How Trump tariffs could affect Minnesota consumers and companies

The tariffs against Canada and Mexico have been postponed a month, but a 10% import tax on China is still on for Tuesday.

The Minnesota Star Tribune
February 4, 2025 at 1:09AM
Gas was $2.39 at the BP gas station ay 46th Street at Lyndale in South Minneapolis. ] GLEN STUBBE * gstubbe@startribune.com Friday September 4, 2015 Pre-Labor Day gas prices in the U.S. are the lowest in 11 years, and under $2 per gallon in many states, though Minnesota's average is nearly 40 cents higher. Just one station, in Brainerd, was selling at $1.99. Checking on whether that is a promotion. Costco and Sams Clubs, usually the low price leaders, were 15 cents more. With some motorists' tho
Most of the oil refined into gasoline for Minnesotans comes from Canada and will be affected by President Donald Trump's tariff plan. (The Minnesota Star Tribune)

If President Donald Trump’s tariffs go into effect as planned, Minnesotans will most acutely feel their effects at gas pumps and grocery stores.

But while Trump first said 25% tariffs on most goods from Mexico and Canada would go into effect Tuesday, after negotiations with the leaders of both countries over border-security measures, he postponed them for now.

Consumers could be hit hard if there are tariffs. American consumers depend on fresh fruits and vegetables from Mexico during winter months.

Minnesota and many Midwest states depend on Canadian oil, which would have faced 10% tariffs, for gasoline.

An all-inclusive 10% tariff on Chinese goods is still scheduled to take effect Tuesday, raising the specter of a price bump for many consumer goods and electronics.

With the three countries being Minnesota’s biggest trading partners, here’s a look at what the brewing trade war could mean in the state.

What would be the most immediate impacts of the tariffs?

Most of the oil refined into gasoline in Minnesota comes from Canada, the state’s largest trading partner. General Mills sources many of its oats for the nation’s top-selling cereal, Cheerios, from the country. And companies involved in the auto industry have a strong relationship with Canadian firms, as does the Iron Range ore industry.

The most immediate impacts of any tariffs on Canada and Mexico will be on food, fashion and electronics, said Neil Saunders, managing director at GlobalData.

“Retailers will take a multi-pronged approach. They will try to reduce costs in their supply chain and wider operations, they will absorb some of the cost, and they will pass some across to consumers,” Saunders said. “Low-margin sectors, which include food and electronics, will feel the pinch more than most as margins are not robust enough to absorb all of the increase.”

After historic grocery inflation finally cooled off to average levels — and following Trump’s campaign promises to lower food prices — higher grocery bills could still be on the horizon.

The Consumer Brands Association, which counts Minnesota companies like General Mills, Hormel Foods, Land O’Lakes and Target among its members, said in a statement tariffs “could lead to higher consumer prices and retaliation against U.S. exporters.”

Why Canada?

The Canadian tariffs are meant to “address the flow of illicit drugs across our northern border,” according to the president’s executive order initiating tariffs on Saturday. Trump was specifically speaking about fentanyl.

The same rationale, plus illegal immigration, was given for Mexican tariffs. Both countries have pledged to send their own troops to enforce the border in exchange for the tariff pause.

The moves would blow up the trade agreement between the U.S. and the two countries that Trump negotiated during his first term.

What is Minnesota’s trade relationship with Canada, Mexico and China?

Canada and Mexico are Minnesota’s top trading partners, with China third. Combined, the state imports far more than it exports to those countries.

In 2023, Minnesota imported $14.1 billion worth of goods from Canada and exported $7 billion, according to census data. Oil is the largest share of Canadian imports.

The state imported $3.3 billion from Mexico, roughly the same level as Minnesota exported to the country in 2023.

Minnesota’s annual imports from China through November 2024 reached $6 billion. The state exported $2.4 billion to China in 2023.

What are the energy impacts?

Should it go into effect in March, Trump’s 10% tariff on Canadian energy could hit Minnesota particularly hard, since the state relies on imports of oil, natural gas and electricity from its northern neighbor.

The Canadian tariffs “would be passed on as a 10% tax to Minnesota consumers,” said Peter Wyckoff, a Minnesota Department of Commerce deputy commissioner who oversees energy.

The state’s two oil refineries — Marathon Petroleum in St. Paul Park and Flint Hills in Rosemount — get most of their crude from Canada, as does the Cenovus refinery in Superior, Wis. Together, those three refineries provide much of Minnesota’s gasoline.

Minnesota is the main portal for much Canadian crude flowing into this country. The Enbridge corridor of pipelines running through northern Minnesota transports oil to refineries throughout the Midwest and to the Gulf Coast.

“Instead of a trade war, we should be working to advance North America as an energy powerhouse,” Calgary-based Enbridge said in a statement.

The largest supplier of natural gas to Minnesota — Northern Natural Gas — relies on several U.S. sources, but Canada is also an important provider. Five of the six pipelines that transport gas in Minnesota originate in Canada, and in 2023 Minnesota imported nearly 550 billion cubic feet of Canadian natural gas — much of which was transported on to other states.

As for electricity, Manitoba Hydro is significant supplier to Minnesota, Wyckoff said, particularly to Minnesota Power.

The Duluth-based utility and Manitoba Hydro built a $700 million, 224-mile power line that was energized in 2020. Power from Manitoba Hydro constitutes about 15% of Minnesota Power’s energy supply.

For propane, very little is imported from Canada.

“Nobody needs to overact to the situation,” said Dave Wager, executive director of the Minnesota Propane Association. “We don’t expect any supply disruptions. ... Propane is just a very small part of this large tariff issue.”

What are the risks and opportunities for Minnesota agriculture?

Dan Glessing, a Wright County dairy farmer and president of the Minnesota Farm Bureau, spoke on Monday morning just before federal officials announced a one-month delay on tariffs against Mexican goods.

Minnesota producers, from grain farmers to pork producers, are heavily dependent on foreign trade, especially with Canada and Mexico. But, at least initially on Monday, the grain markets had spiked upon opening.

“Don’t get me wrong, tariffs are concerning, especially on the heels of [the U.S.] becoming a net food importer,” Glessing said. “But don’t think I didn’t look first thing this morning and the market is up 15 cents on beans today, making me think, ‘What’s going on here?’”

By Monday afternoon, soybean prices were still trending 14 cents higher. Corn had similarly risen 6 cents to $4.88 a bushel, while wheat was up 7 cents to $5.67.

Commodity prices are near a five-year low thanks to ample global harvests and a resulting retreat from record prices fetched during the pandemic. Any disruption to grain trading, then, is likely to spike prices — a boon for farmers but a potential drag on consumer prices.

Higher costs of fertilizer might also push up crop prices or eat into farm income.

During a call with fellow Democratic senators on Monday afternoon, Sen. Amy Klobuchar noted that the 25% tariffs on Canadian goods would jack up the price for needed farmland fertilizer potash by as much as $1.70 an acre for corn and $1.42 an acre on soybeans, right as farmers prepare to enter fields in the spring for planting.

The Fertilizer Institute has asked the Trump administration to exempt potash and other fertilizer imports from tariffs, since the U.S. imports 95% of its potash fertilizer, nearly all from Canada.

“No substitutes exist for potash as an essential plant nutrient,” the group said in a statement.

How are Minnesota manufacturers responding?

Busy Baby founder Beth Fynbo Benike in Oronoco is currently awaiting a cargo ship of goods from China, which will be subject to the 10% tariff when it docks.

Fynbo Benike said the tariff will force her to boost the price of her baby mats from $30 to $33 each. She’s not sure customers are willing to pay that much.

Her silicone Busy Baby mats will soon be shipped to dozens of Target warehouses and will be in 257 Target stores starting March 6. The dilemma prompted Fynbo Benike to write Trump with a request that he impose tariffs based on volume “so you don’t crush little companies like ours. We are not iPhone. We do maybe six [small] container shipments a year.”

Industrial manufacturers are also bracing for impact. Delkor Systems makes and ships about $100 million of robotic packaging machines from its Arden Hills factory each year. About 10% to 15% of that goes north or south of the border.

As a result, “I’m quite concerned about our future opportunities,” Delkor CEO Dale Andersen said Monday. “We’re building several machines right now for Canada. If all of a sudden our customers had to pay a 25% tariff then they would have to buy equipment from some other country.”

“But a lot of people I’ve talked to, [including] a few of the other owners of machinery businesses for packaging, we all sort of feel that this is sort of a negotiation ploy. No one I’ve really talked to thinks that this is going to last for more than maybe a month or two.”

This story includes reporting from the Associated Press and staff writers Carson Hartzog, Patrick Kennedy, Dee DePass, Christopher Vondracek, Kim Hyatt and Mike Hughlett.

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about the writer

Brooks Johnson

Business Reporter

Brooks Johnson is a business reporter covering Minnesota’s food industry, agribusinesses and 3M.

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Gas was $2.39 at the BP gas station ay 46th Street at Lyndale in South Minneapolis. ] GLEN STUBBE * gstubbe@startribune.com Friday September 4, 2015 Pre-Labor Day gas prices in the U.S. are the lowest in 11 years, and under $2 per gallon in many states, though Minnesota's average is nearly 40 cents higher. Just one station, in Brainerd, was selling at $1.99. Checking on whether that is a promotion. Costco and Sams Clubs, usually the low price leaders, were 15 cents more. With some motorists' tho