Ryan Christiansen, president and head distillery of Caledonia Spirits, will tour at Montpelier, Virginia.
Courtesy: Ryan Christians | Caledonia’s Spirit
President Donald Trump’s tariff rhetoric on Canada is only beginning to heat up, but Vermont small businesses are already in pain.
The spirit cargo, ordered by the Société des Alcools du Québec, is the entity responsible for the trade in alcoholic beverages in the state, and has been sitting for about a month at the Montpellier-based shipping dock by Caledonian spirits.
SAQ cancelled the order shortly after Trump announced tariffs on Canada in February, according to Ryan Christiansen, president and head distillery of Caledonia’s Spirits.
“The customers are ready to buy and we are at the peak of the late season. It was an annual cycle for us and we were looking forward to shipping our orders. Now it’s sitting on the dock,” he said. “To hit this in the late month of February? Because of this, I missed my financial plan in February.”
Exports at Caledonia Spirits, Montpellier, Virginia.
Courtesy: Ryan Christiansen | Caledonian Spirit
Vermont has special ties with Canada, as Green Mountain State exports $680 million in goods each year to its Northern US neighbors, according to data compiled by Connect2Canada. Vermont imports more than $2.6 billion in goods from Canada each year, with electricity and fuel oil among its top-notch imports.
Due to the province’s close ties with the shared border with Canada, Vermont small businesses began seeing fallout as early as February. At the time, Ontario also said that American alcoholic products were pulled from the shelves.
Ultimately, Trump gave reprieves to Canadian and Mexican goods covered by the USMCA North American Trade Agreement until April 2nd. However, many products are still subject to obligation.
“We worked really hard to maintain this relationship with the Canadian government,” Christiansen said. “How can I make Canadian customers buy as much as they wanted to buy? I think it’s overly optimistic that this order will be resubmitted, even if the duties are gone.”
Tourism worries
It didn’t take Steve Wright, president and general manager of Jay Peak Resort, about 10 miles from the Canadian border, to begin seeing the impact of rhetoric on tariffs.
He noted that spending from Canadian tourists showed signs of softening especially in the two weeks of Quebec Break Week, which took place from March 3 to March 8, and Ontario Lake Week, which kicked off on March 10.
Visitors in Canada generally make up about half of the resort’s market, but they do virtually all of it during the two-week stretch, Wright said.
People ski at Jay Peak in Vt.
Courtesy: Patrick Coyle, Darla Mercado | CNBC
“Quebec Break Week sold very well and we had great conditions, but what we lacked was the day market,” he said. “We didn’t get the day’s traffic we normally see from Montreal, which softened that part of the market.”
Tariff rhetoric is just the latest pressure point for Jay Peak. The resort’s manager also pointed to a reduced opening hours at nearby North Stroy, Virginia Border Crossing. In January, it started from 24 hours a day to 8am to 8pm.
To cater to Canadian customers over the past 20 years, J-Peak has been offering these tourists AT-PAR options with non-margin products. “Tell me that the lift ticket is $100, and I can give you C$100,” Wright said. “It insulated the business a bit.”
“They have an affinity for Jay Peak. They are here for generations, but there is a point where they decide to stay home despite their love for the place,” he added.
A drive from Montreal, about a two-3 hour drive, I’m worried that tourist traffic is already bubbly among small businesses. This corner of the state tends to see weekend visitors from the north, especially during the mild summer and fall seasons.
Bill Butler, co-owner of the Artisan Handcraft Gallery, is in talks with fellow entrepreneurs in downtown Montpellier to propose a promotional deal to help Canadian visitors maintain pedestrian traffic.
“My idea is to have something like ‘Canadian Day’,” he said. “We’ll come down and take a small tour of town and go from place to place and sign a deal with Canadians who want to get free beer and coffee.”
“I want to take the position of being proactive, not just thinking about absorbing the problem,” Butler said. “We have a great relationship with Canada and there are many Canadians in the gallery.”
Imported products price
For Sam Guy, owner of Guy’s Farm & Yard in Morrisville, tariffs raise more concern than higher prices for certain products.
The wood shavings, wooden pellets and peat moss sold at local chain stores all come from Canada, but made by an American company, he said animal feed contains ingredients that come from Canada.
The 25% tariff attached to imported products must inevitably be handed over to shoppers.
“We can’t eat this,” the man said. “We’re going to pass on tariffs. We’re not going to add margins or anything like that, but many of these are low margin products.”
