The White House announced that President Donald Trump intends to impose 25 percent tariffs on Saturday on goods imported from Canada and Mexico, a decision that Vermont officials and business owners said could drive consumer prices higher.
Through longstanding trade agreements, many U.S. importers pay only small levies for the industrial goods they import now, according to the Office of the United States Trade Representative — about 2 percent, though there are exceptions.
President Trump’s tariff plan, which includes a 10 percent tariff on goods from China, is no surprise. In his first term, Trump levied tariffs worth about $380 billion, according to the Tax Foundation. The Biden administration kept most of them in place and added more in the high-tech sector, the Tax Foundation said.
Tiny Vermont, with a GDP of $35 billion, is particularly vulnerable to tariffs on products from its neighbor to the north. Vermont imports $2.6 billion in goods from Canada annually, according to the Canadian Consulate General. Canada is the state’s largest trading partner, a bigger player than the next five largest foreign markets combined, according to figures compiled by the Canadian Consulate General in Boston.
Vermont businesses rely on Canadian suppliers for electricity — the largest import by far — and fuel oil, as well as cocoa, chocolate, natural gas, and animal feed such as grain and hay.
Every year, Claussen’s Florist, Greenhouse & Perennial Farm imports thousands of seedlings and plants from Canada to supplement the plants it grows in a half million square feet of greenhouses in Colchester. Claussen also pays more than $250,000 each year for Canadian-sourced natural gas to warm its greenhouses. The company also imports equipment such as pipes and fans.
Co-owner Chris Conant, like many businesspeople in Vermont, was anxiously monitoring the Trump administration’s plans. Conant worried tariffs could dramatically affect the 53-year-old business.
“It’s a little scary,” Conant said.
Canada also plays a large role in Vermont’s aerospace industry, sending engines and turbines to Vermont manufacturers. The country also supplies the U.S. with lumber and other building supplies.
Several news reports said oil would be exempt from the new levies.
“We have been following this closely and will evaluate whether it could impact the energy sector and specifically our customers,” said Kristin Carlson, the vice president for strategy and external affairs at the Canadian-owned Green Mountain Power, Vermont’s largest electric company. “If it does, we will do everything we can to protect our customers and limit any potential impact.”
If tariffs are placed on energy, natural gas rates in Vermont could increase by 10 percent and electricity rates by 2.5 percent, according to U.S. Sen. Peter Welch (D-Vermont), who convened a group of business leaders in St. Albans on Monday to talk about tariffs.
“The ability of Vermont’s small manufacturing businesses to absorb a 25 percent increase in costs on parts or raw materials is limited,” Welch said.
He worried about Vermonters having to pay more for homes, as well as for farming and maple sugaring equipment.
“Donald Trump has just raised prices for every working American,” Welch said in a press release on Friday. “He has threatened jobs and set our nation up for retaliation and years of painful trade disputes.”
Uncertainty about tariffs, including how long they might be in place, abounded. Barnard dairy farmer and Paul Doton, who also makes syrup, said it’s too soon to know what will happen, never mind how to respond.
“We really don’t know how it’s going to affect us,” said Doton.
Amy Spear, president of the Vermont Chamber of Commerce, said many of the chamber’s members are wondering whether they’ll be affected by anticipated retaliatory tariffs as other countries ramp up levies on U.S. exports.
“We rely on raw materials from Canada,” she said. “Supply chain disruptions can be very disruptive to the business continuum.”