Jan. 31—Steep new tariffs on goods coming from Canada, Mexico and China are taking effect Saturday — and although the details are still unclear, experts are worried about the impact on the national economy and the north country.
Since before he won the 2024 election, Trump has threatened to slap tariffs on Mexico and Canada, citing border issues as his main motivation for establishing the import taxes. Under his plan, Trump will institute a 25% tax on imports from Mexico and Canada, and a 10% tax on imports from China.
Although Trump has long argued the tariffs are meant to funnel more foreign money into American coffers, economic experts largely agree that the real result will be higher costs on goods that Americans rely on, including petroleum, newspaper and fuel products from Canada, consumer goods from China or automobiles and appliances made in Mexico.
All together, China, Canada and Mexico account for more than one-third of all goods and services imported into the U.S., and these import taxes will be borne by the companies that import the goods. Those companies will likely pass the costs on to the consumer.
In a statement shared Friday afternoon, Garry Douglas, CEO of the North Country Chamber of Commerce that represents businesses in the eastern portion of the region, said the tariffs will be incredibly harmful in both countries and in upstate New York. The Chamber estimates that more than $1 billion in economic activity every year in just Clinton County is driven by cross-border trade.
“It is the single biggest dynamic in the north country economy,” he said.
He noted that some companies have stockpiled resources as available. But one manufacturer he declined to identify was not able to do so at all, and in most cases the preparations can only tide over a business for a few weeks.
Douglas said that while the north country is likely to see outsized impacts of this new trade war with Canada, the entire country will suffer some price hikes.
“Economic integration is deeper and broader across the entire U.S. than most states realize,” he said. “We just happen to be in a trans-border region where the impacts are especially visible and really felt.”
Bright A. Osei, a professor of economics at SUNY Canton, said the tariffs will generally cause a spike in the cost of goods, but the impact will only be clear once the administration announces which items are being taxed.
“We don’t know whether they will include only finished products, or raw materials,” he said in an interview Friday. “If raw materials are included, the U.S. firms importing these raw materials will have an increase in the final cost of production, and consumers will pay.”
Trump has talked about limited tariffs on a selection of raw materials, but Osei said he doesn’t think the administration would be considering a blanket tariff on all raw materials because of the Canadian oil industry.
Canadian oil makes up nearly 40% of America’s daily oil import levels, and a blanket tariff including oil would drive the American economy into a crisis with high fuel and energy prices, especially in border regions that rely more on Canadian supplies.
“If you look at the north country, St. Lawrence County, the price of gas and oil, any increase will affect these citizens significantly,” Osei said.
The Trump administration has been vague in its explanation of what the tariffs will cover. Trump has repeatedly suggested it would be a blanket ban on all items imported into the U.S. from Canada, but if that includes raw materials, all consumer goods including those carried by individuals, or some other range of items is unclear ahead of the formal guidance that will have to come on Saturday to effectuate the tariffs.
Canadian officials spent Friday afternoon trying to get the Trump administration to reverse course, including paying a visit to Tom Homan, the West Carthage-born “border czar” for the Trump administration. Trump has repeatedly argued that the tariffs are coming as a result of weak border policies in Canada and Mexico, permitting illegal immigration and drug trafficking across both the northern and southern borders, and said if Canada and Mexico did not make meaningful policy changes, the tariffs would be the punishment.
Canada is arguing that it has made good on its pledge to secure the Canadian side of the northern border, and argue that they have never been a major player in fentanyl trafficking.
The Canadian government has also pledged immediate retaliatory tariffs on American goods imported into Canada, starting with nearly $37 billion Canadian in goods but potentially expanded to cover $119 billion Canadian in goods the country buys from the U.S.
This tension has not been seen in more than 100 years between the two nations that have become uncommonly, uniquely interconnected over the last 60 years. Canada exports 75% of what it produces to the U.S., from rare earth minerals and paper to electricity and agricultural products, and Canadian companies often establish U.S. outposts to speed up collaboration and production. The north country alone hosts nearly a dozen companies that are either binational or outposts of Canadian companies, many in manufacturing.
There are shared power production facilities, a range of shared border posts and international bridges; but with the trade war on, Osei said it’s likely that the close collaborative relationship is over.
“There’s friction between the two countries, and I think that may translate into how businesses operate, in all activities,” he said. “If both countries are imposing tariffs, that impacts prices for both countries.”
He said the extra costs are likely to create big problems for international companies that may have set long-term pricing agreements that did not account for a 25% tax increase. That uncertainty and instability is poison for business relationships, Osei said.
And a quick reversal may not be in the cards. Osei called attention to the tariffs Trump put in place on certain Canadian imports to the U.S. in his first term, which were never revoked and remained in place even through the Biden administration. Those tariffs, which included steel and aluminum raw products, were meant to protect American industry rather than punish the trading partner.
“There’s evidence to show that businesses did not benefit very much from the previous tariffs, and so the country that does decide to remove the tariffs first, it sounds like they’re losing, right?” he said.
Osei said he expects these tariffs, both from the Canadian and American governments, will remain in place at least until 2026, when the U.S.-Mexico-Canada Agreement that established a largely free trading zone in North America is due to be renegotiated.
For now, observers are especially worried that extended trade taxes will drive Canada into an economic recession, shrinking their economy by at least 3% by reducing demand for Canadian goods in their largest trade market.
Douglas, of the North Country Chamber, said that will not only hurt Canadians, but the north country’s tourism economy and shopping outlets that cater to Canadian shoppers.
“We know a recession undercuts consumer spending and travel, not to mention predictable negativity by many of our neighbors towards spending in the U.S. as a result, and the steep devaluation of the Loonie,” Douglas said.