In Thunder Bay, Canadians shift from economic anger to action over U.S. tariffs 

Programming note: The “Our Canada Connections” program has been moved from Monday to 9 a.m. Tuesday.

After months of tariff threats and taunting from President Donald Trump, Canadians have pretty much had it with the United States. Canadian consumers and businesses are showing their displeasure with their wallets as they deal with new costs and political chaos imposed on them.   

Distress. Confusion. Betrayal. Action. Those were the main themes MPR News host Angela Davis and I heard as we traveled north recently to listen to Canadians and understand the stresses on what’s been a great economic and security alliance. 

“There’s a lot of anxiety because we don’t really know, because it is changing literally every other day,” said James Foulds, founder of the Thunder Bay-based shipper Border Giant Inc. “And then you're trying to figure out, does this impact me, my business? How does this impact my supply chain?” 

Companies across Canada are shifting now from anger to action, he said. “Pretty much every business right across Canada are going to start looking at other options in the supply chain, rather than the USA, even for distributors and everything. They really feel that this is not just a short-term situation.” 

Canadians and Minnesotans we talked to in Ontario and along Minnesota’s North Shore made it clear that the trust that’s kept commerce rolling across the international border for decades is fraying and may unravel if something doesn’t change.  

Bigger than the usual disputes 

America’s border with Canada is more than 5,500 miles long, the world’s longest international border. The two countries have become progressively close over the centuries by negotiating trade alliances and military agreements, expanding sports and sharing cross-border cultural icons like Joni Mitchell and Neil Young.

“The economies, the supply chains, have become increasingly integrated,” said Livio Di Matteo, economics professor at Lakehead University in Thunder Bay. “Canadians have always traveled quite freely across the border.”  

Take Thunder Bay. Residents of the port and railway hub city routinely drive to Grand Portage, Grand Marais and other Minnesota towns while Americans living near the border cross over into Canada. The region in many respects has one economy.

“We have a lot of back and forth, whether it’s business or whether it’s individuals, just going to Grand Marais for the weekend, those kinds of things, going to Duluth, that back-and-forth activity, hockey teams, soccer teams,” said Charla Robinson, president of the Thunder Bay Chamber of Commerce. 

“It’s been a close relationship, certainly from a business perspective,” she said. “We do a fair bit of trade between some of our larger industries, with Minnesota specifically.”

Until now.  

Business, economic and social relationships built up over decades are at risk, thanks to the uncertainty unleashed by Trump’s embrace of tariffs, tariff pauses, partially reinstated tariffs and pending import taxes aimed at Canada and other trading partners. 

Border disputes are nothing new for this region. Canada and the U.S. have wrangled for years over softwood lumber trading and market access for U.S. dairy farmers. But the scale, scope and disparaging tone of the Trump administration’s Canadian tariff policy is an escalation from past disputes.  

Canadians seemed baffled by Trump’s embrace of high import taxes on its products while the administration struggles to explain the reasons driving the policy. 

The tariff details are something of a moving target.  

Trump has hit Canadian manufacturers with 25 percent tariffs on cars, steel and aluminum. He’s targeted Canadian goods worth billions that aren’t part of the U.S.-Mexico-Canada trade agreement and threatened additional tariffs.  

Canada, in return, has put tariffs on billions and billions in U.S. imports, including fruits, vegetables, appliances and liquor. 

That’s led to shoppers going out of their way to avoid buying American products at the grocery store, the liquor store, and other retail establishments. Maple leaf labels signal products made in Canada. Signs in grocery stores highlight the country of origin for produce, such as oranges from Morocco, broccoli from Mexico and blueberries from Peru.  

‘We’re going to have to raise our prices’ 

There’s no doubt Canadians are pushing back. Growing numbers of Canadians are cancelling U.S. vacations plans and routine trips to the U.S.  

Data released by the Canada Border Services Agency shows the number of Canadian travelers nationwide returning from the U.S. fell 19 percent in February compared with 2024. Those numbers were down by 27 percent in March.  

Statistics from U.S. Customs and Border Protection for southbound traffic at Pigeon River, the border crossing just north of Grand Portage, show similar declines. 

The drop in travel to the U.S. is having an impact on nearby U.S. border businesses, especially those that rely on retail traffic. That’s the experience of Sarah Jorgenson-Hallberg, co-owner of Java Moose in Grand Marais. She finds herself under pressure to raise prices at her family-owned coffee shop.  

“There are a lot less Canadians right now. Part of that is sort of a feel of Canadian nationalism and pride to support Canadian brands and to stay within Canada, and then also just that fear of rising costs is a big factor,” she said. 

“The Canadian dollar has diminished a little bit in the last six months to eight months, so that’s impactful as well,” she added. “It’s just more expensive for our Canadian visitors to come down, and then our costs will rise, and we’re going to have to raise our prices in the next couple of weeks.” 

Clearly, Minnesota’s border towns are vulnerable to the tariff wars with Canada. But the Canadian economy is at greater risk to actions taken by its larger neighbor, at least in the short-term. 

The Canadian economy is smaller than America’s and it is heavily reliant on doing business with the U.S. Thirty percent of Canada’s economy is export oriented and three quarters of its exports go to the U.S. In sharp contrast, exports account for about 11 percent of the U.S. economy with some 17 percent heading for its northern neighbor.  

Once trust breaks, ‘you don’t tend to go back’ 

Canada has made large economic shifts in the past. Its primary export market before the 1920s wasn’t the U.S, but the British Empire, economist Di Matteo noted. This time around, it’s uncertain how deep the rupture runs between the two economies. 

Over a longer-term time horizon, odds are Canada will become less reliant on doing business with its American neighbor.  

Canadian business owners feel pressure to nurture stronger economic ties within Canada and forge direct relations with other countries to reduce their reliance on the U.S. Breaking trust like the U.S government has with Canada could exact an economic price. 

“There’s a lot of folks who say that there is a broken trust here now with the U.S. government that they feel will actually impact us for a long time. That’s what I’m hearing from businesses,” said Robinson, the head of Thunder Bay’s chamber of commerce.  

Trust isn’t easy to measure like land, labor and capital. Trust is more like a recipe or a software platform that allows for all kinds of economic activity and innovation. 

In the stock market, for instance, the decision to buy shares partly reflects an analysis of value and risk tolerance. But it’s also an act of faith or trust that the underlying data is reliable, and that the system is fair. Perceptions and expectations of trust matter.  

Trust allows for collaboration and cooperation. The late Nobel laureate Kenneth Arrow once remarked that “virtually every commercial transaction has within itself an element of trust.” 

Scholarly research strongly suggests that higher levels of trust bring economic benefits. The ties of trust can boost trade, promote financial development, and improve economic outcomes. And vice versa. 

“Those who trust those around them tend to weather the tides of uncertainty better,” consultants at KPMG wrote in a recent issue of its Compass Economics publication. “Trust is the oil of a market economy. With it, the economy moves forward unencumbered. Without it, the engine of the economy can literally seize and stop functioning.” 

At Border Giant in Thunder Bay, Foulds is taking steps to put a greater emphasis on operating in Canada’s internal market and working directly with Asia and Europe. The process of finding new trusted partners is painful, he said. He believes the investment in creating new relationships that he and many other business owners are starting to make is also smart business.  

“Once that trust is broken … you have to go somewhere else,” he said. “You’ve done the work to look for some something else. You’ve formed another relationship, and you don’t tend to go back.”