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Kristin Vekasi is an associate professor in political science and the School of Policy and International Affairs at the University of Maine.
President Donald Trump ran a campaign promising the moon. His economic pitch was convincing to many voters, including a strong majority here in Maine’s Second Congressional District. Trump promised tariffs and mass deportations, low inflation and strong economic growth.
Over the past few days, we saw a first application of these promises with Colombia. On Sunday Colombia turned back military deportation flights from the U.S. of Colombian citizens. In response, Trump ordered steep tariffs (an immediate 25 percent with a threat of 50 percent the following week, financial sanctions, and travel bans on Colombian government officials. By the end of the day, Presidents Trump and Gustavo Petro reached an agreement with normal trade and deportation flights resuming, although the details are not yet clear.
One week into the second Trump presidency, and just a few days past a first foreign policy clash, it is worth stepping back and looking at Trump’s promises and what they might entail for us here in Maine.
First, let’s take a look at tariffs. Tariffs have long been Trump’s preferred policy, and he wielded them in his first term against rivals like China and close allies like Japan alike. Following the election, Trump stated he would like 25 percent tariffs on products from major trade partners, neighbors and free trade agreement partners Canada and Mexico in addition to floating proposals about declaring a national economic emergency to legally justify universal tariffs.
Tariffs, to be clear, are taxes on imported goods or services. While it is tempting to say that tariffs are taxes levied on foreigners, in reality the cost of these taxes are passed on to ordinary consumers through increased prices.
Here in Maine, we would feel those tariffs on Canada. Canada is Maine’s largest trading partner, making up around 50 percent of our exports and 60 percent of our imports. Over half of those imports are for fuel oil and electricity, where price increases would be felt quite dearly. Many of our imported products in the state are not final manufactured goods competing with Maine-based manufacturers, but rather inputs used by Maine companies. Maine companies like Wyman’s, for example, import agricultural products such as blueberries from Canada in addition to using blueberries grown right here. Across-the-board tariffs will increase the costs of doing business for these companies rather than giving them a competitive edge.
New tariffs may also be met with retaliation, as Canada has already prepared to do. Canada is likely to levy similar taxes on Maine exports to Canada. While we do import more than we export with Canada, our largest export is seafood products. A U.S.-Canada trade war could harm Maine’s most iconic industry.
Tariffs, if implemented in their promised forms, will certainly increase consumer prices here at home and potentially shrink market access abroad. The nonpartisan Tax Foundation estimates that Trump’s proposed tariffs could increase consumer prices by between $1,200 and $2,000 per household in the first year.
Implementing mass deportation is more complicated than tariffs, with deep implications for human rights as well as the economic issues addressed here. As one of the oldest states in the country, Maine already faces severe worker shortages. In recent years, Maine businesses, including seafood and agriculture, have been seeking more paths for legal immigrants to work in the state. Mass deportation will not solve Maine’s labor crisis, nor bring better jobs to those of us already here.
While the future is murky, there are some things we can predict about the consequences for Maine if all or some of Trump’s policies are implemented. Trump’s three promises will be difficult to simultaneously achieve, and could potentially lead to some painful economic results. Tariffs and deportations will bring higher costs to ordinary Mainers, and strong inflationary pressures. In order to keep inflation low, the Federal Reserve could hike up interest rates, but that would lead to a stronger dollar, fewer exports, lower rates of borrowing and investment, and subsequent lower economic growth. Or we could see tariffs and deportations with rate cuts from the Fed to keep growth strong, but that path would come with a surge in inflation.
Trump has inherited an economy that is the envy of the world, with higher growth and lower inflation than our peer countries have achieved. It will be up to Trump and his team whether they will nurture this opportunity or squander it.