How the US-Canada Trade War Impacts Connecticut

The rekindling of the U.S. and Canada trade conflict, sparked by the collapse of negotiations this past week, has broad implications for Connecticut’s economy.

Newly announced U.S. tariffs on Canadian goods are at high levels—50% in most cases—but the range of products affected are narrow, limiting the near-term impact.

Import tariffs largely avoided products key to the state’s economy, but retaliatory tariffs announced by Canada will more directly impact Connecticut’s manufacturers and industrial base.

Overall, the chief concern is not so much these current tariffs, but the potential for further escalation and overall uncertainty in trade between the two nations. 

Keep in mind that Canada is Connecticut’s largest trading partner, with earlier import taxes driving an 11% drop in goods exported to our northern neighbor in 2025.

US Tariff Impacts: Top 10 Connecticut Imports

Product	Connecticut imports	US tariff coverage	Exposure
Switchgear boards, panels, consoles	$10.53 million	96%	$10.07 million
LED ceiling and wall lighting fixtures	$8.24 million	99%	$8.16 million
Hair care preparations	$7.32 million	100%	$7.32 million
Wood articles	$7.23 million	95%	$6.88 million
Plastic articles	$7.72 million	84%	$6.49 million
Modems, switching, and routing apparatus	$6.42 million	100%	$6.42 million
Chemical preparations	$8.96 million	64%	$5.76 million
Wooden furniture	$5.38 million	100%	$5.35 million
Undenatured ethyl alcohol	$14.52 million	32%	$4.68 million
Metal furniture	$4.51 million	100%	$4.51 million

Tariffs on Canadian imports announced by the Trump administration in July and put into effect last week primarily impact products less directly impactful to the state economy.

The bulk of the new tariffs revolve around consumer items like alcoholic beverages and dairy products, with some levies on intermediate goods used in manufacturing.

Overall, these tariffs are expected to impact about $20 billion worth of imported goods to the U.S.

For Connecticut, however, our estimates suggest an impact only on about $150 million in goods imported directly to the state, or about 2.5% of Connecticut imports from Canada.

Tariffed goods such as plywood or wood products represent the more impactful products on the state economy as they could lead to higher construction costs. 

US Tariff Impacts: Top 10 Connecticut Exports

Product	Connecticut exports	Canadian tariff coverage	Exposure	Tariff rate
Insulated electric conductors	$24.47 million	full	$24.47 million	25%
Cheese	$12.71 million	partial	$6.35 million	25%
Builders’ mountings and fittings, base metal	$7.11 million	partial	$3.55 million	25%
Ppaer tissue, towel, napkin stock	$6.27 million	full	$6.27 million	50%
Aluminum articles	$5.84 million	partial	$2.92 million	50%
Iron or steel structures	$5.5 million	full	$5.5 million	50%
Aluminum alloy plate	$5.41 million	full	$5.41 million	50%
Trailers and semi-trailers for goods	$5.36 million	partial	$2.68 million	25%
Iron or steel articles, other	$4.48 million	partial	$2.24 million	50%
Hair care preparations	$4.29 million	full	$4.29 million	50%

In retaliation, Canadian authorities announced reciprocal tariffs on $20 billion worth of U.S. exports to Canada, set to take effect Sept. 8.

While similar industries such as furniture and dairy products are impacted by these levies, new tariffs on goods like steel and aluminum products could more deeply affect Connecticut businesses.

We estimate these new tariffs will impact about $170 million worth of goods shipped north from Connecticut, or about 8% of the state’s total exports to Canada.

Roughly 70% of tariffs imposed by Canada will affect core industrial products exported from the state, as opposed to about 25% of the new duties imposed by the U.S. on Canadian shipments to Connecticut. 

Economic Risks

Given the size of trade between Connecticut and Canada (over $7.8 billion in 2025), these new levies represent a relatively small near-term risk to the state’s $297.5 billion economy.

For certain products, especially finished goods like the alcohol products or furniture on which import duties were expanded, we expect to see price increases filter through relatively quickly.

For inputs, like plywood, that impact could take longer or be blunted by increased imports from other countries with more favorable terms of trade.

On the export side, the impact could be severe on key items like wires and cables or inputs we export like aluminum plate.  

These Connecticut-specific figures say nothing of the other upstream impacts on the state’s businesses.

Goods imported from Canada to other states would not be captured here, but can often be part of the longer supply chain on which Connecticut businesses and residents depend.

Still, the total $40 billion worth of impacted goods is still fairly small in the grand scheme of U.S.-Canada trade. 

The greater risk to our state economy is renewed trade tensions with Connecticut’s largest trading partner.

Already, President Donald Trump has threatened further tariffs to take effect in the months ahead.

Prime Minister John Carney, meanwhile, has made clear that the Canadians can still inflict pain of their own, and future tariffs could more dramatically impact Connecticut.

Overall, Connecticut should consider itself fortunate that the trade skirmish—for now—has missed many key products, but further escalation places greater risk and uncertainty on the table. 

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About the author: Dustin Nord is the director of the CBIA Foundation for Economic Growth & Opportunity.