‘Doing business in uncertain times:’ Treasurer’s task force talks turbulence in Vermont in light of new federal administration

Vermont Treasurer Mike Pieciak’s federal transition task force hosted a web panel yesterday afternoon about ongoing economic trends and the new administration’s impacts on Vermont business. 

Pieciak opened the panel by welcoming its guest participants, who his team pulled together to bring expert information to Vermont for- and non-profit businesses. 

“I think it’s very well timed, given the broad uncertainty we've seen in the economy and even the uncertainty that just came from today in the announcements that were made out of the White House,” Pieciak said. 

There were nearly 200 people in attendance at the event.

Pieciak thanked collaborators present: Amy Spear, Chamber of Commerce president; Roxanne Vought, who leads the Vermont Businesses for Social Responsibility; and Emma Paradise from Common Good Vermont — all of whom helped coordinate this event and work on the state’s response to how federal policy will impact Vermont, via task force participation. 

“The task force really came out of the experience of the first Trump administration,” Pieciak said. “There were a lot of fast moving federal policy changes, and I found that when we in the state were coordinated, when we were proactive, we were able to make better decisions.” 

“There has been great uncertainty from policy changes that have been announced and then retracted,” he added. “Policy changes that have been implemented and then pulled back by the courts, policy changes that have been expressed but not yet executed on.” 

The treasurer worries about the cumulative effect of that uncertainty on the state’s economy as well as on the national economy. Pieciak said there’s already been volatility in the stock market and indicators of stress on the “main street” economy. 

“The expectation is that maybe the economy will contract in the first quarter of the new year,” Pieciak said. “So — how do you navigate this?” 

The following perspectives and advice is to be used for informational, not legal, purposes. 

Information, communication, adaptation 

The event’s moderator, Ben Doyle, serves as president of the Preservation Trust, which works with towns and villages across Vermont, helping to build community, preserve local history and create locally-led economic development opportunities. 

Last year, the Preservation Trust traveled to 155 towns across Vermont to work on 362 projects. 

“What we're hearing from Vermont's rural communities, from economic development professionals, from businesses, is a real sense of anxiety,” Doyle said. “Of anger and even sadness, of just really how devastating this kind of uncertainty can be, and how difficult it is to kind of see around the corner.” 

His answer to that uncertainty? Community. 

“We can come together and maybe not solve the problems here, but at least have the best information from some of the smartest people, frankly, certainly in the state and in the country, around some of these issues,” he said. 

Panelist Tris Coffin, former U.S. attorney for Vermont and current director of litigation at Downs Rachlin Martin, kicked off the main segment of the panel with his perspective and advice to employers seeking to navigate and mitigate federal and economic uncertainty. 

Coffin spends a lot of his time counseling businesses on how to deal with problems with enforcement agencies or other companies or the economic climate, which he said are always really hard conversations to have, and with no easy solutions. 

“For centuries, Vermont has been a really difficult place to make a living and to operate a business successfully, the margins are thin,” he said. “It's a tough place to do business and to live, but of course, we love it.” 

Navigating unknowns in how a situation might change or progress first and foremost requires flexibility, agility and adaptability, rather than reacting on the assumption things culminate to worst-case-scenario. 

“If there’s one thing we learned in the first Trump administration,” Coffin said, “You never can really tell what tomorrow will bring, because the plans may not be put into effect, or they may need to be changed, or there may be court intervention practicalities.” 

“It's very hard to be proactive in that kind of environment, because you just don't know where it's going to come from and what's going to happen,” he added. “We need to sort of accept there's things that we can't control, but let's try and work on the things that we can control.” 

Having worked in all three branches of the federal government over the years under four different presidents, Coffin said he’s seen this type of “transition” play out before, though never quite like this — nor had he seen anything like the first Trump administration at the time. 

This time around, he views President Donald Trump’s “off-the-spectrum” policy proposals packaged as an imposition rather than a consenting discussion — however, it’s very hard for any agency to flip a switch and instantaneously get all of his new policies imposed in-state. 

“That's really an important pathway to solutions for a lot of Vermont businesses,” Coffin said. “Realize that the people who are in these agencies are still your friends and neighbors and colleagues and the people at your town meetings and in your Rotary clubs.” 

He said to take things one step at a time, but to also recognize the anxiety that comes with new territory and know some tangible change will occur. The workforce may be even more limited, people will be anxious about uncertainties in the healthcare space and the availability of federal grant funding will be limited. 

But overall, Coffin said, it’s important to draw distinctions between tangible shifts as opposed to tentative anxieties, day-by-day and step-by-step. 

It’s also important to keep one’s own team together as a business-owner, knowing that reinforcements may be limited, and to be in touch with community partners and other people in the industry, as well as to know your team may be asked to do more with less. 

“It's just a challenging time,” Coffin said. “Try to be in good communication.” 

Panelist Sarah Mearhoff, director of advocacy and communication for the state’s largest group representing the construction industry, the Associated General Contractors of Vermont, encouraged businesses to find stability where they can. 

“Construction is a unique field in that my members are trying to plan out their seasons months — if not years — in advance, and so it's exceedingly difficult to make those plans,” she said. “And then those contingency plans, when the news of tariffs is changing — from whether they will take effect, to when they will take effect, to what degree they will take effect.” 

“Literally, by the day, or even by the hour,” she added, of said changes. “I mean, earlier, just today, we heard news from the White House that now the president is contemplating 50% tariffs on Canadian steel and aluminum products. So it's very much a moving target.” 

For her industry, which counts on solidifying a year's worth of projects, a year's worth of revenue and cash flow and expenditures, it feels like taking a shot in the dark, she said. 

For some folks, creating stability might mean diversifying projects and revenue sources, so if one revenue stream dries up, perhaps three others can keep you afloat. For other folks, perhaps smaller businesses, the best answer might be to focus on a high-skilled specialty, especially if it positions them in a niche corner of the market.  

“This all being said, I just want to recognize the fact that this is an incredibly tumultuous and difficult space to navigate for business owners,” Mearhoff said. “Businesses really thrive on stability, and it is so hard to navigate a roadmap when you have a blindfold over your eyes.” 

Tariffs, duties, customs 

Jake Holzscheiter, introduced as one of the foremost experts on tariffs in the country, is a licensed custom broker currently serving as president and CEO of A.N. Deringer, and is the past president of the Northern Border Customs Brokers Association as well as a former board chair for both the Vermont Chamber of Commerce and Northwestern Medical Canter. 

Tariffs, Holzscheiter said, usually change slowly, and his clients have a lot of time to prepare for them. But these days? Major global trade decisions are changing by the minute. Even in the process of preparing his comments for yesterday’s panel, he had to redo them twice to keep up. 

In his viewpoint, there are four “buckets” to keep in mind when it comes to international trade. 

• The International Emergency Economic Power Act, intended to entice cooperation with Canada, Mexico and China towards targeting fentanyl and immigration concerns; 

• The existing Section 232 duties on steel and aluminum and derivative type products, which have been in place for a while and are not necessarily new but are shifting; 

• Reciprocal tariffs that the U.S. is leveraging or threatening to leverage on other countries, which are said to be like-tariff for like-tariff, in theory; 

• And the force of retaliatory tariffs now popping up by Canada and China. 

The status of bucket one is that last week, there was a 25% duty on goods from Mexico and Canada and 10% on Canadian energy products announced and then postponed for an undefined period. 

There’s also a 20% tariff on all goods from China that started on March 4. 

For everywhere but Canada, the 232 steel and aluminum bucket has all been expanded to 25% effective today. Yesterday morning, steel and aluminum and derivatives were increased to 50% leveraged on Canada, which was done in retaliation to Ontario having already imposed a 25% surcharge on electricity exports, which affects New York, Michigan and Ohio. 

Products that have steel on them, like furniture with a steel structure inside, will see new potential duties yet to be determined, which will be based upon whatever that foreign steel and aluminum content is. Additionally, there are 200% duties on Russian aluminum specifically. 

The reciprocal tariff category is largely the threatened tariffs that are supposedly going to be announced on April 2. The plan on this is a bit unclear, described by Holzscheiter as a “broken crystal ball,” but the idea is that the U.S. will charge other countries what they charge us, with country-by-country negotiation expected. There are talks of Canadian dairy and lumber already. 

There have also been talks about considering things other than just a straight tariff or duty rate, things like government subsidies — think lumber stumpage fees in Canada and other currency issues in countries that maybe are keeping their currency low to help promote exports. Some claim that Canada does that. Think of the goods and services tax charged on all U.S. goods that are imported into Canada, which some say circumvents the spirit of the duty free agreement. 

The fourth bucket is the retaliatory tariffs: Ontario is placing a 25% surcharge on electricity exports; Quebec is still contemplating; and Canada as a whole imposed 25% on all U.S. goods, with a lot of border communities already seeing a big reduction in Canadian shopper traffic among folks who are closer to U.S. grocery stores or for whom it had formerly been cheaper. 

They're also placing tariffs on pulp and paper products, motorcycles, cosmetics and various other things — and also effective yesterday, China put out a 10-15% tariff in retaliation to the U.S. tariffs on U.S. agricultural products and electric vehicles. 

“So if you can keep all that straight, then you're calling me to call me for a job,” Holzscheiter joked. “So what to do about it is kind of the real question.” 

If you're importing a product you're used to importing, whether it's high volume or low volume, there is a certain basic kind of infrastructure of things you must have as an importer, which can be adjusted to legally avoid the tariffs or mitigate how much duty you’re paying — whilst being very careful about U.S. Customs and Border Protection penalty action, because they’re watching very, very closely for people trying to skirt around these payments, Holzscheiter said. 

The first thing business owners need to do is try to forecast what their duties are going to be if they import, an “import bond,” based on the value imported. If your values are going way up, folks need to raise that up before Customs cancels it, or they won't be able to import anything. 

Then they need to set up a way to pay customs, he said. A lot of Canadian companies are not used to paying duties, nor are companies that have been buying goods from Canada. 

With some help from someone like Holzscheiter, businesses can consider how to make their product differently to avoid certain tariffs, or change the origin place of sourcing raw material, or shift production. 

It also might be possible to adjust one’s purchase and sales contract between the buyer and seller, and agree to cost-sharing to split up the burden of tariffs, duties and related fees. 

“There's various things that you can do in regards to trying to reduce that duty bill so it's not as bad as it may look, things you never looked at before or cared about because you weren't paying duty [before],” he said. 

Customs has been very clear, and the White House, even clearer, that these new tariffs come with full enforcement authority. 

“You should exercise due diligence,” Holzscheiter said. “They can penalize you, so you need to make sure that those values are correct, your classifications are correct, your countries of origin are correct… You really need to be on your toes.” 

Workforce, healthcare, DEI 

The next panelist was David Watts, senior director of human resources at Alice Peck Day Memorial Hospital in Lebanon, N.H. 

In Watts’ eyes, it really is too early to “read the tea leaves” on what the impact of tariffs has been or will be in this environment. But we may be able to draw some broad conclusions as to how the federal actions are impacting the Vermont workforce at large. 

As of March of last year, there were only 3,200 federal employees in Vermont out of a total workforce of about 357,000, so less than 1% of the Vermont workforce is a federal employee. If Vermont was to lose 10% of its federal employees in Vermont via layoffs, it would lead to about 300 lost positions in the state — a minimal change in the grand scheme of things, Watts said. 

“However, when you start looking at the potential impact of federal funding in Vermont, about 20% of workers in Vermont work for nonprofits, which is the second highest percentage in the country, after Washington, D.C.,” Watts said. 

Previous governors have expressed concern about what they see as Vermont’s over-dependence on on nonprofit employment in the state — so the impact of cuts in federal funding to nonprofits, if they are allowed by the Supreme Court, could conceivably be felt much more acutely in the private sector than public, he said. 

And proposed and actual changes arising do Vermont no favors, with its already-tight labor pool. 

Watts referred to “The Rising Storm,” a white paper by a labor market analytics consulting firm called Lightcast, whose findings note that 2029 is going to culminate as “the eye of the storm” for the labor shortage nationally — and that's only four years away. 

“What's scary about that, is that nine of the 10 most in-demand occupations require a high school degree or less,” Watts said. “And yet, here in Vermont, we have the third highest percentage of our residents with bachelor's degrees or higher.” 

“Unless there's something that could happen economically that is going to change the wage scales as we understand them in Vermont, I wish I could paint a prettier picture,” he added. “But I also highly believe in the flexibility and opportunity for Vermonters to do the right thing.” 

Watts said Vermont is also in a bad spot with changes to diversity, equity and inclusion initiatives — and the potential impacts to DEI are bleak as they’re tied to federal funding, given Trump’s orders to ban DEI initiatives, coupled with threats of pulling funding for noncompliance. 

“Many businesses have introduced DEI as a business imperative in order to attract as many qualified initiative workers as possible to their organization,” Watts said. “So it obviously could certainly have a chilling effect on businesses and regions and also states that have really invested a lot of their cultural messaging and their economic messaging through DEI.” 

“Those lower-paid frontline positions are disproportionately occupied by immigrants and members of our BIPOC community,” he added. “So I struggle to know who is going to be caring for our older Americans, because we need nursing assistance and personal care aides, and who's going to build housing in Vermont? Who's going to transport our goods?” 

Watts has received some tips to consider, though, for those who may want to continue their commitments to DEI. For one thing, executive orders are different from laws, so it may be important for folks to contact legal counsel to know about how they're different, and how one needs to follow through on a contract versus what one needs to do in order to follow the law. 

“And if you can afford it, have your counsel ready,” he said. 

Watts believes employers should equip themselves with their congressional delegation’s contact information, even though Vermont’s delegation is Democratic, in case guidance is needed on issues such as ICE raids in the workplace or other concerns requiring support. 

He also advises recipients to read federal funding agreements, to know their reserved contractual rights as grantees of the federal government, and what the cancellation terms are, what constitutes a breach of terms, and to be in touch with counsel to clarify those points. 

“There's absolutely nothing at this point that you absolutely need to do unless you were contacted by a federal project officer,” he said, of folks who plan to stick out their DEI commitments until the absolute last possible moment. 

“Just establish a strong firewall between your funding sources, so that your federal and non-federal funding sources are separated,” he added. “Just in case that DEI directive comes knocking at your door.” 

Yesterday’s final panelist, Thomas Feltonate, is director and senior economist with TD Bank Group, where he monitors and analyzes Canadian and U.S. macroeconomic trends. 

“I just want to acknowledge that we really appreciate your partnership and friendship as a Canadian to join us in this call,” Doyle said, upon introducing Feltonate as an ally up north. 

Feltonate kicked off his segment by noting that Republicans will try to cut Medicaid spending going forward, as part of a broader “reconciliation” bill being put together in the federal House. Cuts to Medicaid and changes to reimbursement ratios have the potential to impact small- and medium-sized businesses and other organizations of comparable size. 

“We're not necessarily keeping up with the pace of healthcare costs, the growth in healthcare costs,” Feltonate said. “So in a sense, you're kind of shifting that cost burden of Medicaid to the states over the longer run, and reducing the cost burden at the federal level.” 

The Congressional Budget Office found that if the federal government was to go down this road of deeper cuts to Medicaid, it could, in effect, save the federal government up to $900 billion over the next decade — but only by shifting the burden of that hefty price tag to individual states to absorb, meaning states would have to either cut funding to other programs to afford it or raise state taxes substantially. Other research found that the move would result in a significant uptick in uninsured rates for people across the nation. 

Doyle kicked off a Q-&-A following the main portion of the panel with a question of his own for Feltonate and Coffin, as to whether they anticipate a government shutdown, and what the impact on the economy would be if something like that were prolonged. 

“I think the chances of a government shutdown on Friday are very, very high,” Feltonate said. “What we've seen in the past through government shutdowns is, they are more or less short-lived, any kind of near-term economic activity lost tends to be regained on the other side.” 

“But we're very quickly moving to a state where uncertainty is really kind of gaining a lot of traction in markets,” he added. “We've seen a pretty steep sell-off over the last couple of weeks. Credit spreads are starting to tighten up. So I do wonder if this time could be a bit different.” 

Coffin said, having lived through a series of shutdowns during the Obama era, his takeaway is there is now a general understanding and cultural awareness that those who seek to shut down the government politically do not benefit — but he does really worry about this situation. 

“The margins are so narrow in the House that we're just on the edge of a bit of a precipice where any deviation from the received knowledge in the plan can lead to some unintended consequences at the national level,” Coffin said. “Even if people are trying to avoid it, I do worry we end up in a situation where it just happens.” 

“I hope not,” he added. “We'll see.”