Indiana's top trading partner is Canada. Will tariffs and an anti-Trump PM hurt that relationship?

Indianapolis Star

08-05-2025

Shortly after President Donald Trump launched wide-ranging tariffs on countries around the world, an Indiana Chamber survey of nearly 200 state business leaders named Canada as the country whose tariffs and retaliatory actions they were concerned might impact Hoosier businesses the most.
The concern over Canada is warranted. For years, the neighboring country to our north has been Indiana's top international trading partner, above both Mexico and China. In 2024, the Hoosier State exported nearly $13 billion in goods to Canada, according to the Indiana Business Research Center. Former Indiana Gov. Eric Holcomb traveled to Canada twice for economic development trips while in office. It's unclear at this point if Gov. Mike Braun and his administration will do the same.
The Trump administration has said the purpose of tariffs is to level out trade imbalances with other countries and to onshore production of goods in the U.S. But tariffs have come with economic uncertainty with changes and pauses since Trump's Liberation Day in early April. Indiana's longstanding export relationship with Canada means the Hoosier State is likely to feel economic impacts, such as a rise in unemployment, pending what happens between the two countries, economists say.
There's also a political aspect at play. Canadian Prime Minister Mark Carney, on April 28 won an election to continue as prime minister, a victory that was boosted by a wave of anti-Trump sentiment in the country stemming from the president's tariffs and comments about making Canada the 51st state. Trump and Carney met at the White House on May 6, but the president told reporters he would keep tariffs on Canada at this point.
From the economic to the political uncertainty between the two countries, what might this mean for Indiana? Phil Powell, an Indiana University professor and director of the Indiana Business Research Center, said while the state's economy is vulnerable to the impact of tariffs it may not all be bad news.
'We have a close relationship with Canada, and if these tariffs stick we are going to have a negative impact,' Powell said. 'We will feel some pain, but over time it will get better, both politically and in terms of adjustment that businesses will adapt.'
Indiana's role as a manufacturing hub within the U.S. already puts Hoosiers among the top-10 export states in the country.
'There are lots and lots of things that, in terms of economic activity, happen in the state of Indiana to then go somewhere else,' said Andrew Butters, an associate professor of business economics at Indiana University.
Canada, specifically, has been Indiana's top export market since at least 2009, according to the U.S. Department of Commerce. Indiana has exported an average of more than $12 billion in goods to Canada annually between 2009 and 2024, with some of the top products including vehicle parts, automobiles and trucks. Canada sends items to Indiana, too, with pharmaceutical products at the top of the list, according to the Canadian Consulate General in Detroit.
But the export of automobiles and vehicle parts means Indiana may be vulnerable to the auto tariffs between the U.S. and Canada. On April 29, Trump signed an executive order that allowed some relief, but not a total exemption of previously announced auto tariffs, while Canada's 25% retaliatory measures remain in place.
The impact of tariffs and the unpredictable changes of the Trump administration's policies can make it hard for Hoosier businesses to follow what the real effects might be, said Indiana Chamber President and CEO Vanessa Green Sinders.
'We've heard, whether it's because of a relationship with Canada or other countries, businesses pausing capital investment, taking a step back from workforce or hiring kind of investments in their business, which are going to have an impact on Indiana and the economy and the workforce here,' Sinders said. 'And because there's no time to kind of adjust to tariffs, that also has its own set of challenges.'
Canada's new prime minister may also have a role in what Indiana's relationship with Canada looks like, based on how Carney, who previously served as the governor of the Bank of Canada, approaches his country's relationship with the U.S.
So far, Carney has gone on the offensive, not only imposing tariffs on the U.S. but looking at ways to diversify Canada's trade and untangle its dependency on the U.S., said Dimitry Anastakis, a professor in Canadian business history at the University of Toronto who has studied U.S.-Canada relations. Carney has also used sharper language when it comes to Canada's relationship with the U.S., Anastakis said.
'Carney has a different kind of dynamic,' Anastakis said. 'In his campaign, he was very strident. He said many times that Trump wants to break us. He wants to take us over economically or otherwise, and we're not going to put up with this. We've got a kind of 'elbows up' approach.'
While Carney and Trump's meeting at the White House on May 6 appeared friendly enough, what each country does in the future will depend on whether Hoosiers and other Americans see impacts like production onshoring.
'What does Canada do and what does Mexico do, and what does the European Union do?" said Butters, of Indiana University. 'Who blinks first, and who decides?'
During the initial months of the first Trump administration in 2017, a top Canadian cabinet official visited Indiana as the president was considering an end to the North American Free Trade Agreement.
Then-Canadian Finance Minister Bill Morneau met with Holcomb at the Statehouse in Indianapolis and made stops in Gary and Lebanon with a focus on trade with the U.S. and Indiana.
Briggs from 2017: Canada hearts trade with Indiana
"Our relationship is so successful that you don't see it on a day-to-day basis," Morneau told IndyStar columnist James Briggs at the time. "Supply chains between businesses are such that parts that might be in an auto parts manufacturing facility here in Indiana might have started in Canada, come here, gone back to Canada and gone back again, and you would never know."
Holcomb then made two economic development trips to Canada as governor, with the most recent visit during his last year as governor. In January 2024, he visited Ontario and signed a memorandum of understanding with the head of Ontario's government to promote trade and investments between the Canadian province and Indiana.
It's unclear at this time if those efforts will continue under the Braun administration. Braun's office did not respond to questions about potential future relationship-building with Canada. However, the company Braun spent decades building, Meyer Distributing, has facilities in Canada and distributes automotive parts, one of Indiana's top exports to Canada.
Anastakis said if Braun seeks to continue Indiana's relationship with Canada, it's likely Canadians will welcome him.
'I think that Canadians can disassociate, or at least, we can have a working relationship with you, as long as all of that extra rhetoric and that stupidity, which is so offensive and so unnecessary, is cut out," Anastakis said. "I suspect that Gov. Braun, is not employing that kind of rhetoric and probably wants to continue these trade relationships.'
Contact IndyStar state government and politics reporter Brittany Carloni at [e-mail]. Follow her on Twitter/X @CarloniBrittany.