By Evelyn Pyburn
President Trump’s tariffs on Mexico, Canada and China could have significant impacts on Montana. In fact, Montana could be the most impacted state in the nation because the state is the most dependent upon imports.
Montana tops a list of eight states that will see at least two-thirds of their imports impacted, according to Lending Tree.
Montana gets over 91% of its imports from Canada alone. LendingTree said that some states send a majority of their exports to these countries, making them vulnerable to retaliatory tariffs.
In 2024, Canada, Mexico and China accounted for 42 percent of total US imports. Mexico stood out as the top exporter with $466.6 billion, according to the US Census Bureau. Mexico and Canada account for more than 30 percent of total goods traded, exceeding $1.6 trillion.
Tariffs will impact Montana’s agriculture, energy and manufacturing industries.
Yellowstone County has refineries that process Canadian crude oil, the state’s largest import product from Canada. Montana farmers buy fertilizer from Canada. And, with a minimal remaining timber industry of our own, Montana buys lumber from Canada – and the list goes on to include farm equipment and machinery, foods and grain, and even Tequila from Mexico.
One business in Yellowstone County that might not spring readily to mind as being impacted by tariffs is Auto Auction of Montana. In the business of selling used cars, Jake Gertsch explained that they auction off about 500 vehicles each week, of which about 50 percent are imports from Canada. If the vehicles were built in Canada they are subject to the tariffs. About 10 percent of the vehicles Auto Auction gets from Canada were built in Canada. Gertsch, who has worked in the family-owned business for 22 years, said that they have already felt the impact of the tariffs in seeing a 10 percent drop in the number of vehicles they receive from Canada. Losing ten percent of their business, while “not significant is detrimental,” said Gertsch. It reduces supply. In keeping with “the law of supply and demand,” when the supply shrinks prices increase, which Auto Auction of Montana has also seen, according to Gertsch. “It will drive up the cost of used cars in our region for consumers,” he said. Gertsch adds that a lot of the parts for the vehicles is also made in Canada, which are also impacted by tariffs, also increasing costs to his business as well as area consumers.
But that’s not all — the cost of your favorite brew is also likely to increase, as Montana brewers scramble to find other sources for malt, a necessary ingredient in the production. Most brewers have been importing their malt from Canada, which is a top malt producer. Many brewers stocked up in advance but “rising prices are sure to come.”
Nearly 75% of Americans believe tariffs will lead to higher prices, and 44% think they’ll negatively impact their personal finances.
Montana farmers, worried about wheat and grain prices, fear that tariffs will plummet those markets. Montana farmers also export a high volume of commodity crops, such as wheat and pulse crops to China, which will likely purchase less of those commodities.
Montana imports live animal products – especially beef —from Canada, as well as selling product to both Canada and Mexico.
U.S. farmers export over 144 million metric tons of agricultural products, valued at more than $105 billion.
A recent television interview with two different beef growers in Montana clearly demonstrated that when tariffs go into effect some producers benefit and others lose. One cattleman pointed out that the tariff would benefit Montana beef by reducing foreign competition and another worried that the tariffs would reduce sales of Montana beef into Canada.
One of the greatest concerns for Montana ag producers is the impact on the cost of fertilizer. They purchase much of their fertilizer from Canada. There have been some reports that many producers have already purchased the fertilizer they think they will need in anticipation of prices increasing.
Fertilizer prices for Montana ag producers have risen 25 percent.
Gas prices could increase 5 to 10 cents per gallon while natural gas bills will likely rise 10 percent.
President Trump’s tariffs, as well as the amount, has been adjusted enough times to generate considerable confusion. Most went into effect on March 4, and he has promised the potential of retaliatory tariffs that will become effective April 2.
Tariffs have been set at 25 percent Mexico and Canada, and doubled on Chinese goods to 20 percent. Levies on Canadian energy are limited to 10 percent.
President Trump has said that the tariffs are efforts to prompt Canada and Mexico to take action to halt the flood of illegal immigrants and fentanyl into the US. Some economists suggest that Trump’s greatest angst is about the trade deficit that exists with Canada – a trade deficit in which the US purchases more from Canada than US producers sell to Canada.
Reports about both the Mexico and Canadian governments indicate that they are in fact taking action to deal with the illegal immigrant and drug issues.
If tariffs fail to get the response President Trump wants from Canada or Mexico the tariffs will generate revenue for the US government, pointed out President Trump.
While economists take issue with the tariffs proposed for Canada and Mexico, there seems to be little opposition to the tariffs imposed on China, because China is broadly considered as an “unfair” trading partner.
As seen with Montana beef producers, some US producers favor tariffs for their specific industry, because it protects them against competition. That’s why tariffs are sometimes called “protectionist.” While tariffs protect domestic industry, they impose what amounts to little more than a sales tax on domestic customers.
US producers who export products into Canada may be harmed by the retaliatory tariffs that Canada has threatened. US-made products will cost more in Canada in competition with Canadian products, and Canadian consumers will then be paying what essentially is a sales tax on those products.
President Trump has pointed out that many countries have all along had tariffs imposed on US products and there have been no retaliatory tariffs from the US. Trump has threatened reciprocal tariffs on the European Union, which exports products like pharmaceuticals, automobiles and alcohol to the U.S.
In general the broader impacts of tariffs over time are negative for consumers. They lower the standard of living for all on both sides of a border.
An interesting observation about the potential impact of the tariffs, published in “The Hill” on March 18: “This ‘tariff threat theater,’. . . might inadvertently accomplish something that conventional economic wisdom would consider paradoxical: helping to combat inflation. . . When Trump threatens new tariffs, consumers rationally react by pulling back on spending, out of fear that prices will soon rise. This psychological dampening of demand can exert significant downward pressure on inflation, even if the tariffs themselves never fully materialize or persist. Essentially, the president may be creating an economic placebo effect — generating the demand-cooling benefits of tariffs without their sustained price-increasing consequences.”
The article further points out: “. . persistent uncertainty creates a peculiar incentive structure. When tariffs are threatened but believed to be potentially temporary, companies are more likely to absorb temporary cost increases rather than pass them along to consumers.”
According to LendingTree the states with the highest percentage of imports from Canada, Mexico, and China are:
* Montana – 94.3%
* New Mexico – 76.9%
* Vermont – 75.0%
* Michigan – 69.7%
* Maine – 69.4%
* North Dakota – 63.5%
* Oklahoma – 57.2%
* Wyoming – 54.5%
