New tariffs from the U.S., set to begin Wednesday, could hurt border states like Minnesota, New York, Vermont, and Washington economically. President Donald Trump has not signaled any delay or cancellation of these tariffs. The Trump administration, citing section 338 of the Tariff Act of 1930, has decided to impose 50% tariffs on about $20 billion worth of Canadian goods including hockey sticks, some clothing, wines, dairy products, and construction materials like cement and plywood. Energy, potash, fish, and critical minerals are exempt from these tariffs.
The White House stated that this action was in response to Canada’s treatment of American products, such as alcohol, dairy, and automobiles, as the trade conflict between the two countries intensified. Despite ongoing negotiations, Canada and the U.S. reported no progress in resolving their differences as of Monday. After speaking with President Trump, Canadian Prime Minister Mark Carney noted the discussions are delicate and intense.
The U.S. Chamber of Commerce also called for an agreement with Canada to prevent economic damage. They warned of the potential negative effects on both economies, with increased costs for American families and disruptions to supply chains affecting millions of American jobs tied to the U.S.-Mexico-Canada Trade Agreement.
Impact on Border States
If enacted, these tariffs would hit border regions the hardest. Research from Cornell University and Ohio State University indicates states with strong economic ties to targeted countries suffer more. Northern states like Michigan and North Dakota, which rely on Canadian markets for processed foods and livestock, are more vulnerable. In the south, states dependent on Mexican goods face similar risks. The tariffs could impact Minnesota, New York, Vermont, and Washington due to their significant trade with Canada. A report by the New York State Comptroller noted previous tariffs have already reduced tourism and exports between New York and Canada dramatically.
Ongoing tariff disputes have already affected northern New York businesses relying on Canadian plywood and lumber. Suppliers indicated these new tariffs would lead to price hikes passed on to consumers. The Chicago Fed suggests increased tariff costs could be transferred to consumers, adding to financial pressures already present due to rising consumer prices.
Attempts to Avert Tariffs
Canada-U.S. Trade Minister Dominic LeBlanc and chief negotiator Janice Charette continue efforts to reach an agreement to avoid the tariffs. However, compromise remains challenging. The U.S. wants Canada to remove tariffs on American autos, adjust dairy quotas, and lift the ban on U.S. alcohol sales. Conversely, Canada seeks reductions in U.S. tariffs on steel, aluminum, automobiles, and lumber. Domestic political challenges, including unfavorable Canadian views of Trump, complicate negotiations.
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