Department of Research, Studies and International News 06-03-2025

The U.S. has officially imposed tariffs on imports from Canada and Mexico, sparking concerns about economic repercussions across the country. President Donald Trump’s decision to implement a 25 percent duty on Mexican and Canadian imports, along with doubling tariffs on Chinese goods to 20 percent, is expected to cause financial strain. However, tariffs on Canadian energy products are limited to 10 percent.

Canada and Mexico, the top two trading partners of the U.S., account for over 30 percent of total American trade, surpassing $1.6 trillion annually. This move has already ignited trade disputes, including retaliatory tariffs from Canada, which could slow economic growth and increase prices for American consumers, many of whom are still recovering from past inflation.

Kathy Bostjancic, chief economist at Nationwide Mutual, warned that these tariffs could lead to an annual increase of nearly $1,000 in household expenses due to rising costs of goods.

Which U.S. States Rely Most on Imports from Canada and Mexico?

While the entire nation will feel the effects of these tariffs, certain states are more vulnerable due to their heavy reliance on trade with Canada and Mexico. Montana tops the list, with a staggering 93 percent of its imports coming from these two countries. Maine follows at 71 percent, while Michigan and Vermont each stand at 70 percent. North Dakota is also highly dependent, with 68 percent of its imports originating from its northern and southern neighbors.

Since these states are more reliant on imports from Canada and Mexico, they are likely to experience the most significant economic consequences. Increased costs for businesses will likely translate into higher prices for consumers, affecting everything from fuel and machinery to consumer goods.

Montana, in particular, faces challenges due to its role as an energy supplier. The state operates four oil refineries, which receive crude oil primarily from Canada and Wyoming. Given that the U.S. imports around four million barrels of oil per day from Canada, the newly imposed 10 percent tariff on Canadian energy is expected to drive up operational costs for these refineries. As a result, American consumers may see an increase in gasoline and electricity prices.

What Are the Most Common U.S. Imports from Canada?

Canada is the largest foreign supplier of oil to the U.S., with crude oil and petroleum products accounting for approximately 30 percent of Canadian exports to the American market. Other key imports include cars, tractors, auto parts, industrial machinery, pharmaceuticals, plastics, and wood products.

In 2024, the U.S. imported $412.7 billion worth of goods from Canada while exporting $349.4 billion, creating a trade deficit of $63.3 billion.

Oil and gas are the top imports for 13 states, including California, Colorado, Delaware, Hawaii, Illinois, Minnesota, Montana, New Jersey, North Dakota, Ohio, Oklahoma, Pennsylvania, and Washington.

Meanwhile, petroleum and coal products are the leading imports for six states: Louisiana, Maine, Massachusetts, Mississippi, New Hampshire, and Rhode Island.

Aerospace products, such as aircraft and related equipment, rank as the top imports for five states: Georgia, West Virginia, Florida, Kansas, and Connecticut.

In response to these tariffs, Canadian Prime Minister Justin Trudeau announced retaliatory measures, stating that Canada would impose tariffs on over $100 billion worth of U.S. goods.

What Are the Most Common U.S. Imports from Mexico?

Mexico plays a crucial role in supplying goods to the U.S., with the automotive sector dominating trade. Vehicles, trucks, and auto parts represent the largest category of Mexican exports to the American market. Other major imports include industrial machinery, electronics, petroleum products, agricultural goods, medical devices, plastics, and textiles.

In 2024, the U.S. imported $505.8 billion in goods from Mexico while exporting $334 billion, resulting in a trade deficit of $171.8 billion.

Motor vehicles rank as the most significant import from Mexico for 16 states, including Arkansas, California, Florida, Iowa, Maryland, Michigan, Montana, Nebraska, North Dakota, Pennsylvania, Rhode Island, South Dakota, Tennessee, Washington, Wisconsin, and Wyoming.

Motor vehicle parts come in second, serving as the top import for seven states: Alabama, Indiana, Kentucky, Mississippi, Ohio, Oregon, and South Carolina.

Computer equipment ranks third, with Georgia, New York, North Carolina, Texas, and Virginia relying heavily on imports from Mexico in this sector.

The Road Ahead

The implementation of tariffs on imports from Canada and Mexico is expected to have far-reaching consequences across the U.S. While all states will face increased prices, those that rely most on trade with these two countries, such as Montana, Michigan, and Maine, will experience the greatest economic strain. Rising costs in energy, automobiles, and essential goods will affect businesses and consumers alike, potentially slowing economic recovery efforts.

Additionally, retaliatory tariffs from Canada could escalate trade tensions further, creating a more volatile economic landscape. As these policies take effect, businesses and consumers will need to brace for changes that may reshape trade relationships and economic conditions for years to come.