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Indianapolis Star
08-05-2025
- Business
- Indianapolis Star
Indiana's top trading partner is Canada. Will tariffs and an anti-Trump PM hurt that relationship?
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 Follow her on Twitter/X @CarloniBrittany.
Indianapolis Star
25-04-2025
- Business
- Indianapolis Star
Indiana lawmakers passed the state budget over night. Here are the biggest winners and losers
Show Caption It was an unusually topsy-turvy road to get there, but Indiana lawmakers finally gave final approval to the next two-year state budget shortly after 1 a.m. Friday morning. Just a week earlier, a dispiriting revenue forecast sent lawmakers back to the drawing board to find $2 billion to either cut or raise. They ended up finding a combination of both: a smattering of cuts to public health, higher education and public media, a little dip into reserves, and a hike in the cigarette tax. And, within only the last two days of session, lawmakers inserted new and substantive policy language impacting state universities. The House passed the budget 66-27; the Senate, 39-11. The bill is now heading to Gov. Mike Braun's desk ― his first budget as governor. In a budget year that was already predicted to be tight, not many parties will feel like winners. But here's our list of who wins and loses in this 2026-27 budget. Winners Indiana Chamber and the American Cancer Society They've been advocating to raise the cigarette tax for many sessions now, as a means of both raising revenue and discouraging smoking. They've gotten close a few times, with the House putting an increase in their budget proposal but the Senate rejecting it. It took a $2 billion revenue shortfall, but they got it: lawmakers raised the cigarette tax by $2 a pack. Wealthy private school attendees Families of four with an annual income of $220,000 currently qualify for publicly funded vouchers to attend private schools. It was a goal of the House's to eliminate that income limit so wealthier Hoosiers can qualify; the compromise in the final budget is universal school choice kicking in starting with the 2026-27 school year, the second year of the budget. Longterm care facilities Since the state transitioned to a "managed care" system for seniors, where three large insurance companies coordinate care for each person needing at-home or facility-based care, those longterm care providers have had issues receiving timely reimbursements from those three companies. Earlier on in session, a representative for longterm care providers (like nursing homes) said they had, collectively, $100 million in outstanding claims. This budget gives those managed care entities 21 to 30 days to pay the facilities, depending on how the claim was filed, and institutes a late penalty of $500 per claim per day. Transparency There's been lots of chatter about Secretary of State Diego Morales' mystery-funded trips abroad. Now, Morales, the governor, governor's cabinet and the other statewide elected officials ― comptroller, treasurer, attorney general and lieutenant governor ― will have to file annual reports to the state budget committee detailing where they've traveled, why and with what state funds. Losers Public media The $7.4 million line item for Indiana's 17 public broadcasting TV and radio stations ― local NPR and PBS affiliates ― is now zero. The state funding cut is on top of threats from the federal level to cut government funding. For some rural stations without deep individual donor pockets, state and federal funding can comprise almost half their budgets. Local health departments State lawmakers decided in 2023 to pump a historic investment of $225 million into county public health departments to do preventative health programming, like disease prevention and maternal health care. This year, lawmakers were prepared to pump another $200 million into this initiative. But since the revenue forecast, they decided to scale it back to $80 million, less than half the original plan. Secretary of State Diego Morales In addition to needing to file travel reports, Morales will also have less control over certain funds. There are a number of dedicated funds that the secretary of state's office administers ― pots of money that come from fines and fees ― that will now route through the General Assembly to decide how that money gets spent. State universities The latest version of the budget introduced new language asserting state control over multiple aspects of state universities' governance. One section gives Gov. Mike Braun the power to appoint all nine members of the Indiana University board of trustees, and to replace any of them. Another drastically redefines tenure at universities by subjecting tenured faculty to "productivity reviews" and probation, which could lead to firing, if they don't meet certain productivity benchmarks. Another makes faculty governance organizations "advisory" only. Yet another requires all faculty to post their syllabi online. Women's and Native American commissions The Indiana Commission for Women and the Native American Indian Affairs Commission, both of which had roughly $100,000 budgets, are gone entirely from this budget. There's no word on whether that means the commissions themselves will be dissolved ― the governor's office has not responded to requests for comment on that question. "I think it's done and I really resent it," Sen. Vaneta Becker, R-Evansville, said of the axing of the women's commission. People on waitlists More than 11,000 Hoosiers in need of home or community based care are on waitlists for the Medicaid waiver as a result of the $1 billion shortfall discovered in 2023. In a separate issue also related to a dearth of funding, the Family and Social Services Administration has also brought back the waitlist for child care vouchers for low-income families. This budget doesn't chip away at either of those waitlists. It does dedicate some money toward the child care vouchers to ensure that all families currently receiving vouchers will not be booted to the waitlist. Tossup Gov. Mike Braun Braun gained some power in this budget over the state's flagship research school, Indiana University. But a number of his tax credit suggestions didn't make the cut, including tax credits for capital investments in rural areas, employers who provide "upskilling" training for their workforce, and young farmers starting out in the business. Win some, lose some.
Indianapolis Star
23-04-2025
- Business
- Indianapolis Star
Indiana state budget deal: Cigarette taxes go up, public health funding goes down
Show Caption Indiana lawmakers and Gov. Mike Braun have reached a deal on the two-year state budget that's slimmer than what they began with ― but boosted by a $2 increase in the cigarette tax. Legislative leaders had to go back to the drawing board last week after the latest revenue forecast showed a $2 billion drop in expected revenue over the course of the upcoming biennium. This new version cuts public health funding by more than half, dips a bit more into reserves, and adds new revenue from the tobacco taxes, which amount to about $800 million over the biennium. They presented the outlines of the deal in a press briefing the afternoon of April 23, but the actual budget has not yet been posted. Lawmakers will likely vote on the final budget the evening of April 24. "We used to think that when you were relatively flush with cash, that's a challenging budget to craft, and maybe harder than when you're short with cash. I'm not sure that I feel that anymore," Senate Pro Tempore Rodric Bray, R-Martinsville, said. "Trying to come up with a way to fund the budget with a $2 billion shortfall in the official forecast is, frankly, one of the more challenging things I think we've ever done." The massive difference in the April forecast compared to December stems from a number of federal policy actions, from tariffs impacting trade and the stock market to deep federal spending cuts. It also partly reflects a return to normal revenues following a period of exceedingly high revenues during the COVID-19 pandemic era. New revenue in the budget Sen. Ryan Mishler, R-Mishawaka, said the final budget increases the cigarette tax by $2 a pack, which would take the tax from $1 to $3 a pack. He said the tax on other tobacco products will also increase "by the same percentage," which would be a tripling. The roughly $400 million per year that this will raise will go entirely to the Medicaid budget, he said. This is something that advocacy groups and the Indiana Chamber, specifically, have advocated for a long time as a way to raise revenue while discouraging people from tobacco use. The House has pitched it in the budget a few times, but the idea has usually died in the Senate. Democrats, too, have suggested it. "Along with revenue comes a really pretty good public policy that was going to help persuade people to either not start smoking or stop smoking at the same time," Bray acknowledged. "So I think everybody expects that number will decrease over time. But that's a good thing, because we think it means we have fewer smokers." What is getting cut Without seeing the specifics of the bill or its fiscal analysis yet, here are some cuts leaders described: Funding for county public health departments, which focus on preventative health care and education, will be funded at $40 million a year, down from $100 million a year. The House wanted to expand the school voucher program to be universal in this budget, and the Senate didn't. They will both get their wish: Universal vouchers will kick in during the second year only. Higher education funding will get slashed an additional 5%, as will the repair and rehabilitation budget, which pays for capital projects. They "did away with some of those" commissions who haven't met in a while and had "big cash balances." They didn't specify which ones. The new deal also dips into reserves more. While the Senate and the House budgets proposed leaving roughly 12-13% of the budget in reserves, this one will leave "a little north of 10%," Bray said. That could equate to a difference of about half a billion dollars, depending on the exact percentages. The decision to cut public health spending while at the same time expanding voucher options for the richest families is one of the largest disappointments for Democrats, Rep. Greg Porter, D-Indianapolis, said. "Is that making Indiana healthy again? I think it's making us extremely vulnerable," he said. Bray said that close to half of the money counties got in 2024 went unspent, so he thinks some counties are still trying to roll out their programs. "While that's a cut I'm sure they'll be disappointed in, they're also continuing to try to build this up," he said. "We want to continue to try to invest in that." Overall, the state budget will grow 0.8% in 2026 and another 0.1% in 2027. By comparison, local governments are projected to have 1.6% increases in the first year and 5.1% in the second year.
Indianapolis Star
23-04-2025
- Business
- Indianapolis Star
Indiana state budget deal: Cigarette taxes go up, public health funding goes down
Indiana lawmakers and Gov. Mike Braun have reached a deal on the two-year state budget that's slimmer than what they began with ― but boosted by a $2 increase in the cigarette tax. Legislative leaders had to go back to the drawing board last week after the latest revenue forecast showed a $2 billion drop in expected revenue over the course of the upcoming biennium. This new version cuts public health funding by more than half, dips a bit more into reserves, and adds new revenue from the tobacco taxes, which amount to about $800 million over the biennium. They presented the outlines of the deal in a press briefing the afternoon of April 23, but the actual budget has not yet been posted. Lawmakers will likely vote on the final budget the evening of April 24. "We used to think that when you were relatively flush with cash, that's a challenging budget to craft, and maybe harder than when you're short with cash. I'm not sure that I feel that anymore," Senate Pro Tempore Rodric Bray, R-Martinsville, said. "Trying to come up with a way to fund the budget with a $2 billion shortfall in the official forecast is, frankly, one of the more challenging things I think we've ever done." The massive difference in the April forecast compared to December stems from a number of federal policy actions, from tariffs impacting trade and the stock market to deep federal spending cuts. It also partly reflects a return to normal revenues following a period of exceedingly high revenues during the COVID-19 pandemic era. New revenue in the budget Sen. Ryan Mishler, R-Mishawaka, said the final budget increases the cigarette tax by $2 a pack, which would take the tax from $1 to $3 a pack. He said the tax on other tobacco products will also increase "by the same percentage," which would be a tripling. The roughly $400 million per year that this will raise will go entirely to the Medicaid budget, he said. This is something that advocacy groups and the Indiana Chamber, specifically, have advocated for a long time as a way to raise revenue while discouraging people from tobacco use. The House has pitched it in the budget a few times, but the idea has usually died in the Senate. Democrats, too, have suggested it. "Along with revenue comes a really pretty good public policy that was going to help persuade people to either not start smoking or stop smoking at the same time," Bray acknowledged. "So I think everybody expects that number will decrease over time. But that's a good thing, because we think it means we have fewer smokers." What is getting cut Without seeing the specifics of the bill or its fiscal analysis yet, here are some cuts leaders described: Funding for county public health departments, which focus on preventative health care and education, will be funded at $40 million a year, down from $100 million a year. The House wanted to expand the school voucher program to be universal in this budget, and the Senate didn't. They will both get their wish: Universal vouchers will kick in during the second year only. Higher education funding will get slashed an additional 5%, as will the repair and rehabilitation budget, which pays for capital projects. They "did away with some of those" commissions who haven't met in a while and had "big cash balances." They didn't specify which ones. The new deal also dips into reserves more. While the Senate and the House budgets proposed leaving roughly 12-13% of the budget in reserves, this one will leave "a little north of 10%," Bray said. That could equate to a difference of about half a billion dollars, depending on the exact percentages. The decision to cut public health spending while at the same time expanding voucher options for the richest families is one of the largest disappointments for Democrats, Rep. Greg Porter, D-Indianapolis, said. "Is that making Indiana healthy again? I think it's making us extremely vulnerable," he said. Bray said that close to half of the money counties got in 2024 went unspent, so he thinks some counties are still trying to roll out their programs. "While that's a cut I'm sure they'll be disappointed in, they're also continuing to try to build this up," he said. "We want to continue to try to invest in that." Overall, the state budget will grow 0.8% in 2026 and another 0.1% in 2027. By comparison, local governments are projected to have 1.6% increases in the first year and 5.1% in the second year.
