On the first day of the U.S. imposing high tariffs on its biggest trading partners, Colorado business people said the actions by the Trump administration pose an existential threat to their livelihoods.
Business owners and agriculture representatives aired their fears about the fallout during a town hall-style gathering organized by Farmers for Free Trade and hosted by the World Trade Center Denver on Tuesday. The forum came as the U.S. launched 25% tariffs on products from Mexico and Canada and doubled tariffs on China to 20%.
Canada vowed to hit more than $100 billion of U.S. goods with tariffs and Beijing retaliated with tariffs of up to 15% on a series of U.S. farm products.
Mexican President Claudia Sheinbaum said she would announce Sunday what American products her country will target in response.
A new twist came Tuesday evening when Commerce Secretary Howard Lutnick said in an interview on the Fox Business Network that the levies on Canada and Mexico might be reduced after the two countries pledged to do more to stem the flow of fentanyl into the U.S.
Whatever turn the trade dispute takes next, speakers at the town hall said the outcome will not be good for consumers or their business if the levies remain.
“These tariffs pose a threat not only for consumer prices, but they pose a threat to companies like mine,” said Jeremy Petersen, founder, president and CEO of Colorado-based Identity Pet Nutrition.
Petersen and his brother started the company in 2018. The company, which is small but fast-growing, gets 100% of its products from Canada. Petersen calculated that the 25% tax increase will raise the retail price by 32.6%.
“We have no choice but to pass that cost onto the consumer,” he added.
More than 80% of the potash fertilizer used by U.S. farmers comes from Canada, said Nicholas Colglazier, executive director of the Colorado Corn Promotion Council. Other products such as pharmaceuticals for livestock and pesticides for crops are imported from China and Canada.
“We’re seeing the costs to grow corn greatly exceed what you can make per acre,” Colglazier said. “This is only going to exacerbate the problem.”
President Donald Trump campaigned on getting tough with U.S. trading partners. His reasons for the tariffs have varied: to persuade Canada and Mexico to crack down on illegal border crossings and the flow of fentanyl into the U.S.; raise money for the country; and spur the return of manufacturing to America.
Trump was set to spring the 25% tariffs on Mexico and Canada in February, but called a 30-day timeout. A 10% levy on goods from China went forward as planned.
Brian Kuehl, executive director of Farmers for Free Trade, called the tariffs “unnecessary and damaging.”
“Canada and Mexico are two of our closest trading partners and obviously our two closest neighbors,” Kuehl said. “We entered into a trade agreement with them in 2019 that President Trump negotiated. It’s a great trade agreement and today it appears we’re breaking that trade agreement.”
Kuehl chalks up Trump’s push to levy tariffs to what he believes is a view of the world as a zero-sum game. “It’s the idea that I only win if you lose. That’s just not the way the world operates any more. Our trade supply chains with Canada and Mexico are tightly intertwined, and we all win because of that.”
If tariffs were limited to just finished goods, that would be less damaging than if they were applied to inputs, or the components used in manufacturing. From a steak on the plate to a Ford truck sitting in a driveway, there is a lot of back and forth between Canada, the U.S. and Mexico, and if tariffs hit multiple times it would drive costs up far beyond 25%.
When it comes to the U.S. states most vulnerable to the latest round of tariffs, Colorado ranks 20th, with nearly half of its $17.8 billion in imports coming from Canada, Mexico and China, according to an analysis by LendingTree. Montana is the most vulnerable state with 94% of its imports coming from those three countries.
Colorado importers paid $459 million in tariffs last year and that amount could rise to $1.4 billion a year, according to an analysis from Farmers for Free Trade and the World Trade Center Denver. Tariffs on steel and aluminum imports alone could add $35 million in purchasing costs.
“None of my learning, none of my teaching, has ever taught me that import tariffs will improve economic welfare,” said Kishore Kulkarni, an economics professor at Metropolitan State University of Denver who has specialized in international trade for the past 45 years.
Tariffs can protect domestic producers, but over time protected industries become less competitive. And trading partners respond with tariffs of their own, causing overall trade to shrink and reducing global economic output, Kishore said.
“An eye for an eye makes the whole world blind,” Kishore, reciting a quote attributed to Mahatma Gandhi.
Gail Ross, the chief operating office for Krimson Klover, a women’s apparel boutique in Boulder, said the company looked at moving its manufacturing to the U.S. in 2019 when Trump increased tariffs on China during his first term as president.
Factories in Los Angeles weren’t interested in Krimson Klover’s business because the volume was too small. A Denver company’s price was close to what Krimson Klover could pay, but “what I could get out of China in four months what would take nine months.”
Sandra Payne is president of Denver Concrete Vibrator, which makes equipment that settles and strengthens concrete for such large commercial projects as bridges, dams and stadiums. The company used to import much of its steel, aluminum, rubber and other goods from China, but now gets many of the products from Canada and Mexico.
“Which is fine, that’s great,” Payne said, “but that means that all of these tariffs now will impact us seriously.”
And Payne worries about her customers if the company’s prices go up. “We don’t want to raise our prices all the time. We raised them a couple of times in the last couple years, but margins are tight and we will be forced to deal with this somehow.”
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