WASHINGTON — Although they’ve been paused for 30 days, President Donald Trump’s tariff threats showed how dependent Minnesota is on trade with Canada and Mexico.
According to the Minnesota Chamber of Commerce, about half of Minnesota’s exports went to those two countries and China in 2021, up from about one-third in 2002. And the chamber said trade between Minnesota and Canada grew about 39% from 2019 to 2021.
Those Minnesota exports would suffer if the nations Trump has threatened with tariffs follow through with their own threats to impose retaliatory tariffs on U.S. goods.
And the huge list of U.S. imports from the countries subject to the new tariffs — which range from cars and wine to pharmaceuticals — would be subject to substantial price hikes, fueling inflation, as U.S. importers pass the cost of the new tax along to consumers.
A trade war with the United States’ closest neighbors and allies was forestalled when Trump reached deals with Mexico and Canada, which would have been subject to 25% tariffs on Tuesday.
But on Tuesday, 10% tariffs will be placed on Chinese goods, which already bear tariffs.
Under the terms of Trump’s agreement with Mexican President Claudia Sheinbaum, Mexico would send an additional 10,000 troops to the U.S.-Mexico border and the United States would aim to stop U.S. trafficking of high-powered weapons to Mexican drug cartels.
An agreement with Canada took two phone calls between Trump and Canadian Prime Minister Justin Trudeau, who had said he would lodge a protest at the World Trade Organization against the new U.S. tariffs, seek redress under the USMCA and impose more than $155 billion worth of retaliatory tariffs on U.S. exports.
In a posting on X, Trudeau said he “had a good call with President Trump” on Monday afternoon and suggested the pause on tariffs on Canadian goods was in response to Canada’s agreement to target the flow of fentanyl across the border into the United States.
But while a trade war has been postponed, the threat of an economic upheaval still remains.
Canada’s retaliatory tariffs would be applied to more than 1,000 American products — from agriculture commodities to clothing and shoes to high-tech products. The list also includes paper products and other goods exported to Canada by Maplewood-based 3M.
“3M is reviewing the recently announced tariffs,” the company said. “We are continuing to monitor the situation.”
A USMCA fact sheet says that in 2019 Canada was Minnesota’s largest export destination and Mexico was the state’s second destination of the state-produced goods, accounting for a combined $7.2 billion in export sales that year.
Trump said he plans to extend tariffs to other nations — including European Union countries — and that they are needed to raise money for the U.S. Treasury. But most economists say U.S. consumers will pay for the cost of the tariffs, not foreign exporters.
“Families are already struggling with high prices and across-the-board tariffs will make it worse,” said Sen. Amy Klobuchar, D-Minn., who supported tariffs on foreign steel she said was dumped at lower prices to hurt domestic producers.
“Tariffs should be applied with scalpel-like precision with specific goals,” Klobuchar said. “Instead, the president is using a sledgehammer and it’s going to clobber our economy.”
Well-traveled pigs
Minnesota’s farmers would be hard hit if there’s a trade war with Canada.
When Trump instituted smaller tariffs on certain imported goods and imported steel and aluminum, Minnesota farmers were hurt by plunging commodity prices and a drop in exports.
Trump was forced to tap a Great Depression-era program, the Commodity Credit Corporation, to pay farmers $28 billion as recompense for their losses.
The USDA estimated that those payments constituted more than one-third of total farm income in 2019 and 2020.
Minnesota Farm Bureau Federation President Dan Glessing said he hoped Trump’s more recent tariffs threats are merely a “bargaining chip” the president is using to seek concessions from allies.
Glessing said the state’s farm economy could survive a new trade war “as long as it does not drag on too long.” But he said the disruptions in the market come at a bad time — on the heels of a two-year slump in U.S. farm exports.
Klobuchar called Canada “a key economic partner for the northern states” and that tariffs on potash from that nation would sharply increase fertilizer costs for Minnesota farmers.
Trump’s tariff policy also raises other questions because of the close relationship of Minnesota’s farmers with their counterparts to the north.
Canada has an agreement with Minnesota pork producers that send piglets to grow into hogs in Canada. These hogs are shipped back to Minnesota and processed into meat products. Some of those pork products are exported back to Canada.
“When you think of how much back-and-forth there is (in the operation), those tariffs could be considerable,” Glessing said.
Ana Radelat
Ana Radelat is MinnPost’s Washington, D.C. correspondent. You can reach her at aradelat@minnpost.com or follow her on Twitter at @radelat.
