There's a new tariff in town

Vermont's economic outlook under the threat of tariffs

Headnote: for those of you who are new here, it’s going to be a bunch of politics for the next few months, localized to Vermont. Please mute if it’s not of interest, and return back in the late spring.

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About fifteen years ago when my parents and cousins visited from Florida, I took Mom to the Capital City Farmer’s Market–she always took me to the local farmer’s market whenever I visited her, so I wanted to give her a true Vermont experience. I also selfishly wanted her to show me (yet again) how to make her som paak, a cabbage and leek pickle that I grew up eating and missed, as I had never attempted it on my own.

We wandered from stall to stall, inspecting the tight, pale green cabbage heads and the leek bundles that were the size of her lanky forearms. She gasped and muttered in disgust when the farmer read the price of the vegetables as she removed them from the scale: $14. “Too expensive,” she said lowly in Laotian so only I could hear. She didn’t know these white farmers and felt out of place even trying to bargain. I pulled a $20 bill from my wallet and smiled at the farmer as we waited for change. I knew what Mother was thinking–-I was getting robbed. Where she came from, vegetables were cheap.

There is a price to pay for living in Vermont, and this residency extracts differently from each of us. As you’ve read in this newsletter, the toll for people of color is exacting and different than for our white counterparts. But we will all bear the cost of the second Trump-era tariffs, should they come to pass. Vermont is, as Rep. Balint reminded us last week, too small to shoulder hardships other more populous states might be able to weather. Everyone is consequential here.

I just got off a Zoom meeting hosted by Senator Peter Welch so he could hear directly from Vermonters on what these potential tariffs could mean. In a state that has an overwhelming contingent of self-employed entrepreneurs and small-mid sized businesses, the threat is really real. Below are some examples of our collective back-of-the-napkin implications of tariffs.

Fuel

Vermont’s natural gas is 100% sourced from Canada. Fuel oil is also majority foreign imports. Vermont Gas expects at least $6M increase from tariffs alone. This is rough and based on what we know today. Could any of us shoulder a 10% increase on our fuel bill? If they were to pass on the increase to the consumer, they would need time to implement, and likely also need those rate approvals from whatever utility commission regulates them. This takes time.

Housing

We have a crunch where demand outpaces supply, and the COVID-era construction inflation has not tempered to where it was in the Before Times, this will leave many more people without housing than anticipated. One construction firm is actually pausing contracts because he can’t project what the costs will actually be. In his 20+ years in construction, 90%+ of his materials came from overseas.

Food

We heard from Jason Maring of the Vermont Foodbank, who reminds us that their largest vendor is a farm in Quebec. They have the kind of scale that we do not have in-state. They could expect an increase of over $150,000 due to the tariffs. Whereas commercial businesses can pass their costs on to the consumer, their business model does not give them this option. The only option is to absorb it or scale down.

I visited the Montpelier Food Pantry and our community food fridge and cabinet earlier this week on my rounds, and I can tell you they were the barest I have ever seen them.

Medicine

UVM Health Network prescribes about $400M annually in medication, of which 90% are generics. Virtually all generics are foreign made. A 10% tariff on pharmaceuticals would skyrocket the consumer price for their medical care. Affordable healthcare would once again be a pipe dream.

Consumer Goods

Everything from electronics made in China to car motors manufactured in Mexico and textiles shipped in from Quebec, virtually all aspects of the American economy will be severely hampered by their ability to source materials and products. Likely more than a handful will be forced to close. Which brings us to manufacturing. We cannot simply throw up a factory and make our own car parts.

We are Vermont, where cows outnumber people and our natural population has been declining annually since 2015.

Manufacturing

If steel and other raw goods are tariff-affected, then some specialty manufacturers simply will not be able to make their products. Some items are not available domestically. There is also the very real threat of retaliatory tariffs from Canada: export of raw material like granite, finished product like maple syrup, and things like municipal-grade snowblowers –- which we pay for with our tax dollars –- are all affected by retaliatory tariffs.

“Canada is all set to pull the trigger on retaliatory tariffs–they will –they are going to have to,” Sen. Welch, this afternoon.

We spend our lives to gain footholds on our future and people we may not have voted for decide to pull the rug from under us because, well, we might need to burn it to keep ourselves warm.

I’m off to a stiff cocktail. Here’s my shawarma from a business lunch earlier today.