MONTPELIER – Vermont is under real and growing pressure, much of it driven by decisions made far beyond our borders. Tariffs, federal cutbacks and abrupt policy shifts are colliding with an already fragile state economy, intensifying stresses on working families, farmers, municipalities and small businesses. This is not abstract. Vermonters are feeling it now.
Tariffs function as taxes, and for a state that imports much of what it consumes and exports specialized products, they hit hard. Vermont manufacturers rely on global supply chains for inputs like steel, aluminum and component parts. When tariffs raise those costs, businesses face an impossible choice: absorb the hit, raise prices or cut back. None of those options strengthen local economies.
Dairy and agricultural producers, already operating on razor-thin margins, are especially vulnerable when export markets tighten or retaliatory tariffs close doors abroad.
At the same time, Vermont is experiencing a sharp decline in cross-border business from Canada, historically one of the state’s most reliable economic partners. In 2025, Canadian passenger vehicle crossings into Vermont dropped by more than 25% compared to the prior year. Credit card data shows an even starker picture: Canadian spending in Vermont fell by nearly 50% year-over-year. That decline is not just anecdotal: it is measurable, immediate and economically damaging.
Canadian visitors have long accounted for roughly $150 million annually in Vermont spending, supporting restaurants, hotels, retail shops, ski areas and border-region downtowns. Tourism makes up close to 9% of Vermont’s economy, and Canadian visitors are especially important during shoulder seasons when margins are thin. When that traffic dries up, the effects ripple quickly through the economy.
Those ripples reach the state budget. Reduced visitor spending directly weakens Vermont’s rooms and meals tax, one of the largest contributors to the general fund and education fund. Recent collections have come in below expectations, reflecting fewer hotel stays, restaurant meals and retail purchases. That shortfall compounds an already difficult budget environment and reduces the state’s flexibility just as costs are rising.
This loss of revenue is not theoretical. Businesses in northern Vermont report double-digit sales declines tied directly to fewer Canadian customers. Fewer transactions mean lower sales tax receipts, fewer payroll hours and weaker local economic activity. For a small rural state with limited revenue sources, losing nearly half of a key visitor segment has real fiscal consequences.
Layered on top of this are federal cutbacks that shift costs downward to states. Reductions or uncertainty in federal support for housing, food assistance, infrastructure, energy efficiency and climate resilience leave Vermont scrambling to fill gaps with limited options. When Washington retreats, Vermont doesn’t suddenly gain new resources: it inherits new obligations. That pressure flows directly to towns, school budgets, nonprofits and, ultimately, property taxpayers.
So, the question must be asked: are we experiencing a man-made crisis? When economic strain stems from deliberate policy choices such as poorly planned tariffs, abrupt funding cuts and manufactured instability, the answer increasingly looks like yes.
This does not absolve Vermont of responsibility. We must continue to make disciplined choices and advocate fiercely for our interests. But we should be honest about the headwinds we face. Vermont’s challenges are being compounded by federal actions that disregard the realities of small, rural states.
Recognizing this matters, because it shapes how we respond. We need coordination, clarity and sustained investment, not volatility. Vermont has weathered hard times before, but we do best when policy supports resilience rather than undermining it. Right now, too much pressure is coming from the top down, and Vermonters are paying the price.
David Yacovone, a Democrat from Morristown, represents Morristown, Elmore, Woodbury, Worcester and Stowe in the Vermont House.
