ST. ALBANS CITY – In light of President Donald Trump’s threats to impose a 25% tariff on Canada and Mexico, Senator Peter Welch (D-Vt.) met with business and industry leaders in St. Albans City Hall to hear their concerns.
Welch started off the conversation Monday telling the roundtable and government officials the purpose of the meeting was for him to hear how businesses could be impacted by the implementation of the tariffs.
“We’re in a bit of a unique position because we have such significant trade in Canada,” Welch said. “I want to be in a position to make a very concrete case ‘let’s adjust it this way or that way,’ or ‘let’s think about whether we should do it at all’ because it’s going to have this impact on us here in the state of Vermont.”
Vermont exports $680 million to Canada, far less than the $2.6 billion the state imports from the country, according 2023 data from the Boston Canadian consulate.
Over the last few years Gov. Phil Scott has worked to strengthen trade with the state’s neighbor to the north, traveling to Montréal for trade missions more than seven times since he was first elected as governor.
Tariffs are imposed by the government on imports or exports of goods. In the U.S., they are collected by Customs and Border Protection agents at ports of entry across the country. When tariffs are placed on imports, it’s American companies that pay the tariff. In turn, those companies often pass their costs on to consumers in the form of a higher price.
Impact to local business
Jake Holzscheiter, president of St. Albans-based company A.N. Deringer, a customs broker, said tariffs would significantly hurt the companies they help import.
“It’s going to cost our Canadian customers $15 billion a year, or $65 million a day, that’s across the entire community,” Holzscheiter said.
Deringer has a large Canadian client base, and spent the last month and a half with their clientele working to prepare them for any possible incoming tariffs. That includes finding different ways to manufacture their products.
The Canadian businesses they work with were shocked, Holzscheiter said, they always viewed the U.S. as a safe harbor.
For Vermonters, almost all the gas and diesel home fuel comes from Canada, Holzscheiter added, adding further complications to the tariffs.
Representing Green Mountain Power’s concerns, Mari McClure, president and CEO of the company, said the issue of tariffs is particularly important for energy concerns. GMP buys a lot of its energy from Hydro-Québec and has a long standing relationship with the company.
“We have a purchase agreement with Hydro-Québec for Green Mountain Power that serves about 20% of our portfolio needs right now or translates to about a million megawatt hours a year coming from Québec,” she said. “If that was hypothetically applied to GMP’s 20% portfolio it would be up to $16 million a year in additional power costs.”
That additional cost would go straight to consumers, McClure added. Hit by a 25% increase in costs from the tariff, she added there would be little the power company can do to mitigate the price.
GMP is also worried about any retaliation tariffs from Canada. If supply was to be cut off for any reason, it would create supply constraints in the region and drive up costs for Vermonters.
Supply of power would not only be threatened, she said, but the manufacturing of components for the electric grid could become more expensive and more difficult for the power company to acquire if the tariffs were implemented.
“Now, I do think we have a very strong, healthy relationship with Hydro-Québec,” she said. “I think the state does, in general, with Québec, and we’re hopeful we would continue that relationship as well as we can. But certainly in a case like this, there really aren’t a lot of places to go if a tariff was implemented.”
From Manufacturing Solutions Inc., in Morrisville, CEO and founder Garrett Hirchak said his business has been around for 29 years working closely with partners that ship raw materials from Canada and other countries to do assembly and precision machining.
For his business, Hirchak said he sees the use of tariffs as a double-edged sword.
Some production in their shops would slow down as it becomes more economical for those who are importing aluminum for Manufacturing Solutions Inc., to take it out of their shop.
On the other hand, Hirchak said it could help domestic production, as businesses would not be importing packaging and materials as much.
However, Hirchak said there’s still a burden when it comes to tariffs as they often apply to specific items. It creates a whole new exhaustive system for people to learn about while managing their operation.
“It creates an overhead of understanding,” he said. “‘What’s the tariff? How much? Because the 6,000 aluminum series is in a tariff, but a 5,000 isn’t, but only if it’s .125 in rectangular.”
Rock Gaulin from H20 Innovation, a cross-boarder company for water and wastewater treatment with operations in the U.S. and Canada, said tariffs on China in the last four years have been difficult on the company and any additions would hurt them more.
“I see a big, big reduction in the quantity of product that we sell in the market,” Gaulin said. “Even though the customer likes to buy products and all that. It’s really, really hard to compete because of the raw material.”
Gaulin added that in the end, the final product would have to cost 30% more in order to compete in the market and survive.
“I want to transform products to make something and the raw material, there’s not a lot of added value to it,” he said. “When we transfer a product to a car or the operator or water treatment system, that’s a lot of jobs right? And so applying the tariff on the raw materials may be a mistake, or, you know, it’s not helping us.”
Vermont Chamber of Commerce President Amy Spears said the issue is in importing raw materials and the extra expense it places on businesses.
“We’re so heavily reliant on the raw materials from Mexico and Canada that we’re really anticipating to see those tighter margins and higher prices, and where we’ll see the continuum disruption is really at every single phase when we’re looking at imports and exports,” she said.
Mike Tetreault, senior vice president and general manager of Poulin Grain, said the tariffs on Canada would cause issues in his company’s shipping costs.
Poulin Grain buys corn, oats, molasses, canola, gluten, distillers, alfalfa, sunflower seeds and specially manufactured items from Canada. It’s 30-40% of where the company buys, he added.
“When we look at the possible tariffs, obviously it could be up to $10 million,” he said. “That affects all of our business and our employees.”
Even if the company moves to buy more from the U.S., Teterault said they don’t have the ability to offset the increase which means the farmers who use grain and feed products will be getting the foot of the bill.
Looking at retaliation from Mexico and Canada, Teterault said the countries are big importers of dairy products.
“If they tear up our dairy products, and they become uncompetitive, it affects the margin,” he said. “So our dairies are going to pay more, and then they’re going to lose profitability from milk pricing.”
State concerns
Deputy Commissioner of the Vermont Department of Economic Development, Brett Long, said essentially any tariffs placed on the state’s closest trading partner will put pressure on both consumers and businesses.
“It’s going to make it more complicated to continue to do business or to do business effectively,” Long said. “That’s going to likely translate into higher prices and higher prices can only be passed along to such a degree before unit sales go down.”
Overall, tariffs would create market uncertainty and huge anxiety of businesses in the state. Treasurer Mike Pieciak agreed, adding the tariffs could have a disproportionate impact on Vermonters.
Small, local businesses will be hit very hard. They don’t have the ability to find a different supplier and different vendors with the limited flexibility they already have, Pieciak said.
“A smaller business likely doesn’t have that margin to be able to absorb those costs fully, or at all,” he said. “Then if they pass those costs along to their customer…as consumers get more conscious about price, they’re going to move to the larger businesses that can provide something at a lower price point.”
Welch’s goals
After speaking with the room of industry professionals, Sen. Welch said it’s clear Vermonters and businesses in the state are unable to sustain the tariff increase.
“The kind of gamesmanship that you have to start to engage in to try to do an end around is very exhausting and time consuming,” Welch said. “But no matter how much you are able to maneuver, a 25% in tariff is a 25% increase in cost to your ultimate consumer.”
Based on the last round of tariffs during President Trump’s first term, Welch said there are long-term effects and damage which he does not want to happen in Vermont.
The amount of disruption from these tariffs is immense, he said, so advocates for the tariffs need to take ownership in answering these kinds of questions.
Other members of Congress are asking these same questions, Welch added, and are probably coming up with similar answers.
“That’s the hope I have, is that I talk to my colleagues and I tell them, ‘Hey, I was in St. Albans, you know, we talked to a manufacturer, we talked to a grain dealer, we talked to a utility, you know, maple syrup,’” he said. “That’s the unifying thing here, because you’re speaking about your enterprise, but your compatriots, who you don’t even know, but in other parts of the country, are facing similar challenges.”
Although they are from different political isles, Welch said he stands with Trump’s view of strengthening the U.S. economy, but tariffs are not the way to go, especially with a close ally.
“(President Donald Trump) won’t listen that much to Democratic politicians, and he might not even listen that much to Republican politicians, but if he’s got every day people with real companies like we had here and they’re not politicized – they’re just nailing the facts,” he said. “I think the president’s administration will listen to everyday people. That’s why it’s really important to me to get their voices heard.”
Story Written by Aidan Schonbrun, Saint Albans Messenger