants, including the Detroit Assembly Complex, which is owned and operated by Stellantis (STLA).

While some government officials, such as Treasury counselor Joseph Lavorgna, argue that the effect of tariffs, once reflected in government data, will be relatively small, the mayor noted that corporate income taxes are already showing strain.

"Our corporate income taxes are down because they’re off of corporate profits. The tariffs have hit them," Duggan said. Still, he noted that personal income taxes "are not down," suggesting that "people are still working."

Read more: What Trump's tariffs mean for the economy and your wallet

Detroit-based companies like General Motors (GM) and Ford (F) are navigating higher costs from global trade disputes while also spending heavily on electric vehicles. Both automakers rely on cross-border supply chains with Canada, and analysts warn that prolonged tariffs could dent margins and slow investment.

Duggan stressed that manufacturing has driven growth over the past decade, but he acknowledged it is "soft," citing the impact of Canadian tariffs. He argued for more targeted policies.

"Tariffs in general, if they were done the right way with Mexico, I think most people in Detroit would feel good about," he said. "We'd just like to see it be more precise."

Even with those pressures, Duggan pointed to the cranes dotting Detroit's skyline — new hospitals, research facilities, housing, and high-rises — as evidence of underlying economic strength.

Still, he warned that the city can't rely solely on its industrial base.

The next frontier, he said, is tech — and specifically artificial intelligence. Large companies, such as Amazon (AMZN), are investing billions in new data centers to support AI growth.

"Michigan is behind the curve at having a solid energy grid," he said. "We are not prepared to compete for the jobs of the future."

Duggan suggested that could change if he were elected Michigan governor in 2026. After serving as Detroit's mayor since 2014, he announced in November 2024 that he would not seek a fourth term. Subsequently, he left the Democratic Party and declared his candidacy as an independent, aiming to offer voters an alternative to the entrenched partisan politics.

"The one thing you're going to see immediately when I get to be governor is [bringing] together this whole tech sector, energy sector," he said. "We're going to make sure we're the place tech companies want to be if you're going to be in the Midwest."

Analysts see a mixed outlook. Goldman Sachs strategist Kamakshya Trivedi noted that while tariffs are creating near-term headwinds, the worst of the impact may be felt "over the next 3-4 months." After that period, things will "look better."

If the labor market holds steady, Goldman sees fiscal support and lower rates providing a tailwind for growth in 2026 — a backdrop that could ease cost pressures on automakers.

Francisco Velasquez is a Reporter at Yahoo Finance. He can be reached on LinkedIn and X, or via email at francisco.velasquez@yahooinc.com.

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