AIM President and CEO Brooke Thomson speaks at a press conference with Governor Maura Healey on tariffs Wednesday. (Joshua Qualls/Governor’s Press Office)

By Brooke Thomson
President & CEO

Mantel Capture Inc. is a pioneering start-up founded by MIT engineers and scientists. The company is developing an industrial-scale demonstration project for carbon capture and reuse at Kruger Inc.’s Wayagamack pulp and paper mill in Trois-Rivieres, Quebec.

Meanwhile, jet engines made by Pratt & Whitney in Connecticut go into the US F-35 fighter plane alongside horizontal tail pieces from Magellan Aerospace in Winnipeg, Canada, and landing-gear assemblies made by Heroux-Devtek in Inc. from Longueuil, Quebec.

The tariffs, reciprocal tariffs and retaliatory tariffs announced during the past weeks have underscored the complex economic relationship between the United States – especially New England – and our neighbors to the north in Canada.

President Donald Trump on Wednesday paused reciprocal tariffs on many countries for 90 days to allow room to negotiate lower trade barriers. There was no change, however, in the previously imposed 25 per cent across-the-board tariffs on Canada and Mexico.  Tariffs on automobiles, steel and aluminum imports to the U.S. also remain in place.

The United States and Canada share the largest bilateral trading relationship in the world, exchanging nearly $1 trillion in goods and services annually and supporting nearly 8 million U.S. jobs. Canada is the largest buyer of U.S. goods — buying more than China, Japan, France, and the UK combined.

Meaghan Sunderland, Head of Public Affairs, Political & Economic Relations
for the Consulate General of Canada in Boston, last week sketched the US/Canada trade relationships to the AIM Board of Economic Advisors. It was a meeting tinged with sadness at the realization that the relationship between two longtime economic allies, neighbors and friends has been perhaps forever altered.

We tend to view trade policy exclusively through an American lens. It was interesting to hear from a diplomat with several decades of experience what it means to our economic partners.

Meaghan said that Massachusetts companies export $3 billion in goods and $2.8 billion in services to Canada annually. The top products shipped north of the border from Massachusetts include outputs from some of the commonwealth’s key growth industries – medical instruments, plastics, paper, computers and pharmaceuticals.

At the same time, 492 Canadian companies employ 26,750 people in Massachusetts. Those companies include innovative performers such as Stem Cell Technologies and AbCellera as well as startups like Alpha9 and Fusion Pharmaceuticals.

What will tariffs do to this trade relationship?

• Canada supplies 80% of U.S. softwood lumber imports. New tariffs could add more than $20,000 to the price of a new home at a time when Massachusetts finds itself in a housing crisis.
• The Canada-U.S. auto sector is deeply integrated, with parts crossing the border multiple times during production. Tariffs could increase the cost of a car by as much as $12,000. Substantial shortages of parts due to tariff costs could bring assembly lines to a shutdown.
• Canada supplies more than 99% of U.S. natural gas imports (around 9% of U.S. consumption), 62% of U.S. crude oil imports (around 25% of U.S. refinery intake) and 25% of refined petroleum product imports.  (Given its location, New England receives many of its refined petroleum products from Canada.) Tariffs on Canadian oil will raise refinery costs, increasing gasoline, home heating, and diesel prices.

But tariffs are just the beginning, Meaghan said. Threats to Canadian sovereignty (“51^st state” rhetoric) mean that a strong “Buy Canadian” sentiment has taken hold to the point that US products have been removed from store shelves throughout the nation. And the New England tourism industry from Boston to Old Orchard beach is expected to suffer as Canadian travelers cancel plans to visit the US.

AIM looks forward to working with the Consulate to navigate the current situation in a manner that benefits both Massachusetts and Canadian businesses. That’s what trade is all about.