HELENA — Economic analysts say there’s still a lot of uncertainty about the impacts of tariffs – but Montana could be more affected than other states.
On Monday, the University of Montana’s Bureau of Business & Economic Research presented its annual midyear economic update in Helena. It’s the first of seven cities where they’ll discuss the report over the next two weeks.
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BBER director Jeff Michael says it’s currently a tough time to project what’s coming next.
“It's extremely hazardous to make predictions,” he said. “Things are changing all the time, right – the policies themselves, people are exploring ways to react to them – and so it is difficult. There's a tremendous amount of uncertainty around the outlook.”
This year, BBER titled its presentation “Taxes, Tariffs and Trade Wars,” and those were the biggest topics of discussion.
Michael said tariffs are an “economic shock,” though he didn’t expect them to lead to a recession. He said they will have benefits for some sectors of the U.S. economy – especially large manufacturing – and for states where those sectors predominate. However, a larger share of Montana’s economy comes from industries like agriculture and construction, which face more challenges from tariffs.
“We're not going to have car manufacturing plants, even if we expand that in the United States,” he said. “On the other hand, what we do have for manufacturing are big users of steel where we're seeing the prices go up.”
Michael said, unlike some analysts, he doesn’t expect trade battles to have a major impact on the tourism industry in Montana. He said, while the number of Canadian visitors is down, that’s actually a relatively small percentage of Montana’s tourists – and Americans may be more likely to travel within the U.S. instead of abroad.
Michael said Montana’s population growth has slowed down significantly since its peak in 2021, during the COVID-19 pandemic. However, he said the impacts of that growth, on things like home prices and the cost of living, are still being felt.
“That Montana lifestyle is still valued; it's just a lot more expensive now,” he said. “So that has an impact on the number of people coming in, and it also makes Montanans more likely to leave the state looking for lower-cost housing.”
He did identify some positive signs for the state’s economy, including continued wage growth and continued high income tax collections and new business filings.
On taxes, Michael said Montanans would benefit from some of the changes in the federal “One Big Bill” – especially a new income tax deduction for seniors and a continued deduction for eligible self-employed people and small-business owners.
The state also passed major changes to property taxes during this year’s Montana legislative session. Michael said it’s challenging to project the impacts of those changes because they vary significantly based on where you live in the state. He said the Montana Department of Revenue estimates primary residences will see larger tax cuts in counties where a small share of their tax base is in residential property, like Meagher – while primary homes will get lower reductions in counties like Missoula, where a much bigger share of property taxes comes from residences.
Todd O’Hair, president and CEO of the Montana Chamber of Commerce, also spoke during Monday’s event. He noted that state lawmakers adopted the property tax changes over objections from the Chamber and other business groups, who warned it would only create a “tax shift” onto businesses.
O’Hair said trying to address property taxes without using revenue from other sources left lawmakers with only two options: do nothing or create tax shifts. He said Montana needed to have an “adult conversation” about whether the state’s current tax system was suited to today’s economy – including whether a general sales tax should be on the table.
BBER’s tour will continue Tuesday in Great Falls. They’ll travel to Kalispell Thursday and then four other cities next week: Billings Tuesday, Bozeman and Butte Wednesday and Missoula Thursday.
