By Habib Sabet/VTDigger
With 25% tariffs on Canadian goods expected to take effect Tuesday, many companies statewide are bracing for impact as that could eat away any margin of profitability for many.
“It hurts. It didn’t have to be this way,” said Kevin Moyer, owner of Vermont Frames, a Starksboro-based timber framing company that uses Canadian wood in many of the handmade frames it builds for homes and barns across New England.
Canada is Vermont’s No. 1 trading partner. The state imports over $2.5 billion in goods from its northern neighbor each year, according to the Canadian consul general in Boston. Thus, President Donald Trump’s trade policy, officials have said, is likely to have dramatic effects on the state’s economy.
But as of late Monday afternoon, March 3, just hours before the levies were expected to take effect, Vermont officials and business leaders were still grappling with uncertainty over exactly which Canadian goods would actually be subject to tariffs.
“All of this is happening so quickly and in a way that’s not consistent with past practice,” said State Treasurer Mike Pieciak. “You worry that the uncertainty itself is going to bring about an economy that is not as confident and therefore not growing as robustly.”
Trump initially threatened to impose 25% tariffs on most imports from Canada and Mexico beginning on Feb. 4, with fuel imports from Canada receiving a lower 10% levy.
After deciding to postpone the tariffs for 30 days, the Republican president last week announced that they would proceed as scheduled and take effect on Tuesday, March 4, potentially sparking a trade war with two of the U.S.’s closest trade partners, both of whom have threatened to declare retaliatory tariffs.
The Trump administration has yet to offer much in the way of specifics, Pieciak said, making it hard to parse the potentially sweeping impacts the tariffs could have on Vermont’s economy.
“When things aren’t done with a scalpel but are rather done with a sledgehammer, then that has a broad impact,” said Pieciak, who formed a taskforce in January to assess the potential economic consequences of Trump’s policies.
One area of the economy that could see a big impact is Vermont’s energy sector, which relies heavily on Canadian imports, purchasing about $775 million of electricity and $420 million of fossil fuels from Canada per year, according to the Canadian consulate general.
But it remains unclear how much of those imports would be subject to the 10% tariff on Canadian energy.
“There are lots of questions on our mind that we need answers to before we can understand the implications for us,” said Rebecca Towne, CEO of the Vermont Electric Cooperative.
According to Towne, the cooperative imports about 40% of its electricity from Hydro-Quebec, a Quebec based supplier of hydroelectric energy. Last month, Towne said the cooperative could see up to $2 million in extra costs in 2025.
But on Monday, Towne said there was still too much uncertainty surrounding the policy to determine any real impact on price increases for consumers.
“We still have to wait for more clarity from the federal administration to understand how this would work,” Towne said. “Like, we’re not even sure what entities are responsible for paying the tariff and how that would be measured and how we would report and pay.”
Vermont Gas Systems, the state’s only natural gas distribution company, gets almost all of its gas from Canada, according to public affairs director Dylan Giambatista. The levies could lead to price increases for more than 50,000 customers that rely on the company.
But Giambatista said that Vermont Gas still had more questions than answers about how the tariffs may impact gas imports.
“We are waiting for Federal guidance that will determine how these import tariffs will be applied, at which time we will be able to estimate rate impacts and address them through the regulatory process,” Giambatista said in a written statement.
Alison Hope, the executive director of the Vermont Maple Sugar Makers’ Association, said that, despite the uncertainty surrounding other sectors, the state’s sugaring industry was primed to take a hit from the tariffs.
According to Hope, the tax threatens to raise costs on imported equipment for local sugar manufacturers even as it makes imported maple products themselves more expensive.
“It’s all so intertwined that I don’t see in the long run how a 25% Canadian tariff could be favorable,” Hope said. “It’s going to have an impact in a number of different ways.”
