U.S.-Canada Tariffs: When One State Gets Hit, Who Pays for It Everywhere Else?

U.S.-Canada trade talks collapsed in late August, and a 50% tariff took effect on roughly $20 billion in Canadian goods. Canada has promised to match it dollar for dollar, with counter-tariffs starting September 8.

The headlines focused on the obvious targets: dairy, alcohol, motor vehicles. But a tariff’s real cost is rarely confined to the goods on the list, or to the place where it first lands. It travels. A tariff that raises costs for one industry in one state quietly raises costs for the industries that buy from it, and those industries can sit hundreds of miles away, in states nobody was watching.

IMPLAN’s Forward Linkages guides show you where that cost goes, and MRIO traces it from one state to the next.

Following the cost forward 

Here’s the idea in plain terms. A tariff makes it more expensive to produce farm equipment in Iowa. But who buys that equipment? Farmers, and not just Iowa farmers. Grain, dairy, and oilseed operations across the country depend on it, and as equipment gets more expensive, so does the cost of doing business.

So the cost doesn’t stay in Iowa. It rides the supply chain forward into other industries and other states that had nothing to do with the original tariff. That’s a forward linkage: not who supplies the affected industry, but who depends on it.

Forward Linkages trace that path downstream, and MRIO carries it across state lines, so you can see the cost land wherever it actually lands, not just inside the state where it started. Pair the two and a tariff stops being a single dot on a map and becomes what it really is: a chain of effects moving through the economy.

What the numbers look like 

Take Iowa’s farm machinery and equipment industry, meaningfully exposed to this round of tariffs.

The direct exposure: Iowa carries $401.7 million of that industry’s tariff exposure, more than a fifth of the industry’s national total. That’s a real, useful figure for understanding what’s at stake for Iowa itself.

Where it travels: Using IMPLAN’s Price Change (Cost-Push) Guide with a two-region MRIO, Iowa plus the rest of the U.S., we modeled a moderate 15% cost increase getting passed down the chain instead of absorbed. The result: $92.5 million in added costs landing outside Iowa entirely.

And it lands where you might not expect. Not on other manufacturers, but on grain farming, dairy and milk production, and oilseed farming, the operations that actually buy the equipment, wherever in the country they happen to sit.

The $401.7 million and the $92.5 million answer two different questions. The first tells you what the tariff means for Iowa itself. The second tells you where the pressure travels next, and to whom, which stays invisible until you follow the chain forward.

What this does and doesn’t tell you

To be clear about the limits: this traces cost from one producer to the next, not all the way to the price you pay at the store. It assumes the cost gets passed along in full rather than partly absorbed, which is a modeling assumption, not a prediction. And the two numbers above measure different things, so they shouldn’t be added together.

What it gives you is the part that’s easy to overlook: how a shock in one state travels to producers somewhere else entirely, before it ever reaches a shelf. For anyone trying to understand the true shape of a trade fight, that’s the view worth having.

The takeaway

When one state’s supply gets disrupted, the effects don’t stop at the state line. Forward Linkages with MRIO let you follow them, showing which industries downstream feel the pressure and which states absorb it.

With MRIO now built into IMPLAN’s Forward Linkage Suite, the regional setup is handled for you. No custom model-building, no guessing which states to include. It tends to surface exactly the industries and the states nobody thought to ask about.

Want to follow your own analysis all the way downstream? Schedule a demo and see where the pressure travels.