What The Trump-Trudeau Trade Spat Could Mean For Vermont

Jun 12, 2018

Tuesday's headlines are all about President Donald Trump's historic summit with North Korean leader Kim Jong Un, but it was just a few days ago that Trump lashed out at one of the United States' closest allies: Canada.

This stems from a trade dispute instigated by Trump. The president imposed tariffs on Canadian steel and aluminum, and now Canada is planning tariffs in retaliation that are set to take effect July 1.

So what does this mean on the state level here in Vermont, where we share a border, culture and a significant amount of trade with Canada?

For a closer look, we turned to Jeffrey Ayres, a political science professor at Saint Michael’s College who focuses on Canadian politics.

Ayres spoke to VPR’s Henry Epp. Find excerpts below, and listen to their full conversation above.

"More And More Uncertainty"

Maple products are among the items that could face new tariffs by Canada. Ayres noted Vermont is among the states whose top export partner is Canada. Those exports could be further impacted by the ongoing renegotiation of the North American Free Trade Agreement (NAFTA).

“It’s kind of a long-term process that’s been going on now for over a year, creating more and more uncertainty," Ayres said. "That's the short term right now, is a great deal of uncertainty. In the long-term, if these tariffs were to go through, we’d certainly see more cost to consumers, as well as to businesses.”

State-Level Economic Relations

Gov. Phil Scott has made a concerted effort to try to convince Canadian — especially Quebecois — businesses to expand into Vermont. The state has one effort with the Lake Champlain Chamber of Commerce to entice Quebec businesses to come here, called the Vermont-Quebec Enterprise Initiative.

Gail Stevenson is the director of that program, and she said any additional trade barriers could be bad for the effort to bring Quebec businesses to Vermont.

"It would be negative, because the whole purpose of the Vermont-Quebec Enterprise Initiative is to get more workers, get more employability in Vermont, have more people doing jobs with a good wage," Stevenson said.  "And if those jobs are not moving into Vermont, then that will have a negative impact, obviously."

The dispute between the leaders of the U.S. and Canada may not trickle down to leaders at the state and province level, according to Ayres. However, he said the economic uncertainty created by the ongoing tariff dispute could make it more difficult for lower levels of government to work together.

“That degree of uncertainty and anxiety in one of the most important trading relationships in the world — the second largest in the world — it will constrain cross-border collaboration,” Ayres said.

As far as how the dispute is playing in the Canadian public, Ayres said it may be a political gift to Trudeau, who faces federal elections in the fall of 2019; Ayres said Trump has “united Canadians of most political stripes right now around the prime minister and the Liberal Party [of Canada] in their response in sticking up for Canadian interests vis-à-vis the president.”

Disclosure: Saint Michael's College is a VPR underwriter.