US-Canada trade war threatens economic fallout in key midterm states

Tariffs risk outsized harm in Michigan, Ohio and Maine, analysts said.

Barters Island Bees, a honey seller in Maine with flavors like "Gentle Ginger" and "Blueberry Lemon," grew year after year -- until a trade dispute broke out between the United States and Canada, chief executive Garret Denniston said.

Sales shrank last year after a drop-off in Canadian tourists hammered business at farmers’ markets and fairs, Denniston said. But revenue has bounced back, he added, surging 75% this year compared to the same period in 2025, in part due to an uptick in Canadian customers as tensions appeared to thaw.

“We thank Canadian tourists every time we see them,” Denniston told ABC News, but he said he’s worried a rekindled trade spat will curtail tourism again. “I’m just astounded. It’s only reasonable to expect it will go back in the other direction.”

When asked whether the trade war could help shape a highly competitive U.S. Senate contest in Maine, Denniston said, “Oh, absolutely. It definitely can."

Tit-for-tat tariffs issued by the U.S. and Canada in recent weeks risk outsized harm for consumers and businesses in states near the northern border, some analysts told ABC News. Many of those states play host to key races in the battle for control of Congress in November's midterm elections , including Senate contests in Maine, Ohio and Michigan.

Fresh levies on $20 billion in Canadian goods are expected to hike prices for imports ranging from orchids to hockey sticks, many of which are sold predominantly in states along the border, some analysts said.

A set of matching retaliatory tariffs that took effect on Tuesday, they added, may crimp sales for nearby U.S. businesses that export products to Canada. A drop in cross-border tourism could also damage companies located within a short trip from Canada, they said.

"If you go far up north, it's an arbitrary line in the dirt between what's in Canada and what's in the U.S.," Tyler Schipper, a professor of economics at the University of St. Thomas, Minnesota, told ABC News.

For now, levies apply to a sliver of goods that travel between the U.S. and Canada, limiting the overall impact of the trade dispute. The tariffs issued in recent weeks apply to only 6% of U.S. imports into Canada and 5% of Canadian imports into the U.S.

Still, some analysts said, the effects will likely be more pronounced in several states near the U.S.-Canada border, which account for a disproportionately large share of trade with the nation's northern neighbor.

Canada is the top foreign buyer of exports from 26 U.S. states, and the top source of imports for 22 states, according to an analysis of U.S. Census Bureau data issued by the Royal Bank of Canada (RBC) late last month.

Maine and Michigan each rank among the top 10 states in combined annual import-export business with Canada, while Ohio ranks as the 15th-highest state, RBC found. Montana, North Dakota and Minnesota also rank among the top states on the measure.

“Someone in Oklahoma doesn’t feel this as much as someone in Dearborn, Michigan,” Jason Miller, a professor of supply chain management at Michigan State University, told ABC News, pointing to a major city in the U.S. auto industry. "It's purely a geography story."

Even as supply chains stretch across a vast, global economy, trade remains simpler and cheaper along short distances, Miller said.

"Business-to-business relationships still matter, and at the end of the day, the farther you have to transport something, the more challenging and expensive things are," Miller said.

In Michigan , the powerhouse auto sector has already felt the effects of President Donald Trump's tariffs -- and car companies would face additional fallout from a potential escalation, Glenn Stevens Jr., an executive director of MichAuto, a statewide industry trade group, told ABC News.

Last spring, Trump slapped 25% tariffs on imported cars and auto parts, putting strain on a highly integrated auto supply chain between the U.S., Mexico and Canada.

The measure excluded goods compliant with United States-Mexico-Canada Agreement, or USMCA, a free trade agreement, but it still resulted in $12.5 billion in duties paid on auto-related imports last year, according to the Anderson Economic Group .

Last month, Trump threatened to ratchet up tariffs from 25% to 50% on Canada-made cars and auto parts beginning in January. Trump did not mention an exemption for USMCA-compliant products.

The potential measure, Stevens said, "would absolutely be untenable for the industry to operate under. It would decimate supply chains and virtually grind business to a halt."

A higher tariff would likely raise prices for consumers and threaten job losses in the state, Stevens added, before noting the attention garnered by trade policy as midterms approach.

"There’s no question in an increasingly intense, rhetoric-filled political season, tariffs and trade are very much a primary issue," Steven said.

On the campaign trail , Democratic Senate candidate Abdul El-Sayed said Republican Rep. Mike Rogers would be a "rubber stamp" for Trump in the Senate as Rogers has largely defended the president's trade strategy, arguing that economic pressure on Canada is necessary to protect American jobs.

"Trump is escalating a trade war with Canada for his own vanity," El-Sayed wrote in a social media post.

Rogers' campaign previously declined to comment on the new round of tariffs on Canada, pointing instead to his past comments on bolstering U.S. manufacturing.

The White House said the tariffs put Americans first.

"Countless American workers, farmers, and businesses have borne the brunt of America's lopsided trade relations, including with Canada which has demanded total access to the American market without reciprocity," Desai wrote in a statement. "President Trump will never stop fighting to put Americans and America First."

In Maine, Republican Sen. Susan Collins, who is running for reelection, said the dispute would raise costs for families and businesses in the state.

"The on-again/off-again trade talks between the U.S. and Canada lead to higher costs, risk, and uncertainty for Maine businesses. If the Administration proceeds with these tariffs, they will increase costs for Maine families, as most businesses will have no choice but to pass on the tariffs to their customers through higher prices," she wrote on X late last month.

Despite her opposition, Trump's tariffs have become a campaign talking point as Democratic challenger Troy Jackson, a former state senator, attempted to tie Republicans to Trump's policies.

Jackson called the tariffs a "direct tax on working families."

"Having spent most of my life working along the border, I know how vital trade with Canada is to Maine. Trump’s tariffs are a direct tax on working families," Jackson said.

For some who live in states near the U.S.-Canada border, however, the trade war may not play a role in their ballot decisions.

Fred Fritz, a retiree who lives in East Lansing, Michigan, sharply criticized the tariffs on Canada imposed by Trump. Still, Fritz added, he remains undecided in the state's high-stakes U.S. Senate contest between Rogers and El-Sayed.

"I don't like either candidate," Fritz said, before describing what he considers flaws of each one. "I'm not impressed."

ABC News' Gaby Vinick and Benjamin Siegel contributed to this report.

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