News regarding President Donald Trump’s tariffs and potential trade wars updates nearly every day.
The 25% levies threatened on Canadian and Mexican imports are held off for under a month now. On Monday, unilateral 25% tariffs on all steel and aluminum went in effect for the foreseeable future.
Like many states and America as a whole, Indiana has a trade deficit. Many tariffs are intended to reduce that deficit in the long run, and increase domestic production. However, critics say the tariffs Trump is proposing will ultimately increase costs for consumers.
Despite the near-weekly paradigm shifts, this article can be used as a guide to help understand the impacts of Trump’s trade policies on Indiana as they continue.
Unless the United States enters a trade war with Ireland any time soon, more than a fifth of Indiana’s imports are safe, as of 2024 federal data recently aggregated by WISERTrade. The vast majority of imports from the Emerald Isle are organic chemicals and pharmaceutical products, which makes sense considering Eli Lilly’s numerous facilities over there.
However, levies would impact much of Indiana’s other trade. Canada is the state’s second-largest importer, though it brings in under a third of Ireland’s total dollar value of goods. Mexico is in seventh place. China, which the Trump administration has already targeted with a 10% tariff, is Indiana’s third largest importer.
Each of the three countries’ largest exports to Indiana in 2024 by category are:
- Canada: Pharmaceutical products, iron and steel and industrial machinery (including computers)
- China: Toys, games and sport equipment (including parts and accessories), electric machinery and industrial machinery (including computers)
- Mexico: Industrial machinery (including computers), electric machinery and vehicles (except railway or tramway but including parts)
Among economists’ chief concerns amid potential trade conflict is retaliation, which has already started to happen in some instances. Canadian retaliation could hit Indiana especially hard, given its proximity.
If Canada chose to raise prices on or cut off oil supply, that would disproportionately impact the Midwest. And even implementing tariffs on Canadian oil would impact consumers hard. According to the Institute on Energy Research, Midwestern refineries are set up to process about 70% of heavy crude coming from Canada.
Retaliatory levies would also impact Indiana’s exports, causing less to be sold overseas. That number’s been on the rise over the past few years, too — from $45.5 billion in 2022 to just under $60 billion in 2024.
Canada is by far Indiana’s largest partner for exports, followed by Mexico. China comes in fourth, just behind Italy.
According to the Office of the United States Trade Representative, exports accounted for more than 11% of Indiana’s GDP in 2023. In 2021, the latest data available, they supported around 173,000 jobs.
