News
February 3, 2025

NYC's Hydropower, Construction, and Avocados at Risk from Tariffs

Caroline Raffetto

The ongoing tariff war between the U.S. and its trading partners, particularly Canada, is threatening various industries vital to New York City’s economy. Canada is the largest export market for New York, purchasing $10 billion in services and $9.5 billion in goods. President Trump’s tariffs on Canada, Mexico, and China could lead to significant price increases, impacting everything from groceries to energy bills, and jeopardizing businesses that rely on trade with Canada.

Mexico, a major supplier of produce to the U.S., provides 50% of all U.S. produce imports, including 80% of avocados. Canada is an essential source of cherry tomatoes for the city, while New York also imports a significant amount of low-cost hydroelectric power from Canada, which supplies energy to 500,000 homes. These industries are expected to face challenges as a result of the tariffs.

On June 1, 2025, President Trump implemented a 25% tariff on imports from Canada and Mexico, as well as a 10% tariff on goods from China. Trump claims these tariffs are necessary due to concerns over the flow of fentanyl and illegal immigration, though these allegations have been disputed by both Canada and Mexico. The President argues that these tariffs are part of a broader strategy to bring manufacturing jobs back to the U.S., although there are concerns over the impact on consumers.

“Some pain” could be inevitable, Trump acknowledged, as experts predict price hikes across a variety of sectors. Economists widely agree that tariffs ultimately raise costs for American consumers, with domestic manufacturers increasing prices in line with foreign competitors.
Trump launches trade war with tariffs ...

Locally, New York City is likely to see the impact of these tariffs, with higher prices affecting the city’s 8 million residents. New York’s manufacturing sector, which has seen a significant decline over the years, is unlikely to experience a resurgence despite the administration's efforts. "We haven’t lost manufacturing jobs to China. We haven’t had a durable goods manufacturing sector in decades," said Lauren Melodia, economist at the Center for New York City. "It will show up as higher prices for people here."

One of the biggest risks posed by the tariffs is the potential disruption to U.S. service firms operating abroad, such as financial institutions, law firms, and consulting companies. New York’s financial and business services sector generates $6 billion annually from Canada, a critical trade partner. Tourism could also suffer, as fewer Canadians visit the city, which would impact the hospitality industry.

The housing construction sector may face disproportionately high costs, as Canada is a major supplier of softwood lumber, which accounts for 30% of all softwood used in the U.S. Tariffs on steel, another critical material, may further inflate construction costs, exacerbating New York City's ongoing housing crisis.

Another potential concern is the effect of tariffs on New York’s clean energy projects. The state relies heavily on inexpensive hydropower from Canada, and while the 10% tariff may not directly impact this source, Canadian Prime Minister Justin Trudeau has suggested he may impose export fees, potentially raising the cost of hydroelectric power to New York consumers.

Additionally, New York is involved in a $6 billion transmission project with Canada to bring more clean energy to the state. The project aims to deliver an additional 7.6 terawatt-hours of electricity from Quebec to Astoria, which could save New York consumers up to $10 billion over the next decade. Any disruption to this project could have long-term financial consequences.

The impact of these tariffs will depend on Canada's response, with some products already targeted for counter-tariffs, such as whiskey from Tennessee, orange juice from Florida, and peanut butter from Kentucky. Other products expected to be impacted include vegetables, beer, wine, clothing, and materials like lumber and plastics. These trade tensions highlight the vulnerability of New York City’s economy to the global tariff war, with businesses bracing for higher costs across multiple sectors.

News
February 3, 2025

NYC's Hydropower, Construction, and Avocados at Risk from Tariffs

Caroline Raffetto
Construction Statistics
New York

The ongoing tariff war between the U.S. and its trading partners, particularly Canada, is threatening various industries vital to New York City’s economy. Canada is the largest export market for New York, purchasing $10 billion in services and $9.5 billion in goods. President Trump’s tariffs on Canada, Mexico, and China could lead to significant price increases, impacting everything from groceries to energy bills, and jeopardizing businesses that rely on trade with Canada.

Mexico, a major supplier of produce to the U.S., provides 50% of all U.S. produce imports, including 80% of avocados. Canada is an essential source of cherry tomatoes for the city, while New York also imports a significant amount of low-cost hydroelectric power from Canada, which supplies energy to 500,000 homes. These industries are expected to face challenges as a result of the tariffs.

On June 1, 2025, President Trump implemented a 25% tariff on imports from Canada and Mexico, as well as a 10% tariff on goods from China. Trump claims these tariffs are necessary due to concerns over the flow of fentanyl and illegal immigration, though these allegations have been disputed by both Canada and Mexico. The President argues that these tariffs are part of a broader strategy to bring manufacturing jobs back to the U.S., although there are concerns over the impact on consumers.

“Some pain” could be inevitable, Trump acknowledged, as experts predict price hikes across a variety of sectors. Economists widely agree that tariffs ultimately raise costs for American consumers, with domestic manufacturers increasing prices in line with foreign competitors.
Trump launches trade war with tariffs ...

Locally, New York City is likely to see the impact of these tariffs, with higher prices affecting the city’s 8 million residents. New York’s manufacturing sector, which has seen a significant decline over the years, is unlikely to experience a resurgence despite the administration's efforts. "We haven’t lost manufacturing jobs to China. We haven’t had a durable goods manufacturing sector in decades," said Lauren Melodia, economist at the Center for New York City. "It will show up as higher prices for people here."

One of the biggest risks posed by the tariffs is the potential disruption to U.S. service firms operating abroad, such as financial institutions, law firms, and consulting companies. New York’s financial and business services sector generates $6 billion annually from Canada, a critical trade partner. Tourism could also suffer, as fewer Canadians visit the city, which would impact the hospitality industry.

The housing construction sector may face disproportionately high costs, as Canada is a major supplier of softwood lumber, which accounts for 30% of all softwood used in the U.S. Tariffs on steel, another critical material, may further inflate construction costs, exacerbating New York City's ongoing housing crisis.

Another potential concern is the effect of tariffs on New York’s clean energy projects. The state relies heavily on inexpensive hydropower from Canada, and while the 10% tariff may not directly impact this source, Canadian Prime Minister Justin Trudeau has suggested he may impose export fees, potentially raising the cost of hydroelectric power to New York consumers.

Additionally, New York is involved in a $6 billion transmission project with Canada to bring more clean energy to the state. The project aims to deliver an additional 7.6 terawatt-hours of electricity from Quebec to Astoria, which could save New York consumers up to $10 billion over the next decade. Any disruption to this project could have long-term financial consequences.

The impact of these tariffs will depend on Canada's response, with some products already targeted for counter-tariffs, such as whiskey from Tennessee, orange juice from Florida, and peanut butter from Kentucky. Other products expected to be impacted include vegetables, beer, wine, clothing, and materials like lumber and plastics. These trade tensions highlight the vulnerability of New York City’s economy to the global tariff war, with businesses bracing for higher costs across multiple sectors.