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The ripple effects of tariffs for Washington state

The United States flag and the Canadian flag fly side by side in Cheektowaga, N.Y., Wednesday, Nov. 14, 2007. President Trump's 25% tariff on goods imported from Canada and Mexico could have a unique impact on Washington as a border state.
David Duprey
/
AP
The United States flag and the Canadian flag fly side by side in Cheektowaga, N.Y., Wednesday, Nov. 14, 2007. President Trump's 25% tariffs on Mexico and Canada could have a unique impact on Washington as a border state.

President Donald Trump has promised to implement a 25% tariff on goods imported from Canada and Mexico starting Saturday. The president said he’s trying to urge the two U.S. neighbors to enforce tighter border controls.

The tariffs would fly in the face of the United States-Mexico-Canada Agreement signed by Trump himself in 2020.

How would the proposed tariff affect Washington businesses and consumers?  

Hart Hodges, an associate professor at Western Washington University’s College of Business and Economics joined KNKX's Emil Moffatt to discuss.

Click "Listen" above to hear their conversation and find highlights below.

Interview Highlights

On the impact on Washingtonian

We'll start with the direct U.S. imposed tariffs, if they happen. Some of the largest imports from Canada to Washington are oil and gas, which we may not see the tariffs in that area.

Lumber. We've already had long conversations in the state about affordable housing and the cost of construction. Tariffs on lumber would not help that. Electric power. There's a fair bit of power that we import from British Columbia, you know all the talk about AI and the cost of power and electrification of homes would be impacted, because those things are going to get more expensive with the tariffs.

If there's retaliation, some of the export areas: aircraft and aircraft parts, some of the paper and paper board that is made in Washington goes up to Canada; fruits and nuts and even farming equipment.

On the possibility of Canadian retaliatory tariffs

If there's retaliation and those exports fall that would certainly be felt in a variety of sectors in Washington's economy. So I think we can be pretty worried locally about what might happen.

On the implications for communities near the Washington-Canada border

I think one of the ways that those communities would feel the sting is simply less cross border traffic. In Bellingham, for example, retail sales per capita are a little bit higher than you would think. Some of the additional revenue is attributed to Canadian shoppers. Definitely true in Blaine and Sumas, right on the border.

We're also going to feel it, whether it's Bellingham or somewhere else in Washington [in] higher prices. Tariffs can lead to higher consumer prices and a bit of inflation, even if they don't happen, just the talk of tariffs, can be a bit inflationary.

On the rarity of tariffs in North America

There's been a certain stability in the relationships, trade relationships, we've had with Mexico and Canada, some of our largest trading partners. Now businesses are wondering, should I make that next investment? Or do I just wait? I've got to wait and see, and that waiting slows down economic activity and growth.

I feel like there's an oversimplification every now and then, that trade is something you win at. Most economists look at trade as something both parties, or all parties, can benefit from. It's not a win versus lose. And so it's an older view of 'we want to export more than we import.' That's not always the case, and we've got to be careful about that.

Emil Moffatt joined KNKX in October 2022 as All Things Considered host/reporter. He came to the Puget Sound area from Atlanta where he covered the state legislature, the 2021 World Series and most recently, business and technology as a reporter for WABE. Contact him at emoffatt@knkx.org.