Trade with Canada: Montana farmers, home builders, drivers could be hit by Trump's tariffs

And all those products could get quite a bit more expensive soon if Trump enacts his tariffs of either 10% or 25% on a variety of Canadian goods on April 2.

Canada is Montana's most important trade partner in terms of both exports and imports. In fact, Montana's share of total imports that come from Canada is higher than any other state, according to the U.S. Census Bureau. That means Montana's economy is inextricably entwined with imported Canadian products.

Trump has already implemented tariffs on some goods coming into the U.S. from Canada, including steel and aluminum.

And Canada has implemented retaliatory tariffs on U.S. products going north, which means Canadian buyers may look elsewhere rather than buying Montana products.

Montana sends over $860 million in goods to Canada every year, most of that agricultural products like pulse crops (lentils, peas and chickpeas) and breeder cattle. Montana imports $6.8 billion in goods from Canada annually, much of which is potash for fertilizer or crude oil going to Montana refineries.

Farmers concerned 

Paul Kanning grows pulses at TomTilda Farm in Flaxville, Montana, and he's also the chairman of the board of USA Pulses, an association that represents the industry. He said that tariffs could result in a loss of international customers, which is very bad for Montana farmers.

"During the last round of tariff wars six years ago, it absolutely wreaked havoc on the prices we get here on farms in Montana," Kanning explained. "Our overall exports fell by 37%. And when you get that large of a drop in exports, there ends up being way too much on the market here in Montana, and that drives prices down. It's simple supply and demand."

Worse than short-term low prices, he said, is the damaged long-term relationships with customers.

"Like all businesses, international trade in the ag commodities we grow is based on personal relationships," he said. "In these countries, when we're no longer able to ship into countries, those relationships deteriorate because they get it from someone else. Honestly, we're just now mending those relationships that were harmed the first time it happened, so the timing is not optimal."

Kanning said Saskatchewan is an enormous supplier of potash to Montana farmers. 

"Also, a lot of the farm equipment we're using today is coming down from Canada," Kanning said. "In fact, there was a rush to get some stuff down here before the steel and aluminum tariffs went into effect last week."

Kanning said there's about $200 million worth of pulse crops that Montana sells to Canada every year, and there's also about $200 million worth of pulse products that Montana buys from Canada every year. 

"It's counterintuitive, but some of it's for seed, some of it's pet food, some is for pure protein," he said. "But it's going back and forth. That's one of our largest trading partners on pulse crops."

Mexico is one of the top five export markets for pulse crops from Montana, so tariffs enacted by Mexico would also hurt pulse crop growers, Kanning noted.

"We hope that it's in the best interest overall for our nation," he said. "We hope it doesn't drag on. We want whatever negotiation to be long-lasting. We don't want to repeat this process in three years. Every business relies on certainty and predictability. I don't care if you're buying a house, deciding which school your kids go to, all of us need certainty. This level right now is not sustainable for ag producers or our partner industries."

He's already heard of companies that are talking about buying fewer Montana crops.

"Things like pastas made from our yellow peas that we grow in Montana, those are sold on both sides of the border," Kanning said. "Those companies have talked about maybe stopping selling into Canada. They're saying, maybe they need to cut back on their orders from Montana farmers and start producing less of it."

About 1.4 million acres of pulse crops were harvested in Montana last year, which accounted for 52% of all U.S. production. That's far more than any other state.

Jason Beery, a third-generation farmer and rancher at the 107-year-old Seven X Ranch in Brockway, Montana, said he's very concerned about the possible U.S. tariffs and how that will affect what he says is already a very thin profit margin for Montana farmers. He grows grains and pulses and also raises cattle.

For his 12,000-acre farm, he buys about 300 tons of liquid fertilizer, 100 tons of potash and all kinds of other products, from free-standing cattle panels to wire to fence posts, that originally come from Canada every year. And the lentils he grows go to Canada before they're eventually sent to India.

So now, when President Donald Trump says that there will be either 10% (such as on potash) or 25% tariffs on a variety of Canadian goods, Beery believes he and other agricultural producers will be paying much steeper prices for everything. And he's worried he may lose the Canadian market for his pulse crops because buyers there may look elsewhere to get their lentils rather than buying products that would become more expensive from the United States. He believes it's possible he could find other markets for his products, but Canada is a customer he doesn't want to lose.

The point of tariffs, as explained by the Trump administration, is to level the playing field and encourage domestic production and investment, or to get concessions from foreign countries. But most economists say they cause short-term pain and their benefits would only be realized long-term.

"I'm not real political," Beery said. "But I know it's hurting us, there's no doubt. A lot of things do come out of Canada right now. If they're getting taxed, guess who's paying it? We are. So I don't know what's gonna happen in the future."

Beery said he may be able to sell his pulse crops locally, or within the United States. He says tariffs may wind up being beneficial in the long-run, but he's not sure.

"We know it's going to have an effect," Beery said. "I don't know what Trump's trying to do, what his reasoning is for it, to be honest with you. Most of my neighbors are all Republicans, so most of those guys are for it. In our area, whether it's right or wrong, they're gonna support it. And I'd call myself a Republican, but I'm for whatever is best for the country or the people."

Making it as a farmer is tough these days, he said.

"It's the sh-ts," he said. "It's been pretty tough to be honest with you. We're already losing our ass on the crop side of it, the wheat and corn. The pulses are holding us together, along with the cattle market. Without the pulse market, farmers would be flat broke. If you're just a straight grain farmer, I don't know how they make with two of the last three years dealing with grasshoppers and drought and everything."

Housing and development

Montana is in the midst of a decade-long housing crisis, mainly due to builders not keeping up with demand, which has led to skyrocketing prices.

A big component of housing construction is the price of framing lumber, which in Montana is often made from softwood lumber imported from Canada. 

The National Association of Home Builders is already sounding the alarm about the effects of tariffs.

"Amid swelling uncertainty about tariffs, the price of softwood lumber (on March 14 of this year) was the highest since June 2023," the organization said in a press release. "Lumber prices are currently 14.9% higher than they were one year ago."

“Builders continue to face elevated building material costs that are exacerbated by tariff issues, as well as other supply-side challenges that include labor and lot shortages,” said Association chairman Buddy Hughes.

Gas prices and refineries

Patrick De Haan, the head of petroleum analysis at GasBuddy, said that tariffs on crude oil and refined products are currently paused, so prices haven't been impacted yet. 

But billions of dollars worth of crude oil flows from pipelines to Montana refineries every year.

Refined products like gasoline, from refineries like the two near Billings, end up in Montana and surrounding states, he said.

"Given the uncertainty, it's impossible to say to what degree (tariffs) could impact (gasoline) prices with so many policies being changed and the developing trade war," De Haan said.

State response

In an interview with the Missoulian, Montana Department of Agriculture director Jillien Streit, a farmer herself, said there's a "lot of concern" about tariffs from what she's heard.

"Especially from the producer level and the industry level," she said. "I can't blame them for having that concern. It's a real issue, and every time we have market instability, it affects bottom lines. Tariffs are a quick causer of market instability, and so I definitely have first-hand experience with the effects of what it does."

Streit said she attended the U.S. Department of Agriculture's outlook forum this year.

"We're facing a $49 billion trade deficit, that's grown $4 billion just last year," she said. "It's no fun to (have) tariffs, so we have to find solutions in the long term."

She said at her family farm, they buy fertilizer from U.S. companies, but that product mostly comes from Canada.

"So there is a lot of concern, definitely, especially on potash and being able to get those valued products across the border without tariffs," she said. "I would like to see some more communications about the impacts, especially in the time frames that producers need to have those. I do feel like it will have impacts if the tariffs are on, but like I said, the $49 billion trade deficit has got to be addressed. And it's hard because it is going to impact producers."

Montana's congressional delegation, along with Gov. Greg Gianforte, are all Republicans and all have mostly enthusiastically supported Trump's policies, including tariffs, although U.S. Rep. Ryan Zinke said he hopes they won't be in place for long.

In an interview with the Missoulian, Zinke noted that oil refineries process crude oil from the Canadian province of Alberta, just to Montana's north. In fact, Zinke noted that 86% of what Montana imports comes from our neighbor to the north.

"Montana gets hit harder than any other state, mostly from our feedstock, and our refineries require Albertan crude," Zinke said, when asked about the impacts of tariffs. "I am hopeful the tariffs will be short and we can move on. Because they do hurt. Canada and the U.S., but as important Montana and Alberta and Saskatchewan, we have communities that are linked family-wise, history-wise."

Zinke, a former Navy SEAL, said the first special forces service was a joint Canadian/U.S. team trained in Helena called the "Devil's Brigade," which was the precursor to the Green Berets.

"There's a lot of relationship between Canada and Montana, and I'm hoping the tariff dispute is short," Zinke said. "Because it does affect families, right? But my understanding of it is, 10 times more terrorists on the Terrorist Watch List come from the northern border than the southern border. Ten times. I'm saying Canada can do more on their border security."

In response to a question from Montana Public Radio at a March 6 press conference, Gianforte said he's "gotten input from ag producers" in the state about the tariffs issue.

"We need to continue to make sure we have strong markets overseas for our ag commodities," he said. "President Trump was very clear in his speech the other night that he's gonna defend America's interests. The tariffs that are being put in place right now against Canada and Mexico are primarily to shut down the flow of fentanyl. We have to remember what's at stake."

Gianforte noted there have been overdose deaths from fentanyl in Montana.

"If we don't want tariffs, these other countries should be fair," Gianforte continued. "I'm proud of the fact that we finally have a president that's standing up for America in our trading relationships."

Former Canadian Prime Minister Justin Trudeau said recently that less than 1% of all fentanyl coming into the United States was confirmed to come from Canada. A recent press release on fentanyl from the Montana Department of Justice didn't mention Canada, and noted that illicit drugs are for the most part trafficked into Montana from Mexico. 

The president of the Montana Grain Growers Association told MTPR recently that Montana farmers rely on Canadian imports, especially for fertilizer, and the costs of fertilizer have gone up 33% since January.

Todd O'Hair, the president of the Montana Chamber of Commerce told the station that businesses across the state are facing unpredictability with tariffs.

”It is creating a tremendous amount of uncertainty among some businesses in this economy as far as what these impacts are going to be," O'Hair said. "And so everyone is kind of sitting by with a lot of trepidation on what all this means."

Missoulian reporter Griffen Smith contributed to this story.