Impact of Tariffs on Vermont’s Business Landscape
Growing Concerns Among Local Enterprises
As President Trump’s tariff rhetoric intensifies, small businesses in Vermont are already feeling the repercussions. A particular concern has arisen from a halted shipment of spirits, originally destined for the Société des alcools du Québec (SAQ), which has remained docked at Barr Hill by Caledonia Spirits for approximately a month.
Ryan Christiansen, the president and head distiller at Caledonia Spirits, explained that their anticipated shipment was canceled soon after the announcement of new tariffs in February. “Customers are ready to buy, and we were looking forward to shipping the order. Now, it’s sitting on the dock,” he lamented. This situation has severely impacted their financial planning during the season typically known for slower sales, particularly in February.
A Strong Economic Link with Canada
Vermont has a robust economic relationship with Canada, exporting nearly $680 million in goods annually. Additionally, the state imports over $2.6 billion in products from its northern neighbor, with electricity and fuel oil being among the most significant imports.
Since President Trump announced a series of tariffs on goods from Canada in February, Vermont businesses have faced mounting challenges. At that time, retaliatory measures were promptly initiated by Canadian officials, including Prime Minister Justin Trudeau, resulting in some American-made alcohol products being withdrawn from Ontario’s shelves. Although Trump provided a temporary reprieve for certain goods until April 2, numerous items remain subjected to the additional tariffs.
Christiansen noted that the relationship with Canadian consumers is essential, questioning the likelihood that the canceled order would be placed again even if tariffs were lifted. “How do I get them to buy as much as the Canadian customer wanted to buy?” he asked, highlighting the anxiety among local producers about losing market access.
Tourism Under Pressure
The tourism sector, particularly around Jay Peak Resort, has already started feeling the economic strain. Steve Wright, the resort’s president and general manager, observed changes in spending patterns among Canadian tourists, notably during the critical Quebec and Ontario break weeks in early March. Canadian visitors typically account for a substantial portion of the resort’s clientele, particularly during these peak periods.
Concerns are compounded by operational changes at border crossings, which have seen reduced hours. Jay Peak has introduced at-par payment options for Canadian tourists to mitigate some adverse effects, allowing them to pay in their own currency for services.
Strategic Responses from Local Businesses
In response to dwindling tourist foot traffic, local business owners in Montpelier are proactively working to attract Canadian visitors. Bill Butler, co-owner of Artisans Hand Craft Gallery, proposed a “Canada Days” initiative to offer promotional deals aimed at Canadians, aiming to foster continued patronage during uncertain economic conditions.
“We have a great relationship with Canada, and we see many Canadians in the gallery,” Butler said, emphasizing a proactive approach to maintain strong connections.
Rising Costs and Their Implications
The looming tariffs also have implications for local retail pricing. Sam Guy, owner of Guy’s Farm & Yard in Morrisville, highlighted concerns about the increased costs for imported goods, such as wood shavings and wood pellets. With a significant portion of their inventory sourced from Canada, the 25% tariffs would likely necessitate price increases for consumers.
Such price hikes may not be absorbable given the low margin nature of the products sold. “We’re going to pass on the tariff,” Guy confirmed, highlighting the indirect effects on consumers, who may face higher prices as a result of these trade tensions.
A Call for Collaboration
The interconnectedness of Vermont’s economy with Canada suggests a need for both local businesses and policymakers to work collaboratively to find solutions. As small enterprises navigate these challenges, maintaining strong relationships with Canadian partners remains essential for long-term success.