What Trump’s tariffs could mean for Vermont

Tim Tierney, Director of Recruitment and International Trade for the Trade and Community Development Agency, recalled that during the last Trump administration, Vermont joined other Northeastern states in opposing tariffs on Canadian steel and aluminum.

Northern New England governors wrote a letter to the Trump administration. After all, metal imports from Canada He was exempted because the reactions increased after the coup.

This time the outcome remains uncertain. President-elect Donald Trump promised during his campaign to impose high tariffs on trade, including a 10-20 percent tariff on all imports and potentially a 60 percent tariff on Chinese imports. Trump has made tariffs the centerpiece of his economic strategy, claiming they will stimulate the U.S. economy, protect American jobs and increase tax revenues.

Tierney said that if tariffs were reimposed, states would likely come together to influence policy, as they did last time, although it’s not possible to stop everything.

“We will do our best to coordinate with all of our states that will be negatively impacted, whether it is agriculture or commodity pricing,” he said.

A tariff is a tax on imported goods that raises their prices, encouraging consumers to buy domestic products instead and allowing domestic producers to raise their prices as well. Often the goal is to make goods produced in the USA more attractive to consumers. Some economistsBut he cautions that tariffs could backfire by fueling inflation and raising interest rates.

Cathy Davis, president of the Lake Champlain Chamber of Commerce, said although there is no guarantee that tariffs will be implemented as Trump has proposed, many Vermont businesses have relied on Canada for products they may not be able to get from the U.S. since the pandemic.

“You don’t have to cross the ocean to get something from Canada,” he said. “You don’t need to keep something on a cargo ship for six months.” While some local businesses have expressed concerns about possible supply chain disruptions from tariffs, Davis said most are waiting for more details before making concrete plans.

Many businesses in Vermont also rely on raw materials or finished products imported from abroad or from nearby countries such as Canada and Mexico. Tariffs could lead to higher prices or narrower profit margins, said Joan Goldstein, commissioner of the Trade and Community Development Agency’s Department of Economic Development.

Goldstein expressed concerns about potential ripple effects on consumers and producers, stating that higher prices could result from international trade tensions.

“If they are manufacturers and trying to export goods to these countries, there may be retaliation,” Goldstein said. “These are issues that concern us. “It’s affordability for the consumer, it’s affordability for the producer, and then it’s retaliation when those countries impose tariffs on U.S. goods.”

In September, a survey A study conducted by the University of Chicago asked a group of economists whether they believed tariffs primarily lead to higher prices for consumers in the country that imposes them. An overwhelming majority of 98 percent agreed with the statement, saying they believed tariffs were passed on to consumers through price increases.

Import and export

Vermont is home to GlobalFoundries, one of the state’s largest exporters, as well as many companies with international reach, including Revision Military in Essex, Liquid Measurement Systems in Georgia, and HEI in Colchester, all of which have global customers, according to Davis. there is.

“It’s not just about paying taxes on something you import, it’s also about what country you might be selling to, how they would react if we imposed a tariff,” Davis said. “We are all waiting to see how other countries around the world will act as well.”

Value in August 2024 Vermont’s exports reached 159 million dollarsApproximately $8.9 million, or almost a 6% increase, over last year.

The state’s biggest exports include integrated circuits, aircraft parts, chocolate and sporting goods. But the province imported far more than it exported, reaching $321 million this year, leading to a negative trade balance of $163 million.

Vermont’s major export destinations were Canada, Taiwan, and China. Davis said there are concerns about how those nations will respond and the potential impact on Vermont’s international trade, given that those countries are also among those facing the highest U.S. tariffs under Trump’s trade policies.

University of Vermont economics professor Richard Sicotte said other countries could respond strategically to minimize the impact of tariffs by outsourcing production to other countries to reduce tariffs.

Savvy businesses often find ways to minimize tariff impacts and reduce costs while remaining competitive in the U.S. market, Sicotte said. Many products, such as T-shirts, are assembled in multiple countries, with steps such as weaving fabric or attaching buttons being performed in different locations. However, tariffs are generally applied based on the final country to which the product is shipped, even if most of the value is added elsewhere.

“If you were a Chinese company, you’d say, ‘Well, if we ship it from here, we’re going to have to pay a 60% tariff to get into the U.S., but if I ship my production to Thailand or somewhere like that, Sicotte says, “it’s only a 10% duty.” “I will have to pay an increase,” he said. “So they can avoid much of the impact of the tariff by making their own strategic decisions.”

He added that this would, on the one hand, reduce the negative impact of tariffs on prices in the United States, but would also limit the protection provided to American firms from the tariff.

Sicotte also said Trump’s policies to deport undocumented immigrants could increase the prices of goods for Americans. He said removing millions of people from the workforce nationwide could worsen the ongoing labor shortage. This could cause prices to rise further as businesses are forced to offer higher wages to attract workers.

This may be good for workers in the short term because they earn more, but higher wages lead to higher production costs for businesses. These higher costs then cause the prices of goods to increase.

“There are a lot of moving parts,” he said. “That’s why it makes (the impact) so hard to predict when we don’t have all the facts yet.”

Supporting companies

Frank Cioffi, president of the Greater Burlington Industrial Corp., warned that food prices could be significantly affected by the president-elect’s stance on illegal immigration and deportation. Cioffi said the deportation could seriously disrupt agricultural production, especially in the vegetable and produce sectors, and lead to higher prices for consumers.

“If you don’t have workers on fields in the larger vegetable or produce industry, prices can go up,” Cioffi said. “Or if you put tariffs on Mexico, most of our products come from Mexico, higher prices are definitely something that consumers will feel.”

Cioffi said he believes foreign trade zones can help Vermont producers. A foreign trade zone is an area within a country where goods can be imported, stored and processed without being subject to standard customs duties or tariffs. Greater Burlington Industrial Corp. maintains a licensed foreign trade zone at Patrick Leahy Burlington International Airport.

“There is a baby food manufacturer in Georgia town, and they are currently our only employer in northwestern Vermont that uses it,” Cioffi said. “It allows people to import a product in the process of production and suspend the duty due until it reaches its final destination.”

He said he hopes to meet with the U.S. Department of Commerce to see if a foreign trade zone would help.

While Davis awaits more information on potential tariffs, he emphasized the importance of federal advocacy to provide assistance to businesses adjusting to supply chain disruptions.

“If there were tariffs going forward, some support would be needed for companies to be able to make changes to their supply chains, find domestic suppliers or produce onshore,” he said.

Cioffi said some of Trump’s stances on tariffs and economic policy could be part of negotiating tactics.

“This certainly troubles economists. We import a lot. “It’s like we’re not a single entity here, we’re a global economy,” Cioffi said. “You cannot be an island. “We really depend on each other.”

“Cross my fingers”

Farmers in the region could benefit from the proposed new tariffs if customers find supermarket produce too expensive and prefer to buy from local sources instead. But the same tariffs could also create significant challenges for farmers.

Abdoulaye Niane, farmer of the family-run Khelcom farm, worked quietly to establish a third greenhouse on a small farm in Barre. He said he planted twice as much garlic this year as the previous year, unrelated to election results. He may have made the right decision, as crops like garlic can significantly impact food prices for both consumers and retailers across the country.

Naine completed the Farmer Training Program at the University of Vermont in 2021 and started an organic farm with his wife the following year. Naine occasionally buys tools from China and Canada to increase efficiency on the farm. Although they only sell their products within the local community, import tariffs may still affect their operations.

“I buy the tools from a company called Dubois Agrinovation and hope the price stays the same,” he said. “I want to cross my fingers and hope for the best.”

It supplies hoops and hand tools from Canada. “We’re organic, so we don’t spray here, but we use rings to cover the plants with bug netting,” he said.

Naine was concerned to learn that the prices of vegetables and other products could increase as a result of Trump’s tariffs.

“One of our goals is to make organic food accessible to local people. If we have to increase our prices we will do that, but I hope not,” Naine said.