Category: Canada

Source: United States Senator Peter Welch (D-Vermont)

“This is essentially a tax on the consumer.”
“Tariffs radically affect our manufacturing arm.”
“We don’t know how they’re going to affect us, we just know they’re going to affect us.”
“How can you navigate the playbook if you don’t know what the rules of the board are”
“This is long-lasting damage to a relationship and emotional damage takes time to heal.”
“What happens in five months, ten months, 12 months, two years?”
“If a bunch of local kids aren’t going to get to learn to ski and snowboard because millionaires and billionaires are getting a tax cut that really doesn’t sit well with me at all.”
STOWE, VT—On Monday, U.S. Senator Peter Welch (D-Vt.), hosted a conversation at The Alchemist Brewery on the impact of President Trump’s trade war on Vermont’s outdoor and tourism economy. Vermont businesses voiced their frustrations with Trump’s tariffs, which are negatively affecting business in Vermont. 
Senator Welch’s panel included representatives from The Alchemist Brewery, the Old Stagecoach Inn, Mad River Distillers, Burton, J Skis, Waterbury Sports & Power Play Sports, and Hen of the Wood. 
“You’re running a real business, with real employees, with real customers, with real expenses. And every one of you has an obligation to your employees, you have an obligation to your shareholders and owners, you have an obligation to producing a quality product. And it’s pretty inspiring. That is, so much, in contrast with these tariffs. It’s about an abstract policy. It’s not grounded in the reality of your businesses—whether it’s retail, or food, or hospitality. And that’s what is so maddening to me. My colleagues—we represent everybody in the country, and there are a lot of different points of view—but we could have a group just like you in Texas, in Iowa. These are people who have your responsibility in those communities and they would be, I’m sure, saying the exact same thing. My challenge is to bring this to the attention of some of my colleagues who are willing to go down with the ship, which is what is going to happen with these tariffs. And these concrete examples that you’ve given are really compelling,” said Senator Welch at the conclusion of the event. 
Read remarks shared during the event by Vermont business leaders:  
“These tariffs are really going to affect us a lot. But I think I speak for all of us when I say we don’t know how they’re going to affect us, we just know they’re going to affect us. And that’s really the hardest thing as a businessperson—because you want to have a budget; you want to do projections; you want to plan for your year. But we can’t do that. What we do know is that these tariffs are happening. We do know prices are going to go up, but we don’t know how much.” said Jen Kimmich, co-founder of The Alchemist.  
On tariffs that will impact production costs, Jen said: “We have a global economy that works. So that recycled aluminum goes from Brazil, goes to Canada where it is made into big, recycled aluminum sheets, and then it comes to the United States…Beyond that, our lids come from Mexico. Those are subject to a tariff, and we don’t know what’s going to happen. All of our malt comes from the U.K. It’s a special malt that we have grown by a small family farm we’ve invested in. Right now, it doesn’t get hit by a tariff because it’s a food product, but we’re told that it might.  
“Beyond that, our other big concern is the decline in tourism, so that stings. Third, we have a looming recession. So even with these increasing prices and decreased business, we can’t increase prices. And number four—and this is the thing that concerns me the most, concerns our employees the most—is cuts to local organizations and social services. If Medicaid gets cut and Copley closes down, or Central Vermont, because they can’t stay profitable, then we’re screwed. We do not have a hospital within an hour of The Alchemist. What about our employees that have students that need special education? Our business—we’re scared. But that is a drop in the bucket compared to the fear I feel for our community, our state, and our country, when our services are cut. And then beyond those things, there’s ICE. We have a huge international population here in Stowe—people working—and I know people who are scared,” Jen concluded.  

“We sell about 40% of our product in November and December, so we don’t really know how it’s going to affect us until it’s too late for the year-end. The recession, the lack of consumer confidence that’s coming, we need to really hedge our bets. We’ve already planned on cutting 70% of our marketing, and there’s really no other choice. We have to cut because we’re going to pay more for product. Our product is made in Canada, just over the border. I’m very proud to be making it in Canada. I’ve had a relationship with them over a decade…there’s no other factory in North America, that close to us, even as an option. We already placed our order last year for this product. No matter what policy changes are made we can do nothing about it at this point, because our product has been ordered for months. And what we pay we don’t know—depending on where that tariff is it could be anywhere from 10-25%,” shared Jason Levinthal, Founder of J Skis. “And unfortunately, a lot of people in America just don’t understand that this is essentially a tax on the consumer. That’s a huge challenge, and that message has to get out. It needs to be crystal clear, very simple. So, there’s more pressure to change than simply politicians telling them to change. It has to come from the people—the power of the people.” 

“Tariffs radically affect our manufacturing arm by raising the price of raw materials. In our case, glass bottles and cardboard packaging sourced from Canada, and the sugar we use to make rum, which is imported from Africa…Although we don’t export abroad, many American whiskey companies do, and we expect there to be an oversupply of domestic whiskey this year that was bound for international markets, particularly Asia. That will now stay in the United States. We anticipate prices will fall even though our raw material prices will increase, as large companies need to liquidate the oversupply. And also keep in mind that everything we’re selling today was made years ago, so yes, we can lower our production because of rising costs but that won’t affect us for years.” said Mimi Buttenheim, President of Mad River Distillers. “On the home front we have retail stores in both Burlington and Stowe, which are typically filled with Canadian visitors over the summer…all of these factors are similar for the 22 members of the Distilled Spirits Council of Vermont. In addition, several of our members who export to Canada have had contracts stalled as the provinces have pulled American spirits off their shelves. 
“For our small businesses, it’s the uncertainty that’s the worst part. Because our businesses are seasonal and occasion-based, and they’re susceptible to changing consumer sentiment. We don’t have large reserve coffers to fall back on,” Mimi Buttenheim concluded.  

“This is having a major impact on our business…We have over 800 employees around the world, 400 of which are based in the Burlington area, and that’s inclusive of our retail store, but primarily manufacturing, sales, service, marketing, you name it. The way we look at this—the one thing is a distraction for our organization. Our time is being absorbed across all elements of the company to figure out what the hell is going on. We’re trying to navigate in the uncertainty of the reality that we are in. We source two-thirds of our product across far-east Asia—be it Vietnam, China, or in all areas of Europe—and this uncertainty plays everyday with some new level of potential cost. Some level of how we’ll be able to import goods. What are the rules on manufacturing when it comes to raw material? And how that’s all going to add up and impact the consumer…” John Lacy, CEO of Burton Snowboards, shared. “Knowing we’ve got two-thirds of our goods, and you’re looking at 46-145% increases on the cost of goods, it goes directly to the consumer…This is tough as a private company.”  
“There’s not a lot of options to pick up and move. It takes three, four years. We had moved to Vietnam 8-10 years ago because it was a safe haven, according to our Administration. There’s nothing safe any longer. We are exploring other alternatives and different areas of manufacturing, but by the time we set up who knows what will happen next,” John Lacy continued. “…We’ve received a lot of input on things to do, but how can you navigate the playbook if you don’t know what the rules of the board are?”  

“As an inn, 95% of my business is tourism, and about 5% locals…Of that 95%, typically 15% are Canadian. We were all excited about having a banner ski season and it was good, but it wasn’t amazing. It was down about 4% over last year. When you start to look at it month-by-month and look at the timing of certain events and rhetoric, January was actually up 16%, February down 15%, March down 9%, the trend is continuing…But the other concern for me is some of the forward-leaning indicators—when we look at our web traffic, as people plan a vacation they’re doing web searches and that predicts our revenues for the rest of the year. Canada, last year, represented 27% of our web searches. This year it’s 4%. Last year, five of the top ten locations in our city data were Canadian cities. This year, there isn’t one in the top ten year-to-date. And as you look at the April data, as more of this has had chance to build, there is not a Canadian city in our top 150 cities. And Canadian search volume is 1.6%, down from 27%,” said Christa Bowdish, owner of the Old Stagecoach Inn. 
Christa Bowdish shared a letter from a Canadian tourist that canceled because of President Trump’s rhetoric against Canada and Canada’s leaders, and then said: “It’s not just the tariffs. It’s not something that will be solved as soon as we conclude trade negotiations. This is long-lasting damage to a relationship and emotional damage takes time to heal. While people aren’t visiting Vermont, they’ll be finding new places to visit, making new memories, building new family traditions, and we will not recapture all of that.” 

“My bigger concerns are more broad, big picture social concerns and bigger economic concerns—and how they’ll be making their way to Vermont. If Burton would have been hiring however-many people next year, and now maybe they’re not hiring anyone. Bigger companies that were going to grow. Kids out of school that thought they were going to have a job and now they’re not going to have one? What happens in five months, ten months, 12 months, two years? That’s where I get a little bit more nervous—the ups and downs of the economy and what happens to people coming to the state of Vermont,” said Eric Warnstedt, the Hen of the Wood. “We’ve had people that have been coming to us for almost 20 years: ‘We love you, thank you, just so you know we’re not coming this summer.’ That hurts, that’s disappointing. I think they know most of us are on their side and my hope is that maybe when some of the heat gets turns down, summer comes, maybe they’ll put that aside.”  

“The big challenge for me is going to be supply chain issues. At my two stores, because we’re general sporting goods stores, I work with over 100 vendors who are making products literally across the globe—from Dubai, to China, to right down the road in Waterbury. So now a huge number of those products are going to be affected by these tariffs. Not a day that goes by I’m not getting an email from one of those vendors saying ‘Here’s what we think’ and of course—they don’t know what to do and they don’t know what’s going to happen because nobody knows what’s going to happen because it’s such a moving target,” said Caleb Magoon, Owner of Waterbury Sports & Power Play Sports. “Your quality of life and my bottom line are all being impacted by these decisions…We’re really worried about price increases. Some [vendors] are pausing shipments of their products. We got pretty good gear this year, and that was really nice, But if those products are paused before they get sent over here, we’re worried about availability in the fall. If I don’t have the product, I can’t sell it.” 
“As Jason [of J Skis] said, these tariffs are a tax. They are a tax on you and me. We’re all going to pay for it. It’s all going to get passed on to us. And what really is unsettling to me is, where is that money going to go? If a bunch of local kids aren’t going to get to learn to ski and snowboard because millionaires and billionaires are getting a tax cut that really doesn’t sit well with me at all,” Caleb Magoon concluded. 
View photos from the event here: 

Media Note: A recording of the event is available on request.  
Read more about the event.