Recap of the CSG West Westrends Board meeting during the 78th CSG West Annual Meeting in Jackson, Wyoming
Led by Alberta MLA Tany Yao and Utah Representative Andrew Stoddard, co-chairs of the CSG West Westrends Board, this year’s program focused on exploring the consequences of increasing tariffs on Western states’ economies, including effects on specific industries. Also considered was the increasing tariffs’ effect on prices of goods that are jointly manufactured by the United States of America and Canada.
$233 billion in extra import spending anticipated
New data generated by Gateway Commercial Finance, an invoice factoring company, reveals states that are highly dependent on trade with Canada, China and Mexico are seeing negative and deeper effects than others, but it is still too early to assert. States that rely heavily on agriculture, manufacturing, and retail industries will feel the most pressure. In nearly every state, more than half of the GDP comes from those industries. In the United States, Canada is the top trade partner for 26 states, Mexico for 13 states, and China for 11 states. According to their calculations, $233 billion in extra import spending will be added to the U.S. These costs will affect consumers, businesses, and state budgets. Gateway Commercial Finance came to this conclusion by viewing data from the International Trade Administration, Trade Partnership Worldwide, and the U.S. Bureau of Economic Analysis.
Top export trading partners for each of the 13 Western states are:
| Alaska | 1. China 2. Australia |
| Arizona | 1. Mexico 2. Canada |
| California | 1. Mexico 2. Canada |
| Colorado | 1. Canada 2. Mexico |
| Hawaii | 1. Japan 2. Australia |
| Idaho | 1. Canada 2. Taiwan |
| Montana | 1. Canada 2. South Korea |
| Nevada | 1. Switzerland 2. India |
| New Mexico | 1. Mexico 2. China |
| Oregon | 1. Mexico 2. China |
| Utah | 1. United Kingdom 2.Canada |
| Washington | 1. China 2. Canada |
| Wyoming | 1. Canada 2. Chile |
Projected GDP decline of .6 – 1.2%
Tariffs have historically acted as economic shocks, and according to the Yale Budget Lab, current average rates are the highest in 90 years. Axios reported that in the first five months of this year, 17 states saw impacts exceeding $1 billion, while 11 states—including Alaska and Wyoming—experienced impacts of $100 million or less. The most considerable impacts occurred in California ($11.3B), Texas ($6B), and Michigan ($3.3B).
A December 2024 The Congressional Budget Office (CBO) analysis estimated tariffs would shrink the U.S. economy by 0.6%, while Trade Partnership Worldwide projected a deeper 1.2% GDP decline and a 1.5% drop in real wages using dynamic modeling that accounts for long-term investment effects. Both analyses estimate $2.7 trillion in revenue over 10 years.
A National Bureau of Economic Research study of 151 countries over 50 years found tariff hikes increase unemployment and inequality, disproportionately affecting lower-income households. U.S. unemployment rose to 4.3% in August, the highest since 2021, driven partly by federal job cuts totaling 97,000 since January, according to Reuters.
Potential long and short term impacts
Jeffrey A. Michael, Director of the Bureau of Business and Economic Research at the University of Montana, addressed the Westrends Board and informed them that there have been other key changes under the new White House Administration beyond tariffs. They include reductions in federal spending, changes to immigration laws, as well as changes to regulations and taxes which also impact state budgets.
While acknowledging the uncertainty of any forecast, Professor Michael offered members an outlook on inflation, interest rates, and sector impacts.
- He anticipates inflation will briefly rise above 3% as tariffs create a one-time 1.5–2% boost over the next 12–18 months.
- Long-term interest rates are expected to remain high, with increased volatility in mortgage rates and the 10-year bond.
- He also noted elevated recession risks, aligning with a general consensus of about a 35% probability within the next year.
Agriculture and construction are expected to face the greatest short-term impacts from tariffs, while manufacturing and service industries could experience modest long-term benefits as supply chains adjust. The effects, however, will vary across the West. California, with its large advanced manufacturing base, will be particularly exposed, while Washington state—which holds the highest concentration of advanced manufacturing in the nation—could also be significantly affected. Despite potential long-term adjustments, manufacturing job losses are expected to continue through 2025 due to persistently high input costs.
In the tourism sector, several states and cities—including Buffalo, Las Vegas, Seattle, and Washington, D.C.—have been significantly affected, prompting a shift toward attracting domestic visitors. Tourism from Canada has seen a notable decline.
Main takeaways from the Director of the Bureau of Business and Economic Research at the University of Montana
- Tariffs will slow economic growth, but they are unlikely to trigger a recession if retaliation by other nations remains low
- The industry most negatively impacted is construction due to higher costs with no gain to market share
- Manufacturers are being impacted in the short term, but many of them will grow in the long term due to import substitution. Advanced manufacturing will be negatively impacted in the long term
- Lower income consumers and those in the Rocky Mountain region of the West are consumers most negatively impacted by relatively high spending on tariff-impacted goods
- For state governments and their revenue stream, slower growth but possibly an increase in sales tax as inflation moves from services to goods
- For state governments and their costs, public works construction will be more expensive, and interest rates will need to be considered
- Consider to what extent international travel impacts your state’s tourism sector
Canadian insights on trade and supply chain impacts
Canada is currently the top trading partner for 26 U.S. states, and it is in the top three for 46 states. It is also the top country for U.S. exports as Canada buys more from the U.S. market than China, France, Japan, and the United Kingdom combined. Joint manufacturing has grown since 1965 when both countries signed the Automotive Products Agreement, which removed the duties of most parts and equipment traded to produce automobiles.
In 1978, Jack L. Hervey at the Federal Reserve Bank of Chicago wrote that the original hope of the agreement was that it would lead to a free trade arrangement between the countries. Since then, the Canada-U.S. Free Trade Agreement (FTA) was agreed to in 1989, the North American Free Trade Agreement (NAFTA) in 1994, and finally the United States-Mexico-Canada Agreement (USMCA) in 2020.
Today, industries such as automotive, agriculture, energy, aluminum and steel, and forestry are tightly linked, with goods often crossing the border multiple times before completion.
Recent tariff increases, however, are disrupting these supply chains, raising manufacturing and construction costs, pushing up lumber prices, and even affecting consumer goods and tourism—for instance, U.S. wines removed from Canadian grocery shelves and declining Canadian travel to the U.S. While USMCA-qualified goods remain exempt, other products face tariffs ranging from 10% to 35%, alongside Canada’s own counter-tariffs on select U.S. exports.
In a recent briefing, Justin Currie (San Francisco) and Andy Janes (Denver)—senior Canadian consular officials—emphasized the need to maintain a balanced approach that safeguards both strong bilateral trade and domestic industry protections as the USMCA review approaches in 2026.
Strategies to encourage Canadian tourism
On the issue of tourism, some border communities have created campaigns to welcome and encourage Canadians back to visit. This past summer, Visit Buffalo Niagara erected a billboard on Interstate 90 (I-90) that had “Buffalo Loves Canada” written on it according to the AP. The marketing campaign included the chance at winning at $500 gift card, but the usual numbers seen of visiting Canadians didn’t materialize. In 2025, there were 20.2 million visitors from Canada to the U.S. Through July, a 23% drop of that number had been calculated by Canada’s national statistical office.
In Seattle and other cities in the Pacific Northwest, nearly 40 businesses, including hotels, cruise lines, restaurants and airlines are offering 30% discounts to Canadians who visit. But it was not just U.S. cities that attempted, and continue trying, to keep the ties strong between citizens of the two countries. The Canada Strong Pass was made available all summer to foreigners but also Canadians to encourage travel throughout Canada. It offered discounts on train fares, free entry into all national parks, discounts on camping and lodging on Parks Canada (the Canadian public lands agency) land. Museums were also included. Early data appears to indicate the program a success with a 10% increase in Parks Canada visits and 15% increase in visits to national museums.