Trade Wars: ‘No Way to Prepare’

The Trump administration’s trade policies continued to fuel growing business uncertainty and overall concerns for the state and national economies this week.

The 25% tariffs levied on all steel and aluminum imports March 12 triggered immediate retaliatory measures from many of the country’s largest trading partners, including the European Union and Canada.

Those U.S. tariffs will directly impact Connecticut’s manufacturing sector, which relies heavily on Canadian steel and aluminum inputs.

Canada is Connecticut’s largest trading partner and also the biggest supplier of both steel and aluminum to the U.S.

Trump administration officials also signaled March 13 that the pause on tariffs on goods from Mexico and Canada covered by the United States-Canada-Mexico Agreement will be lifted April 2.

That pause was put in place earlier this month after the U.S. imposed 25% levies on all goods imported from Canada and Mexico.

Retaliatory Tariffs

Canada responded to the steel and aluminum tariffs by imposing targeted tariffs on $29.8 billion worth of American goods.

Canadian officials are also threatening levies on another $100 billion worth of U.S. products if the current pause is lifted next month.

Connecticut imported $5.74 billion in Canadian goods in 2024, while that country is the state’s largest market, with exports growing 8.8% to $2.3 billion last year.

Aerospace components represented 20% of all shipments to Canada in 2024.

The EU imposed tariffs on a range of American goods totaling $28.33 billion in response to the steel and aluminum levies.

Canada is Connecticut’s largest export market, with shipments growing 8.8% to $2.3 billion last year.

China levied tariffs on $21 billion worth of American agricultural and food products after the Trump administration imposed an additional 10% surcharge on Chinese imports March 4.

Some countries—including Australia, Brazil, the United Kingdom and Mexico—have taken a wait-and-see approach to U.S. sanctions.

The Canadian Chamber of Commerce estimates the cross-border trade war will cost U.S. consumers $1,300 annually in higher prices.

Last week, Morgan Stanley chief U.S. economist Michael Gapen cut his 2025 U.S. economic growth forecast from 1.9% to 1.5%.

Goldman Sachs followed days later, cutting its outlook for U.S. GDP from 2.4% to 1.7%, citing “adverse trade policy.”

‘Businesses Hate Uncertainty’

CBIA president and CEO Chris DiPentima said Connecticut companies are “holding off on big decisions until the dust settles—only to see it get kicked up again.”

“Businesses hate uncertainty and there’s no runway to properly prepare at all,” he said.

“Many of those I’ve talked with are not investing in new equipment or facilities or have paused hiring.”

CBIA's @ChrisDipentima says companies are taking a "wait-and-see" approach to federal trade policies. “They’re waiting for this stuff to settle so they can understand what the new norm is, what the new rules are and how those rules affect their business.” https://t.co/f12w4Qa1dM

— CBIA (@CBIANews) March 16, 2025

He noted that the uncertainty created by federal trade policy was compounding other growth challenges faced by Connecticut businesses, including high labor and energy costs.

“You want the wheels of commerce to move as fast as humanly possible,” he said.

“You want businesses to be confident, to have some certainty and some predictability so they can be aggressive with their investments, both in their facilities and their people, especially here in Connecticut where we really compete on the skills, innovation, and knowledge of our workforce.”

‘Going to Cause Fighting’

Ray Dalio, founder of Westport-based Bridgewater Associates, was among the growing number of business leaders sharing their concerns about U.S. trade policy.

“Tariffs are going to cause fighting between countries,” he told CNBC. “I’m not necessarily talking about military.

“But think about U.S., Canada, Mexico, China. There will be fighting, and that will have consequences.”

In a letter to the U.S. Trade Representative’s Office, Tesla warned that trade policies could “inadvertently harm” American companies.

Also among that growing chorus of businesses? Electric vehicle manufacturer Tesla, owned by Trump confidant Elon Musk.

In an unsigned letter to the U.S. Trade Representative’s Office, the company warned that trade policies could “inadvertently harm” American companies.

“U.S. exporters are inherently exposed to disproportionate impacts when other countries respond to U.S. trade actions,” the letter noted.

“For example, past trade actions by the United States have resulted in immediate reactions by the targeted countries, including increased tariffs on EVs imported into those countries.”