Washington companies and customers are once more bracing for a commerce battle after President Donald Trump on Tuesday imposed tariffs on items from Canada, Mexico and China, prompting retaliation or threats of retaliation from all three nations.
Although a full-scale repeat of Trump’s first-term commerce battle should still be averted, consultants say even a restricted dispute may very well be a serious blow in Washington, the place farmers, producers and ports rely closely on Canada, Mexico and China.
Washingtonians may additionally really feel ache if costlier imports spur inflation or if slowing exports lead to misplaced jobs.
“It’s a double whammy for us,” mentioned Sam Cho, a Port of Seattle commissioner, of the potential impacts from Trump’s tariffs. “It’s going to be actually, actually dangerous.”
The tariffs — basically taxes that importers pay on imported items — are largely the identical ones that Trump introduced Feb. 1 after which suspended for 30 days. The president paused these measures partially to permit Canada and Mexico to answer Trump’s complaints about unlawful immigration and cross-border drug trafficking.
Trump’s choice to revive the tariffs prompted swift reactions.
Canada, which is able to see tariffs of 25% on most items and 10% on oil and different vitality merchandise, reacted by slapping 25% tariffs on an inventory of U.S. items that would develop to $85 billion.
China, which now faces tariffs of 20%, retaliated with tariffs of 10%-15% on some U.S. items, together with seafood, dairy merchandise, and vegetables and fruit, all of that are key Washington exports. Mexico, which additionally faces a 25% tariff, plans to announce its personal retaliatory measures Sunday.
Particulars are nonetheless obscure, and the uncertainty comes simply as many exporting companies are attempting to plan for the yr. However the battle may hit an enormous fraction of Washington’s commerce financial system.
China is Washington’s greatest export market, with $12 billion in exports in 2024, based on the Workplace of the U.S. Commerce Consultant. Canada is the second largest, at $7.9 billion, and Mexico is No. 4, at $4.3 billion.
Mixed, these three nations accounted for 42% of Washington’s $58 billion export marketplace for 2024.
And these three nations are simply the beginning. A 25% tariff on imported aluminum and metal will go into impact March 12 and different, as yet-unspecified tariffs on all agricultural imports and vehicles have been introduced for April 2. Trump has additionally talked about tariffs on the European Union.
With Washington state’s exports nonetheless not again to pre-pandemic ranges, and much under their 2014 peak, enterprise leaders and policymakers concern a second Trump commerce battle may additional hamper the state’s export restoration.
“Once we’re attempting to (encourage) financial improvement … this doesn’t assist — a wholesale assault on commerce relationships with a few of our closest allies,” state Commerce Secretary Joe Nguyen mentioned.
Right here’s what a few of Washington’s largest employers and financial drivers can count on:
Amazon
Amazon, like many retailers, must strike a balancing act as tariffs take impact.
The e-commerce big and its unbiased distributors must resolve: Go further prices on to customers by elevating costs, or take up them, squeezing revenue margins.
Amazon has much more flexibility there than its third-party sellers, who account for roughly 60% of gross sales on the e-commerce platform.
However Trump’s worldwide commerce technique may have some advantages for the e-commerce world.
Some third-party sellers who already produce items within the U.S. may acquire a aggressive benefit over rivals. And Amazon itself may get a leg up in its race with ultra-low-cost purchasing platforms Temu and Shein, each primarily based in China.
Sucharita Kodali, an analyst with Forrester, mentioned she expects Amazon received’t should steadiness too many elements in its hypothetical tariff scale. The corporate has diversified its provide chain and its sellers are inventive, she mentioned.
Others aren’t so optimistic.
“Whereas there may very well be winners and losers, Amazon’s heavy reliance on overseas — particularly Chinese language — suppliers signifies that the prices will probably outweigh any potential advantages,” Monica Morlacco, an economics professor on the College of Southern California, mentioned in an e-mail Tuesday.
Brian Kelly, an economics professor at Seattle College, mentioned if Amazon raises costs, customers will really feel the pinch fairly shortly. Amazon, and different retailers, Kelly mentioned, may tack the brand new value improve on as a separate merchandise as a method to “move the blame.”
Amazon didn’t reply to requests for remark Tuesday, and executives didn’t tackle the impression of tariffs at its most up-to-date quarterly earnings name with traders in February.
Costco
In a name with traders in December, Costco’s chief monetary officer warned of the potential impression of tariffs.
“Tariffs elevate prices in order that’s not one thing that we see as a optimistic typically,” Gary Millerchip mentioned.
Nonetheless Costco’s enterprise could not really feel the chew of tariffs as a lot as its buyers will.
The Issaquah-based firm’s “distinctive place in retail” could buffer it towards the tariffs, mentioned P.V. (Sundar) Balakrishnan, head of the advertising, retail administration and enterprise communications division on the College of Washington, Bothell.
Costco’s concentrate on bulk and important gadgets in addition to its membership mannequin that builds loyalty insulates the corporate.
“Costco’s membership mannequin encourages clients to maximise their funding by consolidating purchases underneath one roof, doubtlessly offsetting any decline in discretionary spending,” Balakrishnan mentioned.
The corporate didn’t reply to a request for remark Tuesday.
Costco buyers will probably really feel the sting of upper costs. The whole lot from imported beef, pork, maple syrup and flowers from Canada, tequila and beer from Mexico to clothes and family home equipment from China may improve in value.
Boeing
Boeing, with each aerospace elements suppliers and airline clients in each nook of the world, warns routinely in its monetary filings that commerce limitations and tariffs threaten its world enterprise.
Dozens of aerospace suppliers to Boeing are positioned throughout the northern and southern borders. Tariffs and countertariffs will definitely add prices and, if utilized over an prolonged interval, may have a considerable impression.
However aerospace producers are solely starting to be taught what it means for them.
For some, their product requires a number of border crossings. Designed Precision Castings, for instance, melts and pours imported U.S. aluminum or metal in Ontario to forged elements which will then return to the U.S. for ending.
“Will it get tariffed each time it crosses the border?” puzzled U.S. gross sales rep Peter Zygadlo. “Or do the tariffs apply solely to the tip product?”
At this level, nobody is aware of.
In the meantime, resulting from geopolitical stress with the U.S., China — the most important aviation market on this planet — has largely shut Boeing out of latest jet orders since 2018, whereas putting massive orders with Airbus.
New U.S. tariffs on China will lengthen that freeze on new Boeing orders and should sluggish deliveries of current jet orders.
Nordstrom
Seattle-based Nordstrom, which posted upbeat quarterly outcomes Tuesday, may very well be bracing for a difficult time forward.
Tariffs could have an effect on the corporate in just a few other ways, mentioned David Swartz, Morningstar senior fairness analyst.
To start out, they are going to probably hit the manufacturers offered at Nordstrom, since China is among the greatest suppliers of attire to the U.S. The price of these tariffs will ultimately make their approach onto the shop ground.
“The manufacturers which are offered at Nordstrom and different department shops are going to be affected by tariffs, and they also’re going to have to boost costs,” mentioned Swartz. In consequence, Nordstrom will probably have to boost costs, too.
Nordstrom additionally immediately depends on manufacturing in China to supply a lot of its private-label items.
Non-public-label clothes is especially weak to tariffs as a result of buyers count on it to be reasonably priced, Swartz mentioned. “But when the tariffs require them to boost costs, then that form of reduces the enchantment to customers of these form of merchandise.”
How onerous enterprise is hit will depend on how lengthy the commerce battle lasts and whether or not the Trump administration decides to implement larger or extra tariffs. In the long term, larger costs may drive inflation and curtail shopper spending, additional hurting income for retailers like Nordstrom.
One factor that probably received’t be affected, Swartz mentioned, is a deal to take the corporate non-public, set to shut within the first half of this yr.
Nordstrom didn’t reply to requests for remark.
Starbucks
The Seattle-based espresso big depends on an intercontinental espresso provide chain, and a worldwide buyer base. Economists have warned espresso can be one of many items affected by tariffs on imports from Mexico. Trump additionally threatened Colombia, a espresso bean-producing nation, with tariffs in January.
Starbucks additionally has its enterprise overseas to fret about. The corporate’s second-largest market behind the U.S. is China. In a regulatory submitting in November, Starbucks warned authorities regulatory reform associated to tariffs affecting worldwide markets like China may elevate prices.
“As a result of significance of our China market enterprise models for our revenue and progress, we’re uncovered to dangers in China,” the submitting mentioned.
In October, Starbucks CEO Brian Niccol mentioned the corporate wouldn’t improve menu costs by its 2025 fiscal yr, which ends on the finish of September. Starbucks declined to touch upon any potential results of tariffs.
Microsoft
Trump is contemplating tariffs on chips, which may have an effect on the tech trade as most main corporations bounce on the AI growth fueled by chips made in Taiwan.
However the tariffs levied towards items from China may drive up {hardware} prices for tech customers, significantly avid gamers.
Microsoft has insulated its gaming enterprise from hardware-cost volatility. The creator of the Xbox has been shifting away from gaming consoles as a big income driver.
Since its $69 billion acquisition of Activision Blizzard, Microsoft has been relying extra on software program gross sales by pushing video games to customers over the cloud and to different platforms, mentioned Neil Barbour, an trade analyst with S&P International Market Intelligence.
But when tariffs have been to drive down shopper spending over an prolonged time period, it may attain Microsoft.
“If total person progress stalls as a result of abruptly all gaming {hardware} is dearer, that may ultimately stymie Microsoft’s recreation gross sales,” Barbour mentioned.
Microsoft declined to touch upon any potential results of tariffs.
REI
REI faces a tough journey from tariffs on its imported outside gear.
The Seattle-founded co-op is weak as a result of its merchandise are “largely discretionary, typically imported and topic to seasonal winds,” UW’s Balakrishnan mentioned.
REI sells a spread of merchandise made in Canada and China, comparable to Arc’teryx model attire and sure Patagonia model gadgets.
The corporate is also attempting to get well from a rocky interval. In January, the Issaquah-based firm introduced it was shedding 180 full-time and 248 part-time staff, and eradicated its outside lessons, occasions and excursions.
Balakrishnan mentioned the corporate’s enterprise mannequin, which depends on a slim, however passionate, buyer base, “gives little shelter from tariff storms.”
REI didn’t reply to a request for touch upon Tuesday.
Transport
A commerce battle would even have a serious impression on cargo volumes and associated jobs at Washington’s ports.
China accounts for round 40% of cargo quantity on the ports of Seattle and Tacoma, based on Northwest Seaport Alliance, which oversees marine cargo operations at each ports.
For a number of months after Trump’s reelection in November, cargo volumes surged at each ports, which port officers imagine was at the very least partly from importers and exporters ordering further merchandise earlier than an anticipated commerce battle.
Inbound container volumes have been up 29% for November and December in contrast with the identical interval in 2023, and up 38% in January in comparison with January 2024, based on alliance figures.
One other impression: as import restrictions cut back incoming cargo, it additionally means fewer empty cargo containers and empty ships can be found for farmers and different Washington exporters, mentioned Cho.
Agriculture
Washington’s farmers are closely depending on overseas markets and extremely weak to any new commerce battle.
In 2023, Washington exported $7.5 billion in meals that have been grown or processed within the state, with greater than a 3rd of that going to Canada, China and Mexico, based on the state Division of Agriculture. Canada alone takes $1.3 billion in Washington farm merchandise.
General, the state exports as much as 90% of its wheat crop, as much as 70% of its potatoes and round 30% of its apples and 25% of its cherries, state knowledge from 2023 signifies.
Though many crops haven’t but been particularly focused by Canada, Mexico or China, Washington producers are cautious.
“That may very well be coming,” mentioned Chris Voigt, govt director of the Washington State Potato Fee. “Mexico is predicted to announce their listing on Sunday and we weren’t on Canada’s first listing however will most likely be on their second listing.”
As vital, Washington farmers are extremely depending on overseas provides of fertilizer, tools and different merchandise.
The state’s wheat farmers get 90% of their fertilizer from Canada, and a number of chemical compounds and farm equipment from China, mentioned Casey Chumrau, CEO of the Washington Grain Fee.
Uncertainty over these prices, Chumrau mentioned, is enjoying havoc with wheat farmers who “are having to make choices and purchases proper now for spring — inputs, fertilizer, that form of factor.”
Seattle Occasions enterprise reporters Paul Roberts, Jessica Fu, Dominic Gates, Alex Halverson, Lauren Rosenblatt and freelance reporter Victor Whitman contributed.
