Trump Just Terminated Talks With Canada Again! Where Does That Leave Vermont?
While the President’s stated rationale focuses on a new 3% Canadian tax on digital services and dairy market access, experts suggest it's a high-pressure negotiating tactic, right out of his playbook.
In a move that sent shockwaves across the northern border, President Donald Trump abruptly terminated all trade negotiations with Canada on Friday, threatening to unravel a deeply integrated economic relationship and placing the State of Vermont in a uniquely perilous position.
The announcement, delivered via the President’s Truth Social platform on June 27, 2025, cited Canada's recent implementation of a Digital Services Tax (DST) on U.S. tech giants and long-standing disputes over Canadian dairy tariffs as the primary reasons for the breakdown.
“Based on this egregious Tax, we are hereby terminating ALL discussions on Trade with Canada, effective immediately,” the President wrote, adding a seven-day deadline for imposing new, unspecified tariffs on Canadian goods.
For Vermonters, the federal showdown is not a distant diplomatic squabble; it is an existential threat to the state’s economy. Canada is not merely a trading partner for the Green Mountain State—it is an indispensable economic lifeline, serving as Vermont's number one foreign market, with bilateral trade totaling approximately $3.0 billion annually.
“The economic relationship between Vermont and Canada is not just important; it is foundational,” said a recent analysis of the trade dispute.
While the President’s stated rationale focuses on a new 3% Canadian tax on digital services and dairy market access, policy experts suggest the move is a high-pressure negotiating tactic, a signature of the Trump administration’s "strategic uncertainty" playbook designed to extract concessions.
The Canadian government has responded with measured concern, caught between defending its sovereign right to tax and the risk of severe economic damage from a trade war. But nowhere are the potential consequences of that damage more acute than in Vermont, where a complex, cross-border economy now faces a cascading crisis.
A Ripple Effect Across Every Major Industry
The threat of new tariffs and Canadian retaliation poses a direct and severe threat to nearly every major sector of Vermont's economy.
Energy Security: Vermont’s most profound vulnerability lies in its near-total dependence on Canadian energy. According to Governor Phil Scott, the state receives 100% of its natural gas, 80% of its fuel, and 50% of its total energy from its northern neighbor. Senator Peter Welch has warned that tariffs on these imports could lead directly to a 10% increase in natural gas rates and a 2.5% hike in electricity rates, a de facto tax on every Vermont household and business.
Dairy Dilemma: Vermont’s iconic dairy industry is caught in a painful paradox. While the U.S. fights for greater access to Canada’s protected dairy market, Vermont farmers are critically dependent on Canadian imports of animal feed and fertilizer. Anson Tebbetts, Vermont's Secretary of Agriculture, Food and Markets, has noted that farmers cannot easily absorb the sudden cost increases that tariffs would trigger. One farmer calculated that new tariffs would spike his farm's monthly operating costs by a staggering $20,000. The greatest fear, however, is Canadian retaliation, which could slam the door on the very export market the U.S. is fighting to open.
Integrated Manufacturing: For many of Vermont’s advanced manufacturers, products are not "Made in Vermont" so much as "Assembled in Vermont" from a web of components that cross the U.S.-Canada border multiple times.
Aerospace: The state’s $2 billion aerospace industry operates as part of a seamless "Vermont-Québec Aerospace Corridor," supplying precision parts to Canadian giants like Bombardier and Pratt & Whitney Canada. Tariffs would disrupt this intricate supply chain, adding costs at every stage.
Maple Syrup: While a symbol of Vermont, the maple industry is surprisingly interdependent. The vast majority of specialized sugaring equipment—from sap lines to evaporators—is manufactured in Canada and imported into the state. Tariffs would drive up costs for producers and create steep barriers for new farmers.
High-Tech: Semiconductors and electronics are Vermont’s single largest export, valued at over $685 million in 2024. This sector, which relies on duty-free access under current trade rules, is now directly at risk.
An Immediate Chill from the North
While the impact on agriculture and manufacturing is a looming threat, the damage to Vermont's vital tourism sector has been immediate and quantifiable. The political rhetoric has fueled what some business owners describe as a grassroots "boycott" by Canadian visitors, who contribute an estimated $150 million annually to the state's economy.
Data from this spring already paints a stark picture. Vehicle crossings from Canada into Vermont plummeted in April. Businesses across the state have reported a precipitous drop in Canadian traffic, with some hotels seeing a 45% decline in reservations and credit card spending by Canadians falling by 36%. Jay Peak Resort, where Canadians can account for half of all visitors, saw its Canadian ski pass sales drop by 35%.
"Team Vermont" Mounts a Unified Defense
In response to the crisis, Vermont's political and business leaders have mounted a rare, unified, and bipartisan front to mitigate the damage.
Republican Governor Phil Scott, who has made strengthening ties with Canada a cornerstone of his administration, has led numerous trade missions to Québec and established an interagency task force to monitor the situation.
Vermont’s congressional delegation has been a forceful opponent of the tariff policy. Senator Peter Welch has held roundtables with affected business owners across the state, framing the issue as a direct threat to Vermont jobs. The Vermont State Senate also passed a resolution urging Congress to reassert its constitutional authority in crafting trade policy, a clear signal of frustration with the administration's approach.
This unified front, however, is ultimately a damage control operation. While state leaders can lobby, prepare, and advocate, they are fundamentally powerless to alter a federal policy that threatens the economic well-being of the entire state. As the seven-day deadline for new tariffs approaches, Vermont’s leaders and business owners are bracing for impact, hoping that a diplomatic off-ramp can be found before a full-blown trade war inflicts immense and lasting damage on the Green Mountain State.