Minnesota business leaders say Trump’s proposed tariffs would result in higher prices for consumers

Many Minnesota business leaders worry that President-elect Donald Trump’s call for new tariffs on goods from China, Mexico and Canada will spark a trade dispute that ultimately hits consumers’ pocketbooks, disrupts supply chains and hurts the state economy.

Canada, Mexico and China combined make up 55% of Minnesota’s fast-growing $7 billion export market.

Unless the tariffs are isolated to address a specific “unlevel playing field” — similar to past cheaply dumped steel or candles from China — there will be an “inflationary impact, supply-chain disruptions, and ultimately, it could create retaliation against U.S. products, which would hurt our export markets to those same countries,” said Doug Loon, chief executive of the 6,300-member Minnesota Chamber of Commerce.

Trump on Monday said that on the first day of his presidency he would increase tariffs 10% on Chinese goods and add a new 25% tariff on goods from Mexico and Canada.

“Target is a big importer, and they’ll definitely feel the impact of these tariffs. And then we have Cargill, who is a great importer and exporter for that matter,” Loon said. Food giant General Mills and paint sprayer maker Graco are also expected to feel some pain, depending on how the details shake out.

Hormel exports Spam to Canada. 3M shuttles its Scotch tape, Nexus bandages, Filtrete Air Filters and Post-it Notes from Minnesota to Canada. And Medina-based Polaris sells four-wheelers, motorcycles and boats in Canada and has a factory in Monterrey, Mexico. Cleveland-Cliffs sells taconite to Canada.

Many companies use aluminum and materials imported from Canada. So the reach of new tariffs could be widespread.

On Best Buy’s earnings call Tuesday, CEO Corie Barry said about 60% of the retailer’s products or parts come from China and that Mexico is the Richfield-based giant’s second-largest supplier.

So Best Buy could feel the pinch of tariffs more than other retailers, she said.

“Typically, it results in a higher price point for the consumer, which doesn’t help in our collective battle we’re waging against inflation,” Barry said. The supply chains for consumer electronics “are incredibly complex” with just a fraction of the industry based in the United States.

Many of Best Buy’s vendors are now meeting with members of Trump’s incoming administration to explain what the impacts might be, she said.

Best Buy will likely need to ship more products ahead of the time the tariffs take effect.

Yet planning is difficult, experts said, because there are not many details yet on final policy language. In addition, Trump said he would be willing to negotiate if the three countries take steps to slow the flow of undocumented immigrants and illegal drugs into the United States.

“We can’t speculate on the potential impact of proposed tariffs,” Gabrielle Gerbaud, executive director of the Minnesota Trade Office, said in an emailed statement. “Tariffs are highly complex and specific. We don’t know what the specific plans are and what the tariffs would apply to. That means we don’t know how these tariffs might relate to certain materials, components or products the U.S. imports from Canada and Mexico. We also don’t know whether or how these countries might apply countermeasures to U.S. tariffs.”

Until there are details, it’s hard to predict what countermeasures other countries might take, she said.

Several officials representing U.S. manufacturers also said privately they need to see the final details of the tariff plans. Other companies, including 3M, Polaris and Ecolab, did not return calls seeking comment. Medical Alley, which represents Minnesota’s massive medical device industry, said its officials are “still reviewing this proposal and waiting to see more specific language on it.”

Optical and medical products are Minnesota’s largest exports as of the second quarter, when Minnesota firms exported $1.22 billion worth of those products. That’s up 17% from 2023, according to the state’s Department of Employment and Economic Development.

Behemoth medical-technology companies such as Medtronic, Boston Scientific and Abbott Laboratories employ tens of thousands of workers here. And the state is home to a community of medical technology startups.

GlobalData, an analytics company, projected Trump’s tariff plans would affect prices on about 75% of all the medical devices marketed in the United States and made in other countries.

Tinglong Dai, professor at Johns Hopkins University’s business school, said he believes Trump’s tariff talk is simply a negotiation tactic meant to trigger a conversation about drug trafficking and immigration. But even if the tariffs do not materialize, Dai said the threat will make medical device executives nervous because “they cannot take uncertainty: They will actually take steps to [reconfigure] their global supply chains.”

That’s true of all industries and retailers in Minnesota, said Kingshuk Sinha, supply-chain management professor at the University of Minnesota’s Carlson School of Management.

Because the impact of tariffs could be wide-ranging, he advises each business sector — from agriculture to medtech and retail — to identify its largest and most vulnerable product imports and devise a group plan.

“The global industry giants, the 3Ms, Polaris, Tennants and Donaldsons of the world, can hang together” to protect themselves. Their collective voice, he said, will be stronger and more effective than if they work separately on plans to mitigate the possible tariffs.

Brooks Johnson contributed to this story.