President Donald Trump sparked widespread concern in Alaska over the weekend when he announced steep tariffs on imports from the United States’ three largest trading partners.
By Monday morning, Trump had partially paused the policy. But that hasn’t stopped worries in Alaska. The tariffs could dramatically impact the state if they go forward. At stake is everything from grocery and lumber prices to the economies of border towns like Haines and Skagway.
“Things will become more expensive. That’s a fact,” said Gregory Wolf, the president of the Alaska International Business Center.
Wolf has worked on trade issues in Alaska for nearly four decades. He said tariff wars, no matter which countries they’re between, are nearly always a “lose-lose situation” – and that this time would likely be no different.
The tariffs came from an executive order on Saturday that placed 25% tariffs on Mexican and Canadian goods, with a lower tariff on energy resources from Canada. Trump also placed a 10% tariff on Chinese goods.
Trump said the tariffs were meant to push the three countries to curb the flow of undocumented immigrants and drugs including fentanyl into the U.S. But economists and lawmakers say the policy could have a sprawling set of unrelated impacts on Alaskans in particular.
Alaska’s unique vulnerability
Take the proposed tariffs on Canadian goods. Alaska is uniquely vulnerable to the policy, due in large part to the state’s reliance on Canada for timber, agricultural products and more. If the tariffs are implemented, the cost of Canadian goods could surge by as much as 25% for Americans, said Kevin Berry, chair of the economics department at the University of Alaska Anchorage.
“We are facing potentially higher costs from any good that’s produced and sold from Canada, as well as smaller markets for our own goods,” he said. “There’s also the potential for disruption when it comes to the Alcan, or transportation to the Lower 48.”
But Alaska also exports goods to Canada. If the tariffs take effect, and Canada were to respond in kind, that would make it more expensive for Alaskan companies to do business with its only neighbor, Berry said. Canada could also strike back by imposing fees for using Canadian highways, for instance, disrupting travel.
Canada is also a major investor in the state. The country has long been the largest investor in Alaskan mining operations, for example. That could change if the tariffs move forward, said Wolf.
Wolf said the same will be true of tariffs on China – and that Alaska has a lot to lose there, too. China has been the state’s top trading partner since 2011, with the exception of a period around 2018 when Trump imposed tariffs on China during his first term.
China already responded to Trump’s tariffs by imposing tariffs of its own on U.S. imports. The back-and-forth means Chinese consumers will pay more for products that U.S. companies want to sell them. Meanwhile, Americans, including Alaskans, will spend more on countless Chinese goods.
“It almost sounds, if you listen to the president, that China will write a check to us,” Wolf said. “That never happens. It’s never happened. It will never happen. The people who pay the tariff are the people in America who import the goods from China.”
Senate Majority Leader Cathy Giessel, R-Anchorage, shares the concern, though there’s not a lot state lawmakers can do about tariffs proposed by the president. Even so, she is drafting a resolution to formally oppose the policy. She says the tariffs would increase prices on a range of goods and necessities — bad news in a state where the cost of living is already exorbitant.
Giessel also emphasized that the tariffs also threaten something else: Alaska’s long-standing relationship with its only neighbor, including as it relates to military defense. She said Canada supports the U.S. Air Force, Navy and Coast Guard when Russian or Chinese aircraft threaten U.S. borders.
“These are significant partnerships that are being jeopardized by the proposal of these tariffs,” Giessel added.
Worries for border communities
Remote communities close to the border could also face impacts. That’s because their cost of living is already high, and they rely more heavily on goods coming from Canada.
“If we think about Haines or elsewhere, where a lot of the access to larger markets is in Canada, this can have an outsized impact on the cost of living,” said Berry, the economics professor from Anchorage.
There’s also Skagway, which sits close to Haines and just 15 miles from the Canadian border. Residents and businesses in the coastal tourist town frequently go to Whitehorse — two hours away — for groceries and other products.
Orion Hanson, a builder and member of the Skagway assembly, says he purchases supplies in Whitehorse for most of the homes he builds. He’s worried the tariffs, assuming they take effect, would make doing so more complicated and expensive.
He points out that Skagway and Alaska more broadly are both already grappling with housing shortages that tariffs would only make worse.
“As a builder, I have a lot of concerns about how much lumber prices would go up,” Hanson said. “I think steel prices would go up. I think concrete prices would go up. Let alone if fuel prices go up, that’s going to affect every facet of the economy.”
The tariffs may disrupt businesses like Hanson’s, depending on how much money they spend on Canadian goods. But the tariffs are less likely to impact residents who drive to Whitehorse for groceries or other supplies. That’s because they’re meant to target large scale importers and exporters, Wolf said.
The nitty-gritty details of the tariffs remain to be seen – as does whether they’ll even take force. But Hanson said the stakes are high.
“The cost of living is very expensive in Skagway. And I’m concerned that this would exacerbate that and make it worse and make it harder to live here year-round,” Hanson said.
The proposed tariffs on Canada and Mexico have been paused through February to allow for negotiations over steps the countries will take to crack down on border security and drug trafficking.
U.S. Senator Lisa Murkowski welcomed the pause in a statement on Tuesday.
“I’m glad to see that both Mexico and Canada are stepping up and working with President Trump to address border security and the fentanyl crisis. Our countries must work together to keep our people safe,” she said.
The tariffs on Chinese products took effect Tuesday. China responded by announcing its own tariffs on coal, crude oil and other U.S. imports.
