Trump Tariffs Could Hit These US States Hardest

Donald Trump has substantially reoriented American trade policy, imposing major new tariffs on some of the United States’ biggest trading partners, including close allies, with promises of more to come.

Many of the countries targeted have hit back with their own counter tariffs, some economists arguing a global trade war could push the U.S. economy into recession.

However, while every American state will be affected in some way, some will almost certainly be worse off than others. Trade experts told Newsweek the impact will likely depend on proximity to the Mexican or Canadian border, how reliant a state is on foreign energy imports and whether it is subject to countermeasures from overseas rivals deliberately targeted at red-state America.

Newsweek contacted the U.S. Department of Commerce for comment via email on Saturday outside of regular office hours.

Trump’s Tariffs

Following his return to the White House, Trump has imposed a series of new tariffs, which he argues are necessary to restore America’s manufacturing capabilities and end what he regards as the economic exploitation of the U.S. by foreign powers.

At the beginning of March, the Trump administration introduced new 25 percent tariffs on all produce from Mexico and Canada, except oil from north of the border, as well as an additional 10 percent tariff on trade with China. Canada and China swiftly hit back with their own retaliatory tariffs.

Trump said the tariffs would remain in place until Mexico and Canada cracked down on illegal immigration and fentanyl smuggling over their respective borders, though in Canada’s case the quantities are small and its unclear how this is to be measured.

The Mexico and Canada tariffs were cut back just days after being introduced, Trump announcing first that the automotive sector would be excluded for a month and then that this would apply to all Mexican and Canadian products included in the USMCA free trade treaty which he approved in 2018.

Ontario Premier Doug Ford announced that in response to the new tariffs he was introducing a new 25 percent surcharge on electricity sales to the U.S, leading Trump to double tariffs on Canadian steel and aluminum to 50 percent. After being promised a meeting with U.S. Secretary of Commerce Howard Lutnick, Ford put this measure on hold, and Trump did likewise on steel and aluminium.

Trump did still introduce a new 25 percent tariff on steel and aluminium covering the rest of the world, vowed to introduce new tariffs targeting the European Union in April and threatened to impose a 200 percent alcohol tax on the bloc in response to a tariff on American whiskey.

Geographical Proximity

Speaking to Newsweek Gary Clyde Hufbauer, a trade expert and nonresident senior fellow at the Peterson Institute for International Economics, said states bordering Canada or Mexico are likely to take a particular hit.

This would include the likes of Michigan, Minnesota and New York state on the northern border and Texas, Arizona and California in the south.

Hufbauer said: “A very strong empirical relationship in trade is that distance matters. In other words, countries close to one another trade much more than countries further apart. The same is true between states and provinces within a country.

“Based on this relationship, it is fair to predict that states bordering Canada and states bordering Mexico will, in general, be harder hit than interior states.”

According to U.S. Census Bureau figures, Texas trades more with Mexico than any other state, with around $200 billion worth of imports and exports moving between the two each year. This is followed by California with around $40 billion and Arizona on about $20 billion.

Figures from the Office of Technology Evaluation, which forms part of the U.S. Department of Commerce, showed that in 2022, 17.3 percent of total U.S. exports went to Canada, valued at $2.1 trillion. Meanwhile 13.4 percent of total U.S. imports came from Canada, worth a total of $3.2 trillion.

Farming and manufacture

Kristen Hopewell, an economist and director of the University of British Columbia’s Liu Institute for Global Issues, told Newsweek that “there’s no state that won’t be harmed by Trump’s tariffs—but some will be hit even harder than others.”

She said the “farm belt” states of Iowa, Illinois, Indiana, Ohio, Nebraska, Kansas, Kentucky, Minnesota, Missouri, North Dakota, South Dakota, and Wisconsin will be “severely hit” commenting: “Roughly 85 percent of the potash used by American farmers for fertilizer, for example, comes from Canada. Trump’s tariffs on potash and other inputs are significantly increasing costs for American farmers—at the same time they face counter-tariffs from Canada, Mexico and China, which are their three biggest export markets. American farmers are being squeezed on both sides.”

Hopewell also said states particularly reliant on manufacturing and the auto industry are vulnerable. She said: “Tariffs on steel and aluminum will raise costs for manufacturers across the U.S., undermining their competitiveness. This will hurt the biggest hubs of American manufacturing—California, Texas, Illinois, Ohio, Michigan, Pennsylvania, New York, Indiana, Wisconsin and North Carolina—hardest.”

Energy

While Premier Ford has suspended his planned 25 percent electricity tariff on Michigan, Minnesota and New York, he could decide to reimpose it at any point, or even cut off the electricity supply altogether. Jeffrey J. Schott, an economist at the Peterson Institute for International Economics, told Newsweek the three states are particularly vulnerable to Canadian retaliation in the energy sector.

Hopewell also warned American states that receive large quantities of Canadian oil are vulnerable.

She said: “Canada supplies 60 percent of U.S. oil imports. Many U.S. refineries, particularly in the Midwest, are specifically designed to process the heavy crude oil that comes from the Alberta oil sands.

“There is no readily available alternate supply, meaning tariffs will simply be transferred onto consumers in the form of higher prices. Consumers in states like Michigan, Wisconsin, Indiana, and Ohio will face the greatest impact from higher prices due to Trump’s tariffs.”

Red States

According to Politico Canada deliberately targeted Republican voting states with some of its retaliatory tariffs in a bid to bring the cost home to Trump’s base. Products included in the tariffs included fruit from Florida, household appliances from Ohio and South Carolina and motorcycles from southern Pennsylvania.

The New Republic reports the EU made a similar move with “a special focus on Republican states,” including soybeans from Louisiana and beef and poultry from Kansas and Nebraska.