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A BNSF freight train carrying 76 container cars and FedEx freight trailers made its way from Seattle to various destinations east on August 23, 2021, as observed in Livingston, Montana.
President Donald Trump has announced the impending implementation of extensive tariffs on imports from Canada and Mexico, with these measures set to take effect following a one-month delay. He confirmed on Monday that these tariffs will commence as scheduled, suggesting significant economic repercussions across the United States, although the extent of impact will differ markedly among states. The two largest state economies, Texas and California, are projected to bear the most substantial financial burdens in absolute terms. However, various states with substantial trade relationships with Canada and Mexico are also expected to face significant economic disruptions, compounding challenges already arising from existing tariffs on China.
Montana is highlighted as a state particularly vulnerable to these tariff changes, as it relies heavily on imports from China, Canada, and Mexico, with these countries accounting for 94% of the state’s total imports.
“We may be the United States, but we are composed of more than 50 individual economies, each unique in its trade dynamics,” stated Matt Schulz, chief credit analyst for LendingTree. The online lending platform recently conducted an analysis of all 50 states using U.S. Census Bureau data to assess vulnerability to tariffs, which can directly impact prices consumers face amid rising inflation.
The findings highlighted significant disparities in trade exposure among the states, with some like Montana highly reliant on trade with Canada, China, and Mexico, while others have minimal interactions.
Trade flow is crucial for sustaining a country’s economy. While each state contributes to the national GDP, its individual trade relationships are vital for the health of local economies, highlighting the importance of trade dependency across the U.S.
To evaluate the implications of Trump’s tariffs on North American partners, as well as retaliatory tariffs aimed at other global counterparts, CNBC scrutinized import and export data for each state, drawing from LendingTree and additional insights from ImportGenius. This analysis revealed specific product categories, allowing for a clearer understanding of each state’s economic risks connected to these tariffs, potentially influencing jobs and local prosperity.
States Most Affected by Upcoming Tariffs
Following Montana, New Mexico ranks second in vulnerability, with 77% of its imports sourced from Canada, Mexico, and China, while Vermont follows closely at 75%.
Conversely, states with the least exposure include Hawaii, with only 13% of its imports coming from these three nations, followed by New Jersey (21%) and Maryland (23%).
Data indicates that the types of imported goods vary widely, with Montana importing a diverse range of items from auto parts to frozen strawberries, New Mexico importing everything from pickled jalapeños to laparoscopic surgery tools, and Vermont sourcing coffee beans and industrial electrical equipment.
“Our top trading partners, Mexico, Canada, and China, significantly dominate U.S. imports, showcasing a vast array of products across numerous industries,” remarked William George, director of research for ImportGenius. “The products sourced from these nations permeate virtually every retail sector and industrial use, including oil, electronics, and automotive goods.”
Specific Impacts from Canada, Mexico, and China
An analysis by CNBC also categorized exposure state-by-state by country, identifying which states face the highest risks based on imports and exports from Canada, Mexico, and China.
The states with the most imports from Canada include Montana (92%), Maine (69.4%), and Vermont (68%). Energy products remain the foremost import from Canada for all states.
When it comes to imports from Mexico, New Mexico leads with 41%, followed by Michigan (40.3%) and Texas (37.3%).
California ranks highest in imports from China (27%), succeeded by New Mexico (26.4%) and Nevada (22%).
“The fundamental issue lies in the risk associated with states placing too much reliance on specific trading partners or products,” Schulz pointed out. “Diversifying trade relationships is akin to managing financial investments; it reduces vulnerability and enhances security.”
Highlighting Key Imports: Oil and Automotive Products
A deeper examination of six-digit Customs codes reveals that the primary imports from Canada, Mexico, and China consist of oil, durable goods such as vehicles and components, and smartphones.
“These major categories represent critical sectors in state economies, with impacts extending beyond mere import values,” explained George. “For instance, the automotive sector in Michigan, supported by imports of vehicle parts, contributes over $300 billion to the state’s economy each year.”
The volume of oil imported from Canada stands out significantly.
“Though the importance of this dynamic is well-established, analyzing a state-by-state basis underscores the magnitude,” Schulz noted.
In Montana, the value of imported oil from Canada reaches $4.9 billion, eclipsing the state’s next largest import manifold. Oklahoma, a key drilling region, equally imports a substantial amount of oil from Canada, despite its own production capabilities.
Beer imports are also notable. Data indicates that Illinois leads in beer imports from these three nations at $5.2 billion, significantly outpacing Texas at $239 million.
Companies, such as Tesla, are also likely to face challenges due to their reliance on imports for electric vehicle batteries, especially from China. Tesla’s operations in California and Texas alone account for over 12,000 containers filled with lithium-ion batteries in recent years, demonstrating substantial exposure to tariff impacts.
States at Risk from Export Retaliation
Exports serve as a vital component of both national and state GDP, placing states at risk of retaliatory tariffs from their trading partners.
According to LendingTree, states with significant exposure to potential retaliatory measures, where over two-thirds of their exports go to Canada, Mexico, and China, include North Dakota (88%), New Mexico (79%), and South Dakota (72%).
North Dakota stands out for exporting a large volume of oil to Canada, comprising more than 80% of its total exports, while in New Mexico, computer components for the automotive sector account for 70% of their overall exports.
“Retaliatory tariffs aimed at these sectors could severely impact those state economies,” Schulz added.
Export figures indicate North Dakota earned $7.7 billion, followed by New Mexico at $4 billion, and South Dakota at $1.7 billion.
The states with the least exposure to retaliation include the District of Columbia (0.70%), Hawaii (6%), and Florida (16.2%).
When considering the top states exporting to Canada, North Dakota ranks first at 82%, with Maine (49%) and Montana (46%) following closely. Top exports include agricultural products, such as soybeans and livestock.
New Mexico leads exports to Mexico (70%), followed by Texas (29%) and Arizona (28%). In exports to China, Alaska (22%) and Washington (18%) top the list.
The Cross-Border Trade Impact on Local Economies
Examining the economies of states reliant on reciprocal trade relationships, such as Maine and New Mexico, illustrates the ripple effects of international trade.
Maine’s economy significantly benefits from trade with Canada, with exports amounting to $3 billion in 2023, particularly supporting the vital seafood industry, which is essential in job creation. The Seafood Economic Accelerator for Maine indicates that this sector alone generates over 33,000 jobs.
However, recent reports indicate Maine’s seafood exports declined by $88 million (18%) in 2023, likely influenced by Chinese tariffs on U.S. lobsters.
Trade figures also show declines in various products, while segments like electrical machinery and prepared foods saw increases. Canada remains Maine’s principal trading partner with $1.4 billion in exports in 2023.
Further south, New Mexico exported over $1.6 billion in computer components used in vehicles manufactured in Mexico in 2023. Medical devices for surgical and dental applications constituted the top import for New Mexico from Mexico, totaling $983.1 million.
These overall trade numbers may not fully reflect daily implications, yet the transactions significantly impact businesses reliant on products essential for consumers, ranging from life-saving medical devices to everyday electronics.
“These instances highlight the importance of trade relations with our top partners — Canada, Mexico, and China — and the role their products play in sustaining domestic industries,” concluded George.
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