President Donald Trump, with lockstep support from Republicans who narrowly control Congress, has wasted little time trying to overhaul the nation’s economy.

As with all big shifts in economic policy, there are invariably winners and losers. And for reasons that range from geographic to political, Maine might be positioned to suffer more than most states.

Experts say the state’s economy, which has shown resilience coming out of the pandemic, is suddenly under assault on multiple fronts.

First, the state is literally stuck in the middle of a trade fight between the Trump administration and the Canadian government that could have immediate and secondary impacts.

“Maine is among the most exposed and vulnerable to a tariff regime,” said Patrick Woodcock, president and CEO of the Maine State Chamber of Commerce.

Canadians, encouraged by their prime minister, have signaled they might hold off visiting Maine in response to Trump’s tariffs. At the same time, some ardent Trump supporters from other parts of the country have hinted they might boycott the Pine Tree State in protest of Gov. Janet Mills’ defiance of Trump’s executive order on transgender competition in sports.

For a state where tourism accounts for a large share of the economy, that type of double whammy could be a serious problem.

“Maine can’t find new tourists to come (here). This is very new,” said Stefano Tijerina, who teaches international business at the University of Maine Business School.

On top of all this, some fear that Trump might seek to make an example of Maine and follow through on threats to withhold federal funding, which would have ripple effects through the economy. Just last week, his administration rescinded $4.5 million in funding for Maine Sea Grant’s operations, only to reverse that decision days later.

And even if Maine isn’t being singled out, the Trump administration’s large-scale cuts to federal government will be felt here. Maine’s biomedical laboratories are warning of disruptions because of nationwide cutbacks in grant funding.

Still, amid all the speculation about what Trump’s policy shifts could mean, the uncertainty is most ominous to those paying close attention to the economy.

“I’ve talked to a good deal of business leaders over the last few weeks, and the most important thing for them is predictability,” said Quincy Hentzel, president and CEO of the Portland Regional Chamber of Commerce. “It just feels like it’s all just happening and very much out of our control.”

On Thursday, just a few days after instituting the already once-delayed tariffs, Trump granted a one-month pause for certain goods from Canada and Mexico.

Heather Johnson, outgoing commissioner of Maine’s Department of Economic and Community Development, said the state is preparing as best it can to soften any impact on businesses and consumers.

“We’ll have to be ready to do what we can as things become clear,” she said. “But I think it’s going to be a really difficult road.”

GOODS AND SERVICES

Because of proximity alone, Maine relies on Canadian goods more than most other states.

Roughly 70% of the state’s imports — $4.4 billion in 2024 — come from Canada, compared with 13.5% nationally. The bulk of that is heating oil and gasoline, along with wood products, seafood and other food items. Another $1.6 billion in goods traveled from Maine to Canada last year.

“What makes us unique is the strong integration of the economy between Maine and our Canadian neighbors,” explained Wade Merritt, president of the Maine International Trade Center. “It’s not just trade back and forth of manufactured goods, but actually a shared ownership of resources, shared processing of resources — that is something that is somewhat unique to border states, but certainly Maine, because we’re talking about so many different pieces. It’s the lobster industry, blueberries, potatoes, forestry.”

That relationship goes back centuries.

“Maine was intertwined with Canada before a border even existed, before we were a country,” Tijerina said. “Nothing really happened except the name was changed. We never thought this could be undone. This is uncharted.”

Maine-based businesses will see major impacts on the increased price of fuel and other sources of energy, but Maine also buys tens of millions of dollars’ worth of baked goods, live plants, frozen fruit, nuts and more from Canada that are then sold in stores.

“If we looked at other states, the mid-Atlantic and (lower) New England have a more-diversified trade portfolio than Maine. In that sense, we are more vulnerable,” said Kristin Vekasi, an associate political science professor at the University of Maine.

In his joint address to Congress last week, Trump acknowledged that tariffs would bring short-term pain. The president has said he’s using the tariffs to pressure countries to negotiate on things like border security and to encourage more economic development of goods in this country. Economists say there are no guarantees either will happen.

“I think people are wondering: How many steps backwards are we taking during this time of extreme pain?” said Hentzel, with the Portland chamber.

Maine’s iconic lobster industry, which is already facing existential threats from climate change and increased regulation, is bracing for a tough year. Maine sends $200 million in lobster each year to Canada, where it’s processed and sent back. The state is dependent on that relationship because there isn’t enough processing capacity here.

Outgoing Department of Marine Resources Commissioner Patrick Keliher said last week that the possibility that tariffs will depress the wholesale price as Canadian demand drops, combined with the decline in the volume of lobsters caught (it was down by 10 million pounds last year), could mean that “potentially hundreds” would go out of business.

Some fear a trade war will dampen Maine’s ability to solve its persistent housing crisis.

The state has set a goal of building 80,000 new housing units by 2030, in part to help attract workers. Tariffs on lumber, and planned tariffs on steel and aluminum, could give developers pause.

“This is incredibly disruptive to all these efforts statewide to bring more housing to the market,” Hentzel said. “That will have huge implications.”

The energy market also is a concern. Maine is more reliant on petroleum products than most states, and 80% of heating oil and gasoline comes from Canada. Maine does not have the same natural gas networks as other states do, said Dan Burgess, director of the Governor’s Energy Office. The only choice is to pay 10% more or try to find domestic supply, which could cost even more since it would have to travel farther.

Mills, in a radio address last month, warned that consumers will bear the brunt of the impact because businesses will be forced to pass on those increased costs.

“This will cost more than $1,200 annually in purchase power for the typical United States household,” she said. “I would estimate more for Maine households given our interrelationship with Canada.”

TOURISM

Canadians have long made up a big share of annual tourists in Maine. In 2023, more than 780,000 Canadians visited and spent a collective $464 million, just under $600 per person. Data for 2024 has not been finalized yet.

Woodcock said state officials already had concerns about the state’s tourism industry, which has yet to rebound to pre-pandemic numbers. He said the best-case scenario would be for the tariffs to be short-lived.

“This is when Canadians are making plans for summer travel. Timing is important,” he said. “Even a modest impact is material, especially when we have a partial slowdown already.”

It might be too late. Maine Tourism Association CEO Tony Cameron said last month that businesses already are seeing cancellations and fewer bookings in 2025.

“It’s early yet, and we certainly hope this blows over, but this feels a little different,” he said.

Canadian Prime Minister Justin Trudeau even singled out a Maine community – Old Orchard Beach – during remarks last week in which he suggested Canadians might boycott the U.S. The oceanside community has long been a destination for eastern province Canadians.

Merritt, the international trade expert, said he follows Canadian media closely and has seen what he called a “surge of economic nationalism on the part of Canadians.”

But will that persist in the long term? “I think that is definitely a risk,” he said.

Johnson said Maine’s director of tourism visited Canada last week on a damage-control mission. The message was simple: Maine still wants you.

Whether the tariffs last or go away, bad blood might be fomenting. As a business historian, Tijerina said he has never heard such a “hateful position” that’s emerged against Americans. “Friends and colleagues don’t want to come to the U.S. to spend a single cent.”

Mills’ political battle with Trump is likely also a factor in the upcoming tourist season. A Georgia resident sent a letter to the editor to the Press Herald this week vowing to boycott Maine for defying the president.

“Our family (six adults and six grandchildren) has frequently spent vacations at York Beach,” Bennett Quillen wrote. “We were planning to do so again this year but have decided to support a more level-headed state: Isle of Palms and Charleston, South Carolina.”

POLITICS AND UNKNOWNS

There are less-talked-about impacts at play, too.

The stock market has been falling as Trump planned, paused, implemented and reversed tariffs. If that volatility continues, it could have an outsized impact in Maine, which has a high percentage of retirees who might be anxiously watching their investment portfolio at a time in their lives when stability is most important.

With an older population and residents with lower incomes than in most other states, Maine could also easily be harmed by cuts to social service programs, said Andrew Rudalevige, professor of government at Bowdoin College. He cited false claims by Trump and adviser Elon Musk of widespread fraud in Social Security that may be used to justify cuts to benefits.

“Maine is particularly vulnerable … on the social services side,” Rudalevige said.

Tim O’Brien, senior manager of applied research at the John F. Kennedy School of Government at Harvard University, couldn’t speak to Maine specifically but said he’s been tracking some lesser-known economic consequences of Trump’s policy shifts. A reduction in the federal workforce, for instance, could have ripple effects because those employees circulate their money in local economies.

“Another dimension we’re paying attention to is this de facto freeze on grants,” he said. “All these entities are trying to make sense of what they are supposed to do based on economic orders. It’s hard to see the full impact, but small communities are reliant on various flows of federal funding.”

According to an analysis from Pew of fiscal 2022, federal grants accounted for 36.4% of states’ total combined revenue, although that number was elevated by both pandemic aid dollars and infrastructure investments. Maine ranked 18th with 40.7%, a number that already has come down with the drop-off of pandemic aid and infrastructure funds.

There are swirling legal questions about whether Trump’s cuts to various federal programs and grants will hold up.

The biggest issue, though, O’Brien said, is that “no one knows what’s happening or what’s coming next. And that has deep implications in business decision-making, perhaps more so than any tariffs.”

During a confrontation with Mills at the White House on Feb. 21, Trump threatened to cut Maine’s federal funding over the state’s refusal to ban transgender athletes from competing in girls sports.

If a political war between Trump and Mills persists, Maine might find itself on the losing end of any number of federal spending initiatives.

Maine’s congressional delegation has already been working to minimize the impacts. The state’s only Republican member of Congress, Sen. Susan Collins, has some clout as chair of the powerful Senate Appropriations Committee, although she is hardly a close ally of Trump’s.

“I think we have confidence that the congressional delegation is well-positioned to manage this, and they will be an important voice,” said Woodcock, the state chamber president. “We need, as a state, to have a strong relationship with our federal government.”

Even before Trump took office, Mills had warned that the state’s budget is precarious as the economy comes down from highs fueled by pandemic-era stimulus funding.

“If you look at our GDP growth, compared to other states, we were in the top tier since 2019. That’s unique for Maine,” said Johnson, the governor’s outgoing economic adviser.

Now, however, Maine is at the mercy of forces well beyond its control.

“All of this certainly will impact that momentum,” Johnson said.

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