There’s been a lot of talk about tariffs but President Donald Trump said Monday that the time for talk is now over.
“Tomorrow tariffs — 25% on Canada and 25% on Mexico — that will start,” Trump said about the tariffs set to go into effect Tuesday. “So, they’re going to have to have a tariff.
“So, what they have to do is build their car plants, frankly, and other things in the United States, in which case they have no tariffs.”
Trump also said there would be no midnight deals for Canada or Mexico this time. The two countries, which are among America’s closest allies, have done too little to discourage the “vast amounts of fentanyl that have poured into our country” over the southern and northern borders, Trump said.
Not to mention, a continuing trade imbalance between the two countries, with the U.S. buying far more in goods than either Mexico or Canada buy in return.
The tariffs Trump is imposing on Mexico and Canada are 25%, while the tariffs on Chinese goods are set to raise another 10% over and above the 10% Trump added to Chinese tariffs last month.
Trump has broad authority over tariffs and economic sanctions under a 1977 law, the International Emergency Economic Powers Act.
Stock markets fell in afternoon trading Monday following Trump’s announcement that tariffs would move forward for all three countries.
Canada and Mexico, meanwhile, have both vowed to impose retaliatory tariffs on American goods exported to their countries.
Canada Top Trading Partner
Canada is Wyoming’s top trading partner, importing $568 million in goods annually and exporting around $380 million in goods.
Chemicals are Wyoming’s top export to Canada at 26%, followed closely by energy at 22%, and equipment and machinery at 21%.
“At the high level, I do know that 18% of our exports go to Canada, and about 48% of our imports come from Canada,” University of Wyoming Economist Anne Alexander told Cowboy State Daily on Monday. “Trona and beef are the two biggest Wyoming exports to Canada.”
Dollarwise, the biggest single commodity exported from Wyoming to Canada is fuel oil, at $85 million, followed by fertilizers at $49 million, and inorganic chemicals at $44 million, according to figures from the Canadian consulate.
Other goods include salt, sulfur, earth and stone, lime and cement, as well as motor vehicle parts, cement products, engines, compressors, generators and firearms.
“I would say the biggest pain point for us is going to be petroleum and coal,” Alexander said. “We export both of those things to them, as well as refining some of that stuff.”
Fresh food from Canada is another pain point, she added.
“We do bring in some fresh food from them,” Alexander said. “And I would say on our producer side, agricultural producers could be impacted pretty greatly because of the chemical products that we import. And that would also lead to (effects on) pharmaceuticals, and any kind of over-the-counter medication.”
Wyoming trades much less with Mexico, with around $48.7 million in exports and $42.8 million in imports.
“The primary export sectors into Mexico were basic chemicals and oil and gas,” Alexander said.
Other products she listed include agriculture, construction and mining machinery, as well as fabricated metal products, veneer, plywood and engineered wood products.
It’s A Tax By Any Other Name
To the extent tariffs are carried out, they can be thought of as a tax, Alexander said.
“It will be as they enter and who bears it really depends on a lot of factors,” she said. “It could be that the domestic firm that’s importing will pass that cost on to the consumer. Or it could be they will eat it, and that’s going to decrease their profits.”
A third less-likely possibility is that foreign firms decide to reduce wholesale prices to remain competitive.
“But I seriously doubt that’s going to happen,” Alexander added. “The first two scenarios are more likely.”
Alexander said tariffs in the past haven’t had a good track record when it comes to taming trade deficits. Typically, what happens instead is prices go up for consumers, and profits go down for businesses.
Much depends on the details, which are not yet clear, Wyoming Business Alliance President Renny Mackay told Cowboy State Daily. Specifically, what goods face a tariff and what do not.
“This will be a time of learning,” he said. “I think there’s a lot of businesses that are taking a wait-and-see approach to understand exactly how this impacts them.”
MacKay said the Alliance is also working on that and looking at what kind of information businesses need to better navigate the situation.
“This is a state that supported President Trump very robustly,” he said. “So, I think the business community is watching this closely, and we will be trying to figure out what information businesses need.”
MacKay said with exact plans of each party unknown as yet, it’s hard to pin down specific steps.
“Economists are putting a lot of information out there, and I’m trying to digest that, too,” he said. “So, this is kind of a time to just watch and see. Are there going to be negative impacts?
“We haven’t heard exactly what Canada’s plans, Mexico’s plans are. I think things are up in the air for a lot of our consumers and the business community.”
Renée Jean can be reached at renee@cowboystatedaily.com.
