At the beginning of February, President Trump implemented a 25% additional tariff on imports from Canada and Mexico (both of which have been delayed for one month) and a 10% additional tariff on imports from China. Energy resources from Canada will have a lower 10% tariff. And, on February 10, 2025, President Trump reinstated a 25% tariff on steel imports and increased tariffs on aluminum imports to 25%.
A tariff is a tax imposed by one country on the goods and services imported from another country to exert influence, raise revenues, or protect domestic industries or competitive advantage. Although the importing business pays the tariff to the government of the country where the goods are imported, to offset higher costs, manufacturers and retailers often increase prices, passing the burden on to consumers. In addition to the risk of driving increased prices & inflation for US consumers, tariffs may provide an unproductive cycle of retaliation from the affected counties, i.e. a trade war, impacting Wisconsin exports.
Wisconsin exports exceed $28 billion annually, in a ~ $400 billion state economy – they make up 1.3% of total US exports by dollar value. The leading WI export product categories are Machinery, Computer & Electronic Products, Transportation Equipment, Chemicals, and Processed Foods. The three largest trading partners for Wisconsin businesses account for over 50% of our exports: Canada ($8.5 billion), Mexico ($4.3 billion), and China ($1.5 billion).
Tariffs on energy and raw materials will lead to higher prices across numerous goods and services as they cause production costs to increase. Even final goods produced in the US will increase in price as a result. Market reactions to the recent and pending tariffs and the scope of the impact to businesses, workers, and consumers will unfold in the upcoming months and beyond, as companies adjust their production & supply chains, and consumers shift their buying habits.
