U.S. Tariffs on Canadian Goods Set to Impact Border States

On Wednesday, a fresh wave of U.S. tariffs will hit Canada. President Donald Trump shows no sign of delaying or canceling them. Border states like Minnesota, New York, Vermont, and Washington face potential economic strain.

On July 20, the Trump administration invoked section 338 of the Tariff Act of 1930. New tariffs at 50 percent will affect around $20 billion worth of Canadian exports to the U.S. Items affected include hockey sticks, specific clothing items, wines, some dairy products, and building materials like cement and plywood. Energy, potash, fish, and crucial minerals remain exempt.

The White House claims the tariffs respond to Canada’s “discriminatory treatment of American products,” affecting U.S. alcohol, dairy, and automotive exports. These practices emerged over the last year as trade tensions escalated.

Despite continued negotiations, CBC reported no progress between Washington and Ottawa, with tariffs likely proceeding as planned. After a phone call with Trump, Canada’s Prime Minister Mark Carney highlighted “delicate” and “intense” talks, indicating limited advancements to halt the tariffs.

Canadian officials aren’t the only ones racing against time as Wednesday nears. The U.S. Chamber of Commerce urges resolution, warning of mutual economic damage. Neil Herrington, senior vice president for the Americas, stated, “Higher tariffs would harm both economies, increase costs for U.S. families, disrupt crucial supply chains, and risk the 13 million American jobs linked to the U.S.-Mexico-Canada Trade Agreement.”

Impact on Border States

If implemented, the tariffs could swiftly impact communities near the U.S.-Canada border. Research from Cornell University and Ohio State University indicates that Washington’s trade wars more severely affect states with stronger economic ties to targeted countries. States like Michigan and North Dakota, closely linked to Canadian markets, face higher vulnerability to tariffs on Canada. Southern states, such as Texas and Arizona, are more exposed to tariffs affecting Mexico.

States like Minnesota, New York, Vermont, and Washington stand to experience significant effects first. They maintain robust trade ties with Canada, and border-region economies could suffer noticeably.

An April report from the New York State Comptroller’s office outlined prior tariffs’ detrimental impact on tourism from Canada and exports to the neighboring country. These disruptions are most pronounced in regions near the Canadian border.

In these areas, travel from Canada had dropped over 21 percent, equating to nearly 3.6 million fewer visitors; exports fell by $3.8 billion due to tariffs.

Last week, New York-based radio station WAMC highlighted how businesses in northern New York could face severe setbacks from new tariffs on Canadian plywood, lumber, and construction materials, significantly raising costs. A building supplier relying heavily on Canadian inventory warned that tariff increases would be passed down to customers.

Economic repercussions might cascade nationwide as import costs rise, burdening importers who may shift additional expenses onto consumers. The Chicago Fed emphasized that with 569 affected product categories and existing fees, import costs would spike if sourcing from Canada continues, increasing the likelihood of consumers facing higher costs.

American consumers, already grappling with a 3.4 percent price increase over the past year, might face intensified financial challenges.

Newsweek reached out to the North Country Chamber of Commerce, Vermont Chamber of Commerce, Minnesota Chamber of Commerce, and the Border Policy Research Institute at Western Washington University for comments.

Possible Avenues to Avoid Tariffs

On Monday, Canada-U.S. Trade Minister Dominic LeBlanc expressed continued efforts with chief trade negotiator Janice Charette to forge an agreement with Washington that could prevent the tariffs.

LeBlanc stated, “Our job is not yet done,” as reported by CP24.

It remains unclear if a compromise can avert the tariffs. Reports suggest the U.S. wants Canada to lift retaliatory tariffs on American autos, amend dairy quotas, and revoke the ban on U.S. alcohol sales imposed last year. Prime Minister Mark Carney lacks authority over these alcohol restrictions, which the provinces control.

Conversely, Canada seeks reductions or the elimination of tariffs on steel, aluminum, automobiles, and lumber. For both nations, making concessions poses challenges. Canada’s difficulty is underscored by an Angus Reid Institute poll, revealing 79 percent of Canadians hold an unfavorable view of Trump, and 59 percent oppose the new tariffs.

Contact Newsweek editors on this story: Ben Kelly and James Debens.