Tariffs to Have Broad Impacts on Northwest Montana Industries
Economists and industry leaders say the levies will have lasting effects on everything from crop to gasoline prices as trade disputes continue and uncertainty looms
By Maggie Dresser
As spring approaches in the Flathead Valley and Heritage Custom Farming co-owner Tryg Koch prepares to plant spring-seeded commodity crops like wheat, barley and canola, he has watched fertilizer prices rise 25%. To make matters worse, he’s now expecting wheat and grain prices to plummet.
After the Trump Administration announced a 25% tariff on Mexican and Canadian goods along with a 20% tariff on those from China, Montana farmers and economists say commodity markets, which were already being impacted before the levies went into effect, would only become more untenable.
Koch is concerned about the price increase on potash fertilizer, which is produced in Canada and will add to his own production costs this season. He also thinks commodity crops prices will plummet due to the high volume of exports like wheat and pulse crops that are sold to China.
“We have had a very good trade agreement with these countries,” Koch said. “That’s what Montana and U.S. producers rely on – is that free trade initiative. So, we can export a lot of our commodities. China buys a lot of wheat and with tariffs it will be more expensive. It will keep us from selling our commodities and that will drive prices down for us.”
While Koch said the tariffs could drive domestic demand and help farmers sell within the United States in the long run, he said the short-term consequences will likely be severe.
“It’s going to be tough for Montana producers this year,” Koch said. “That’s the bottom line – it will keep prices down.”
Dr. Eric Belasco, a Montana State University agricultural economics professor, said that while a high volume of Montana’s crop and beef exports go to Japan and Southeast Asia, international free trade is essential to the agriculture industry. Live animal imports from Canada will also be impacted by the tariffs.
“Mexico and Canada are some of our biggest trading partners across the board,” Belasco said. “We do quite a bit – especially with beef – in Canada and Mexico.”
As a large importer of Canadian oil, Montana’s refinery industry in Billings will be significantly impacted by the tariffs, adding to costs and creating a less competitive product, according to Jeffrey Michael, the director of the University of Montana’s Bureau of Business and Economic Research (BBER).
Gas prices will likely rise 5 to 10 cents per gallon while natural gas bills will likely rise 10%, he said.
“Canada is Montana’s biggest trading partner and one of the biggest in the U.S.,” Michael said. “In terms of what comes into Montana, the majority of our imports from Canada are oil and gas, and the Billings area will see the biggest impact.”
According to the U.S. Census Bureau, last year there were $114.2 billion worth of Canadian oil and petroleum product imports while car and truck imports accounted for $37.5 billion.
Gas prices have yet to see an impact across the U.S., with prices hovering around $3 per gallon.
The trade disputes have also sent shockwaves through the stock market, with the S&P 500 dropping 4.21% in the last month.
Construction costs will likely increase with tariffs on imported materials ranging from Canadian wood products and sheetrock to Chinese cabinets and drywall.
Nationwide, $8.5 billion worth of sawmill and wood products were imported in 2023, 70% of which came from Canada. The U.S. imported $456 million worth of lime and gypsum products, 71% of which came from Mexico, according to the National Association of Home Builders.
At Terry Homes in Kalispell, Vice President Miles Terry said sheetrock is his primary concern. Purchasing estimates will also become tricky as the markets fluctuate and since homes at his company are pre-sold, contractors may wind up eating those costs.
Finding quality cabinets, for example, has become an issue for the company because manufacturers often maintain the same price for an inferior substrate. Strains on the purchasing department could lead to a reduction in homes built.
“That hurts our purchasing department,” Terry said. “Looking for materials that would historically be good while trying to find products at a fair price.”
He said builders are waiting to see how much prices will increase over the next few weeks.
“In general, tariff policy estimates are an added percentage point on general inflation,” Michael at the BBER said.
“Certain businesses and industries will be super specific because of the supply relationships they have,” he added. “Some businesses will have to adjust to that and readjust supply chains.”