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Trump tariffs target Washington’s top three export markets – here’s how that might change your bills

Sen. Maria Cantwell, D-Wash., rips Trump for starting what she called an unnecessary trade war

By Thomas Clouse, The Spokesman-Review, Spokane
Published: February 4, 2025, 10:08am

Americans should expect prices for items including new homes, cars, cellphones and groceries to jump if trade wars break out with Mexico, Canada and China, local experts say.

The tariffs announced this weekend by President Donald Trump, and then postponed for 30 days, include 25 percent for all products from Mexico, and 25 percent for Canadian goods with the exception of energy, which would be slapped with a 10 percent tariff.

Despite the monthlong pauses for the tariffs that were set to take effect on Tuesday, the eventual impact from those actions, which will likely result in retaliatory tariffs on U.S. exports, will be wide-ranging and could hurt local consumers and small businesses the most, said Steve Scranton, the chief economist for Washington Trust Bank.

“If you look at imports, Mexico makes up almost 50 percent of our fresh food and vegetables, especially during the winter,” Scranton said. “Just as the price of eggs shot up when we had the problem with avian flu, I think this will be the same story with other foods.”

In the opening days of his administration, Trump decided to violate what he had touted as one of the greatest economic achievements of his first administration: the U.S.-Mexico-Canada Agreement, which took effect on July 1, 2020. It replaced the North American Free Trade Agreement.

As a result, many provincial governments across Canada have ordered American-made products, mostly liquor, off shelves and its federal government has threatened to place tariffs on about $106 billion worth of imports from the U.S. in two waves. China officials said they would challenge the U.S. moves with the World Trade Organization.

“That is baffling to me and everybody else,” Scranton said of the announced tariffs against Canada and Mexico. “This is a negotiation thing where he is backing up his campaign promises to attack the immigration and opioid problems. But these are your strongest allies. Why would you pick a fight with them?”

All told, the tariffs could hit some $1.3 trillion worth of goods that flow in to the United States. In other terms, that is about 43 percent of all imported goods that will become more expensive as the cost of the tariffs are passed to consumers.

“WILL THERE BE SOME PAIN? YES, MAYBE (AND MAYBE NOT!)” Trump posted on Truth Social. “BUT WE WILL MAKE AMERICA GREAT AGAIN, AND IT WILL ALL BE WORTH THE PRICE THAT MUST BE PAID.”

Sen. Maria Cantwell, D-Wash., ripped Trump for starting what she called an unnecessary trade war.

“President Trump should not start trade wars that hurt American manufacturers, consumers, and farmers, especially when food prices and interest rates are so high,” she said in a statement.

“Canada and Mexico are already willing to partner with us to fight fentanyl and strengthen border security. I hope the President will work with Congress on opening new markets, growing U.S. exports, and using the EXIM Bank to compete with China, instead of driving up prices at the grocery store and gas pump.”

Evergreen two-step

The brewing trade war has far-reaching effects for everyone who lives in Washington. Some two out of every five jobs in the state are tied to trade and related industries.

Based on 2023 figures, Washington imported about $19.9 billion worth of goods from Canada, including, oil, gas, lumber and electrical power; $1.7 billion from Mexico, including cars, vehicle parts and household appliances; and about $12.1 billion of goods from China.

But the trade flowed both ways, according to statistics from the Washington Department of Agriculture. In fact, Trump’s proposed tariffs target the state’s three largest trading partners.

Canada topped the list. Washington sent $1.3 billion worth of goods north, which represented the top markets for Washington fish and seafood, onions, frozen fruits, fresh sweet cherries and berries, fats, oils and nonalcoholic beverages.

Mexico ranked second, importing some $867 million worth of Washington-produced goods, including $199 million worth of apples. Mexico also ranked as the top importer of nuts, fresh pears and roasted coffee.

China was the state’s third-largest trading partner and took some $857 million worth of locally produced goods. In 2023, China was the state’s top destination for beef, pulse crops such as dried peas, lentils and chickpeas, along with leather products and pork.

Scranton noted that former President Joe Biden did not take off many of the tariffs against China that Trump enacted in 2018. In fact, Biden increased some of those duties for things like electric cars. So the announced 10 percent increase recently threatened by Trump would add to existing tariffs.

He said two sectors that could get hit the worst in Washington are aerospace and agriculture.

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“Those are the two biggest industries that will be impacted,” he said. “Because of higher import costs and retaliation on the other side, it can make it tougher for our businesses to export.”

And the tariffs, despite the pauses for Mexico and Canada, are just Trump’s latest brush with trade sanctions. Also in 2018, Trump imposed tariffs on steel and aluminum that prompted other countries to respond in kind.

Mexico responded with 20 percent tariffs on apples and potatoes. As a result, Washington apple exports fell by more than 29 percent and potato exports dropped by 21 percent, according to Cantwell’s office.

All told, Trump paid out about $28 billion to American farmers who claimed they were targeted by importers who retaliated.

Revenue with a twist

While its true that countries have historically used tariffs to either get access to markets or protect their own industries, the way they are administered can be misleading.

Generally, tariffs are paid by importers, meaning that a company that brings in those goods has to pay the 25 percent tariff when that good crosses the border.

“What I tell people is that a tariff is just another tax,” Scranton said. “It’s a revenue source, but somebody has to pay that tax. The way it is structured, businesses, and an over proportion of small businesses, will pay that to the U.S. Treasury.”

While most economists say those higher import costs get passed on to the consumers, Scranton said pass-along-costs can vary.

“You impose that 25 percent tariff when those goods land at the port. When the business goes to pick it up, (Customs) collects 25 percent from that business. They may not pass all of that to the consumer,” he said. “But, the consumer is going to pay higher prices. The question is whether they charge the full 25 percent or something else.”

That’s where the major impact to small businesses gets skewed, he said. Massive companies like Amazon and Walmart have war chests that allow them to possibly eat some of the tariff costs, he said.

Small businesses “don’t have the cash reserves or the profit margin to be able to absorb the 25 percent tariff,” Scranton said. “I believe they will have to pass that fully on to the consumer. It hurts.”

And several companies, such as General Motors, sends parts and partially assembled cars over international borders several times before they are sold. Scranton said he doesn’t know if each crossing will generate a new tariff.

“I read an article this weekend where one economist said it will raise prices of cars by $5,000,” Scranton said. “Consumers need to expect higher car prices. The question is, how much higher.”

End game

Scranton said he works with local business owners who are concerned about the uncertainty. The on-again-off-again tariff changes with Canada and Mexico on Monday alone highlight the difficulty.

“What I tell our businesses is to build your contingency plan for what (Trump) says he is going to do,” he said. “But don’t execute that plan until you see the effects of what is happening.”

Regardless of timing, consumers can expect to pay more for most things, he said.

“I think you will see signs in stores that say, ‘Sorry for the high prices.’ They will try to deflect the blame off of themselves,” Scranton said.

Another sector that could get hit is housing. Canada provides much of the lumber used in Spokane-area construction.

“We already have this housing affordability issue,” he said. “If we see the costs of building homes going up, that’s not going to do anything to bring the prices down.”

How long the tariffs remain a thing depends on the reaction, Scranton said. Just like in 2018, Trump could carve out certain sectors of the economy if business leaders begin to complain.

“When you start to see polls from the citizens up in arms, that’s where you can see a back-off, as well,” he said. “Since (Trump) has no specific target about what he hopes to accomplish, if he starts to get some negative feedback, that’s when we talk with Canada and Mexico to either reduce or eliminate them completely. That would be my educated guess.”

Scranton suggested watching how investors respond.

“Trump has always tied the success of his policy to the stock market,” he said.

The Dow Industrial Average dropped several hundred points before rallying Monday upon news that Mexico and Canada tariffs would be paused for a month.

“If we see a selloff that lasts a week or days in a row, I’ll be curious to see if (Trump) suddenly says, ‘We are reaching an agreement’ and backs off tariffs,” Scranton said. “He’ll find other reasons to say why he’s doing it, but he may not like what is happening to the stock market and doesn’t want to get blamed for that.”

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