Trump to implement new tariffs on Illinois’ largest trading partners as
state faces uncertainty over economic projections
[February 28, 2025]
By Ben Szalinski
SPRINGFIELD — As the Governor’s Office of Management and Budget Director
Alexis Sturm warned a House committee that uncertainty about President
Donald Trump’s economic and administrative policies could affect
Illinois revenue, the president announced new tariffs will take effect
Tuesday on imports from some of Illinois’ top trading partners.
After initially pausing implementing 25% tariffs on products from Canada
and Mexico, Trump announced in a social media post Thursday morning that
tariffs will begin on March 4. In addition, he said the U.S. will add
another 10% tariff on Chinese goods.
The president alleged drugs were still coming into the United States at
“unacceptable levels.”
Meanwhile in the Illinois Statehouse, Sturm told the House Revenue and
Finance Committee that revenue projections in Gov. JB Pritzker’s
introduced budget account for the possibility of tariffs affecting the
economy.
“There’s a lot of uncertainty in our outlook based on what’s going on at
the national level regarding tariffs, tax policy, what the Federal
Reserve is going to do,” Sturm said.
The governor’s $55.2 billion budget is based on the December S&P Global
forecast that projected stable economic growth and considered some of
Trump’s top economic policies, including tariffs and tax cut extensions,
would be implemented, Sturm said.
After the governor’s budget office in November projected flat revenue
growth for fiscal year 2026 based on the September S&P forecast, the
December forecast caused state officials to revise their forecast upward
by $1.8 billion in the upcoming fiscal year.
There’s also a risk that Trump’s administration pulls back federal
funding states are expecting. The current fiscal year budget for the
state expects to receive upwards of $20 billion in federal funding, but
earlier this week, Pritzker wrote a letter to the federal Office of
Management and Budget saying the federal government is withholding $1.9
billion that has already been promised to Illinois.
“There’s no real way to prepare for that,” Sturm said. “Obviously we are
watching closely what’s going on at the national level, but I think the
governor has tried to make clear that this state at this level of
operations can’t cover any decisions that the federal administration or
Congress makes to reduce its payments to Illinois.”
Asked whether there are any spending cut plans for downturns in revenue
projections, Sturm the governor’s office doesn’t have a backup plan.
“At this point, no,” Sturm said. “I think the important thing to watch
is what happens in April.”
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Governor’s Office of Management and Budget Director Alexis Sturm
speaks to the House Revenue and Finance Committee in Springfield on
Thursday, Feb. 27, 2025. (Capitol News Illinois photo by Andrew
Campbell)
Sturm hinted there could be some good news for state finances when
income tax revenue is reported at the end of April. She said state
officials are expecting a “pretty significant April tax payment,” which
could cause state officials to reevaluate their revenue projections for
the current fiscal year.
Personal income tax receipts for the state are up 8% for the fiscal year
through January, according to the non-partisan Commission on Government
Forecasting and Accountability.
But new tariffs on imported goods could add more uncertainty to the
state’s economy.
Illinois received $127.8 billion of imports from China, Canada and
Mexico in 2023, according to the Department of Commerce and Economic
Opportunity. Canada is Illinois’ largest partner for both imports and
exports, with the state receiving $65.6 billion of goods from the
country in 2023.
Illinois is highly dependent on oil and gas from Canada, meaning
consumers could be in line for higher energy and gas prices due to
Trump’s tariffs. About 72% of Illinois’ imports, or $47.4 billion, from
Canada in 2023 was oil and gas, according to DCEO.
China had the second-highest volume of imports to Illinois in 2023, with
$43.9 billion worth of goods, including $27.2 billion of computers and
electronics.
Illinoisans might end up paying more for alcohol and cars if tariffs are
implemented on Mexican goods. Illinois received $18.3 billion of imports
from Mexico in 2023, including $5.9 billion of beverages and tobacco and
$2 billion of transportation equipment.
China, Canada and Mexico received $37.9 billion of exports from Illinois
in 2023, nearly half of the state’s exports for the year. This included
a combined $3 billion in agricultural goods to China and Mexico and
nearly $4 billion of machinery to Canada.
Canada’s proposed targeted tariffs include penalties on American exports
of food and metal products, according to the Canadian Broadcasting
Company. Illinois sent $3.2 billion of food and primary metal
manufacturing products to Canada in 2023.
Capitol News Illinois is
a nonprofit, nonpartisan news service that distributes state government
coverage to hundreds of news outlets statewide. It is funded primarily
by the Illinois Press Foundation and the Robert R. McCormick Foundation.
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