Washington businesses and consumers are again bracing for a trade war after President Donald Trump on Tuesday imposed tariffs on goods from Canada, Mexico and China, prompting retaliation or threats of retaliation from all three nations.
Though a full-scale repeat of Trump’s first-term trade war may still be averted, experts say even a limited dispute could be a major blow in Washington, where farmers, manufacturers and ports depend heavily on Canada, Mexico and China.
Washingtonians could also feel pain if costlier imports spur inflation or if slowing exports result in lost jobs.
“It’s a double whammy for us,” said Sam Cho, a Port of Seattle commissioner, of the potential impacts from Trump’s tariffs. “It’s going to be really, really harmful.”
The tariffs — essentially taxes that importers pay on imported goods — are largely the same ones that Trump announced Feb. 1 and then suspended for 30 days. The president paused those measures in part to allow Canada and Mexico to respond to Trump’s complaints about illegal immigration and cross-border drug trafficking.
Trump’s decision to restore the tariffs prompted swift reactions.
Canada, which will see tariffs of 25% on most goods and 10% on oil and other energy products, reacted by slapping 25% tariffs on a list of U.S. goods that could grow to $85 billion.
China, which now faces tariffs of 20%, retaliated with tariffs of 10%-15% on some U.S. goods, including seafood, dairy products, and fruits and vegetables, all of which are key Washington exports. Mexico, which also faces a 25% tariff, plans to announce its own retaliatory measures Sunday.
Details are still vague, and the uncertainty comes just as many exporting businesses are trying to plan for the year. But the conflict could hit a huge fraction of Washington’s trade economy.
China is Washington’s biggest export market, with $12 billion in exports in 2024, according to the Office of the U.S. Trade Representative. Canada is the second largest, at $7.9 billion, and Mexico is No. 4, at $4.3 billion.
Combined, those three nations accounted for 42% of Washington’s $58 billion export market for 2024.
And these three countries are just the start. A 25% tariff on imported aluminum and steel will go into effect March 12 and other, as yet-unspecified tariffs on all agricultural imports and automobiles have been announced for April 2. Trump has also talked about tariffs on the European Union.
With Washington state’s exports still not back to pre-pandemic levels, and far below their 2014 peak, business leaders and policymakers fear a second Trump trade war could further hamper the state’s export recovery.
“When we’re trying to (encourage) economic development … this doesn’t help — a wholesale attack on trade relationships with some of our closest allies,” state Commerce Secretary Joe Nguyen said.
Here’s what some of Washington’s largest employers and economic drivers can expect:
Amazon
Amazon, like many retailers, will have to strike a balancing act as tariffs take effect.
The e-commerce giant and its independent vendors will have to decide: Pass additional costs on to consumers by raising prices, or absorb them, squeezing profit margins.
Amazon has a lot more flexibility there than its third-party sellers, who account for roughly 60% of sales on the e-commerce platform.
But Trump’s international trade strategy could have some benefits for the e-commerce world.
Some third-party sellers who already produce goods in the U.S. could gain a competitive advantage over rivals. And Amazon itself could get a leg up in its race with ultra-low-cost shopping platforms Temu and Shein, both based in China.
Sucharita Kodali, an analyst with Forrester, said she expects Amazon won’t have to balance too many factors in its hypothetical tariff scale. The company has diversified its supply chain and its sellers are creative, she said.
Others aren’t so optimistic.
“While there could be winners and losers, Amazon’s heavy reliance on foreign — especially Chinese — suppliers means that the costs will likely outweigh any potential benefits,” Monica Morlacco, an economics professor at the University of Southern California, said in an email Tuesday.
Brian Kelly, an economics professor at Seattle University, said if Amazon raises prices, consumers will feel the pinch pretty quickly. Amazon, and other retailers, Kelly said, could tack the new price increase on as a separate item as a way to “pass the blame.”
Amazon did not respond to requests for comment Tuesday, and executives did not address the impact of tariffs at its most recent quarterly earnings call with investors in February.
Costco
In a call with investors in December, Costco’s chief financial officer warned of the potential impact of tariffs.
“Tariffs raise costs so that’s not something that we see as a positive in general,” Gary Millerchip said.
Still Costco’s business may not feel the bite of tariffs as much as its shoppers will.
The Issaquah-based company’s “distinctive position in retail” may buffer it against the tariffs, said P.V. (Sundar) Balakrishnan, head of the marketing, retail management and business communications department at the University of Washington, Bothell.
Costco’s focus on bulk and essential items as well as its membership model that builds loyalty insulates the company.
“Costco’s membership model encourages customers to maximize their investment by consolidating purchases under one roof, potentially offsetting any decline in discretionary spending,” Balakrishnan said.
The company didn’t respond to a request for comment Tuesday.
Costco shoppers will likely feel the sting of higher prices. Everything from imported beef, pork, maple syrup and flowers from Canada, tequila and beer from Mexico to clothing and household appliances from China could increase in price.
Boeing
Boeing, with both aerospace parts suppliers and airline customers in every corner of the world, warns routinely in its financial filings that trade barriers and tariffs threaten its global business.
Dozens of aerospace suppliers to Boeing are located across the northern and southern borders. Tariffs and countertariffs will certainly add costs and, if applied over an extended period, could have a substantial impact.
But aerospace manufacturers are only beginning to learn what it means for them.
For some, their product requires multiple border crossings. Designed Precision Castings, for example, melts and pours imported U.S. aluminum or steel in Ontario to cast parts that may then go back to the U.S. for finishing.
“Will it get tariffed every time it crosses the border?” wondered U.S. sales rep Peter Zygadlo. “Or do the tariffs apply only to the end product?”
At this point, no one knows.
Meanwhile, due to geopolitical tension with the U.S., China — the largest aviation market in the world — has largely shut Boeing out of new jet orders since 2018, while placing large orders with Airbus.
New U.S. tariffs on China will extend that freeze on new Boeing orders and may slow deliveries of existing jet orders.
Nordstrom
Seattle-based Nordstrom, which posted upbeat quarterly results Tuesday, could be bracing for a challenging time ahead.
Tariffs may affect the company in a few different ways, said David Swartz, Morningstar senior equity analyst.
To start, they will likely hit the brands sold at Nordstrom, since China is one of the biggest suppliers of apparel to the U.S. The cost of those tariffs will eventually make their way onto the store floor.
“The brands that are sold at Nordstrom and other department stores are going to be affected by tariffs, and so they’re going to have to raise prices,” said Swartz. As a result, Nordstrom will likely have to raise prices, too.
Nordstrom also directly relies on manufacturing in China to produce many of its private-label goods.
Private-label clothing is particularly vulnerable to tariffs because shoppers expect it to be affordable, Swartz said. “But if the tariffs require them to raise prices, then that kind of reduces the appeal to consumers of those kind of products.”
How hard business is hit depends on how long the trade war lasts and whether the Trump administration decides to implement higher or more tariffs. In the long run, higher prices could drive inflation and curtail consumer spending, further hurting revenue for retailers like Nordstrom.
One thing that likely won’t be affected, Swartz said, is a deal to take the company private, set to close in the first half of this year.
Nordstrom did not respond to requests for comment.
Starbucks
The Seattle-based coffee giant relies on an intercontinental coffee supply chain, and a global customer base. Economists have warned coffee would be one of the goods affected by tariffs on imports from Mexico. Trump also threatened Colombia, a coffee bean-producing country, with tariffs in January.
Starbucks also has its business abroad to worry about. The company’s second-largest market behind the U.S. is China. In a regulatory filing in November, Starbucks warned government regulatory reform related to tariffs affecting international markets like China could raise costs.
“Due to the significance of our China market business units for our profit and growth, we are exposed to risks in China,” the filing said.
In October, Starbucks CEO Brian Niccol said the company would not increase menu prices through its 2025 fiscal year, which ends at the end of September. Starbucks declined to comment on any potential effects of tariffs.
Microsoft
Trump is considering tariffs on chips, which could affect the tech industry as most major companies jump on the AI boom fueled by chips made in Taiwan.
But the tariffs levied against goods from China could drive up hardware costs for tech consumers, particularly gamers.
Microsoft has insulated its gaming business from hardware-cost volatility. The creator of the Xbox has been moving away from gaming consoles as a significant revenue driver.
Since its $69 billion acquisition of Activision Blizzard, Microsoft has been relying more on software sales by pushing games to consumers over the cloud and to other platforms, said Neil Barbour, an industry analyst with S&P Global Market Intelligence.
But if tariffs were to drive down consumer spending over an extended period of time, it could reach Microsoft.
“If overall user growth stalls because suddenly all gaming hardware is more expensive, that would eventually stymie Microsoft’s game sales,” Barbour said.
Microsoft declined to comment on any potential effects of tariffs.
REI
REI faces a rough ride from tariffs on its imported outdoor gear.
The Seattle-founded co-op is vulnerable because its products are “largely discretionary, often imported and subject to seasonal winds,” UW’s Balakrishnan said.
REI sells a range of products made in Canada and China, such as Arc’teryx brand apparel and certain Patagonia brand items.
The company also is trying to recover from a rocky period. In January, the Issaquah-based company announced it was laying off 180 full-time and 248 part-time employees, and eliminated its outdoors classes, events and tours.
Balakrishnan said the company’s business model, which relies on a narrow, but passionate, customer base, “provides little shelter from tariff storms.”
REI didn’t respond to a request for comment on Tuesday.
Shipping
A trade war would also have a major impact on cargo volumes and related jobs at Washington’s ports.
China accounts for around 40% of cargo volume at the ports of Seattle and Tacoma, according to Northwest Seaport Alliance, which oversees marine cargo operations at both ports.
For several months after Trump’s reelection in November, cargo volumes surged at both ports, which port officials believe was at least partly from importers and exporters ordering extra products before an expected trade war.
Inbound container volumes were up 29% for November and December compared with the same period in 2023, and up 38% in January compared to January 2024, according to alliance figures.
Another impact: as import restrictions reduce incoming cargo, it also means fewer empty cargo containers and empty ships are available for farmers and other Washington exporters, said Cho.
Agriculture
Washington’s farmers are heavily dependent on foreign markets and highly vulnerable to any new trade war.
In 2023, Washington exported $7.5 billion in foods that were grown or processed in the state, with more than a third of that going to Canada, China and Mexico, according to the state Department of Agriculture. Canada alone takes $1.3 billion in Washington farm products.
Overall, the state exports up to 90% of its wheat crop, up to 70% of its potatoes and around 30% of its apples and 25% of its cherries, state data from 2023 indicates.
Although many crops haven’t yet been specifically targeted by Canada, Mexico or China, Washington producers are wary.
“That could be coming,” said Chris Voigt, executive director of the Washington State Potato Commission. “Mexico is expected to announce their list on Sunday and we weren’t on Canada’s first list but will probably be on their second list.”
As important, Washington farmers are highly dependent on foreign supplies of fertilizer, equipment and other products.
The state’s wheat farmers get 90% of their fertilizer from Canada, and a lot of chemicals and farm machinery from China, said Casey Chumrau, CEO of the Washington Grain Commission.
Uncertainty over those costs, Chumrau said, is playing havoc with wheat farmers who “are having to make decisions and purchases right now for spring — inputs, fertilizer, that kind of thing.”
Seattle Times business reporters Paul Roberts, Jessica Fu, Dominic Gates, Alex Halverson, Lauren Rosenblatt and freelance reporter Victor Whitman contributed.
