‘We are in a trade war’: Washington leaders, business sectors largely express confusion and concern at Trump’s sweeping tariff announcement
Washington is uniquely positioned to feel the negative effects of a trade war spurred by a host of new tariffs, several statewide officials said this week.
“We are the most trade-driven state economy of all 50 states,” Lt. Gov. Denny Heck told The Spokesman-Review Wednesday. “There’s no way to have this material of an increase in tariffs without it damaging our state’s economy, and in fact, disproportionately, because we are more trade-driven than the other 49 states.”
President Donald Trump on Wednesday unveiled long-awaited tariffs on countries throughout the world ranging from 10% to 49%, creating economic instability and potentially starting trade wars with many of the country’s largest trading partners.
Heck, who previously represented Washington’s 10th Congressional District for four terms, currently serves as Chair of Washington’s Legislative Committee on Economic Development and International Relations, which studies international trade, tourism and industrial development. Since taking office as lieutenant governor, Heck has led trade missions to Canada, Mexico, Taiwan and the United Kingdom.
Until recently, Heck also served as vice-chair of the Export-Import Bank of the United States Advisory Council.
“This leads nowhere good, leads nowhere good,” Heck said of the tariffs announced Wednesday. “It never has.”
Trump’s plan to tariff exports to boost domestic production, Heck said, “is really faulty in a bunch of regards,” including the lack of stability for the business community.
“The zigging and zagging he’s done on tariffs is kind of the opposite of stability,” Heck said. “So it’s not like they can conclude, ‘OK this is it, I’m going to go invest, I’m going to build this plant, and then we’re going to be able to sell this domestically.’ Because he’s changed his mind so often, I’m pretty sure that I, as an investor, would say, ‘I’m not ready to make that decision.’ ”
Investments to boost domestic production, Heck said, also typically take years to come to fruition.
Heck is not alone among state officials sounding the alarm on the state’s economy.
As he unveiled an updated revenue forecast last month, Dave Reich, the state’s chief economist, said there was an “elevated level of risk” in the forecast “due to some of the recent changes in trade policy from the government that has happened pretty rapidly and pretty recently.”
“So there’s some risk going forward,” Reich said on March 18.
Tariffs, Reich said, are a negative to “the national economy and the local economy.”
“In the short run, we expect to see higher prices,” Reich said. “And of course, other countries are retaliating, so that’s a negative for our economic forecast.”
While the tariffs could have far-ranging effects, Heck said he is particularly concerned about the state’s agricultural industry, which he said is “going through some pretty tough times economically.”
Heck, who was presiding over a session of the state Senate as the tariffs were announced, had not yet seen the details on the plan, though he was shown the general details during the interview, including a 10% tariff on all imports with various countries experiencing higher tariffs.
“Liberation day is actually a declaration of war day. Not a shooting war, but it’s a trade war,” Heck said. “It’s nothing less. We are in a trade war, now, officially, with this announcement.”
Heck said he “would not be surprised” if many economists throughout the world opted to raise their projections of a recession this year as they digest the tariff plan.
“You can’t unwind the clock on an integrated global economy without real damage,” Heck said. “And one of the other effects it will have is, of course, it’s going to make things more expensive for people. It is, by definition, inflationary.”
While Heck said presidents have a “considerable amount of authority” to enact tariffs on other countries, it’s not power that “Congress couldn’t take back if the heat got too hot.”
“Lots has been said about so many members of his party to oppose him, even when it’s in the economic best interest of their district,” Heck said. “But there is a threshold, and I think we’re moving toward it. Damage will be done in the meantime.”
The impact of a trade war was partially cited as a factor in the state’s updated revenue forecast, which showed a $845 million decline in projected revenue over the next four years.
On Tuesday, Gov. Bob Ferguson said Washington’s economy could be hit hard by a potential tariff war, noting the state is among those “most dependent” on international trade.
Here’s a look at what leaders in a variety of sectors are anticipating with the new tariffs.
Agriculture
Casey Chumrau, CEO of the Washington State Grain Commission, wrote that it wasn’t clear what effect tariffs would have on the state’s markets.
“On the export side, any reciprocal tariffs imposed by the countries of our customers will be more of a determining factor,” Chumrau said. “We don’t have enough information at this time to make predictions.”
Washington is a major grain exporting state, and the countries that purchase much of the state’s soft white wheat each saw substantial tariffs announced Wednesday. These include China, which now faces a 54% tariff rate – according to CNBC, the White House has clarified the 34% tariffs announced Wednesday will be in addition to previously announced 20% tariffs – the Philippines (17%), Japan (24%), South Korea (25%) and Indonesia (32%), according to the grain commission.
It’s not immediately clear, either, what tariffs might have on the biggest foreign customers of Washington’s wine industry – or even necessarily what tariffs will be imposed on those countries, according to Chris Stone, deputy director of the Washington State Wine Commission.
“It’s just, to be honest, more confusion than answers right now,” Stone said. “The announcement was made, but it didn’t come with a lot of clarity.”
Canada is the biggest foreign destination for Washington’s wine, Stone said, but Wednesday’s announcement made no mention of tariffs on imports from Canada. There also wasn’t immediate clarity on what, if any, industries will be exempted, Stone added.
“We need more detail before we can truly understand the impact,” Stone said. “It will certainly have impact. I think the biggest mystery is the fact that Canada and Mexico were not included. Are they not implementing tariffs on Canada and Mexico or are they going with the previously announced tariffs?”
After Trump’s announcement Wednesday, the White House told reporters that Canada will not be subject to the newly announced baseline tariffs of 10% across the board, and instead the previously announced border-related tariffs will continue to apply, the Canadian Broadcast Corporation reported.
Attempts to seek comment from the Washington Apple Commission, the Washington State Wheat Growers, the Northwest Horticultural Association as well as Spokane-area growers and agricultural product makers regarding the potential impacts on tariffs were largely unsuccessful.
Automotive
The Trump administration has also already imposed a 25% tariff on foreign-made vehicles that takes effect Thursday and similar tariff rates on foreign automotive parts starting May 3.
The Washington State Auto Dealers Association, which represents the state’s 293 franchised new car and truck dealerships, raised concerns that increased tariffs could make it more difficult for consumers to afford new and used vehicles.
“We don’t know exactly how much prices will go up,” wrote Vicki Fabre, executive vice president for the association. “And it won’t be uniform. Some vehicles will be more affected than others. Estimates right now go anywhere from $2,000 per vehicle to north of $10,000 per vehicle.”
Fabre expressed that the association supports strengthening U.S. manufacturing, but that dealers “need a viable path to get there.”
“We encourage a path that affords manufacturers the opportunity to restructure their operations before imposing tariffs that fall more heavily on America’s car buyers,” Fabre wrote.
Homebuilding
Similarly, the Spokane Home Builders Association expressed support for greater U.S. manufacturing but stressed that there is a current shortage of 1.5 million homes nationwide and 35,000 in Spokane County.
Isaiah Paine, public affairs and strategic office for the association, noted that the industry estimates about 7% of all goods used in residential construction are foreign-sourced, including 30% of softwood lumber and 30% of appliances. Gypsum and lime products also largely come out of Mexico, he added.
“While we certainly welcome elimination of barriers to domestic production, specifically lumber production … in the immediate term, there’s a housing crisis,” Paine said.
Manufacturing
In his Wednesday address in the Rose Garden, Trump argued that tariffs would bring back American manufacturing jobs.
“Jobs and factories will come roaring back into our country, and you see it happening already,” Trump said. “We will supercharge our domestic industrial base.”
Britt La Chance is the CEO of Liberty Lake-based Premier Manufacturing, a company that makes precision sheet metal products for use in electrical enclosures, data centers and other products. It exports products globally.
“All in all, it’s going to increase demand for U.S. manufacturing, so as an American manufacturer, it’s going to increase reliance on us, as opposed to some of the foreign providers,” Le Chance said in an interview.
In many cases, Le Chance thinks the increased costs to consumers from more reliance on American made goods will be marginal.
“What most people don’t understand is there are already domestic sources in place for a lot of those products, but a lot of them were not being procured because they were a 5% higher price,” he said.
Retaliatory tariffs may impact his business, he noted, though he said around 80% of the company’s raw goods are produced in the United States, after the company turned toward domestic sources during the COVID-19 pandemic. He added that his company often struggles to compete in foreign markets due to the trade barriers in those countries, and hopes that this trade dispute results in a fairer landscape for American-made goods.
Not everyone in the manufacturing sector, however, believes that tariffs will largely benefit American companies or consumers.
Edmund O. Schweitzer III, founder of Pullman-headquartered Schweitzer Engineering Laboratories, made no secret of his concerns with tariffs leading up to Wednesday’s announcement. In early March, he co-wrote an op-ed in The Spokesman-Review with U.S. Rep. Michael Baumgartner disputing the Trump administration’s claims that tariffs would not raise prices for American consumers and arguing that they would disrupt the free market.
“The modern system of global free trade took shape after World War II, with the U.S. leading the charge,” the two wrote. “Nations that remained outside the global free trade system – including the Soviet Union – lagged behind economically, with outdated products and inefficient agricultural methods.”
“Eastern Washington will suffer from these tariffs, hurting manufacturers and farmers who, like SEL, want a fair, free, flat and open playing field and stable international relations to prosper,” they continued.
Following Wednesday’s announcement, Schweitzer wrote in a statement that the new tariffs “may likely go down in history as one of the worst examples of taxation in the United States.”
“Unlike Smoot-Hawley 95 years ago, Trump inflicted tariffs on us single-handedly, with no input from We the People,” he wrote. “I just don’t see how his tariffs can be justified as an emergency, nor can I see how his use of the IEEPA is legitimate.”