Editorial: A trade-dependent state braces for Trump’s tariffs

By The Herald Editorial Board

For a state such as Washington that is dependent on international trade for its businesses, jobs and overall economy, hearing an incoming U.S. president describe tariffs as “the most beautiful word in the dictionary,” and tout trade wars as “good and easy to win,” the coming of Trump administration 2.0 might be unsettling.

As with most of the players among Washington state’s exporters and importers, Lori Otto Punke, president of the Washington Council on International Trade — the Northwest’s leading association advocating for trade and investment policy — has been here before; she began leading the WCIT at the start of Donald Trump’s first term, nearly eight years ago.

The incoming Trump administration’s influence regarding trade in Washington was the subject of discussions this week among members of the Washington State Port Association, Otto Punke said, including what to expect and how to navigate the next four years, based on his first term and what he’s promised for his second.

“It’s an important conversation for Washington state,” she said.

Most Washington residents understand trade at a basic “apples and aerospace” level, she said; among the state’s leading exports being Boeing jets and Gala (and other) apples. But the products and services leaving Washington — as well as other U.S. goods that transit through the state’s airports and maritime ports — represent a broadly diversified economy, including forest products, high technology, clean tech, medical equipment, military equipment, food and agricultural products, beer, wine, spirits and more.

About 40 percent of jobs in Washington state — manufacturing, food and agriculture, retail, technology and science — are tied to international trade. In recent years, according to the WCIT’s online trade dashboard and other reports, exports from Washington, joined with those from Oregon, totaled more than $135 billion and supported 900,000 jobs in Washington and another 500,000 in Oregon.

The markets for those exports span the continents, but among the largest customers are China, Canada, Japan, Mexico, South Korea and India. And 95 percent of the goods and services produced in Washington state go to consumers in those global markets.

There’s growing concern now because of statements the president-elect made during his campaign and more recently. Trump has long decried the U.S. trade deficit — the difference in value between exports and imports — and views tariffs — a tax levied against imports into the country — as a solution to that imbalance, a way to encourage more U.S. manufacturing, a source of federal revenue and policy leverage against other countries.

During the campaign, Trump announced his plans for tariffs of 60 percent levied against all products coming from China, and 10 percent to 20 percent against all other countries. More recently, citing ongoing problems with illegal immigration and smuggling of fentanyl, Trump has threatened an additional 10 percent tariff against China and 25 percent tariffs against Canada and Mexico.

The problem for consumers with tariffs on imports is that those costs are typically passed along as price increases, contributing to inflation. But those tariffs also can prompt other countries to levy their own tariffs on U.S. exports, discouraging sales of U.S. made products and services. And tariffs can also increase costs for U.S. manufacturers who import materials and parts for the products they produce, such as the aluminum in Boeing jets.

In the past, negotiations among countries over tariffs and trade agreements — such as between the U.S., Mexico and Canada during the first Trump administration — have been effective in striking a fairer balance of trade and resolving issues. But linking tariffs to non-trade issues is a new wrinkle, Otto Punke said.

“What we are trying to better understand is what this might look like when you’re talking about the sorts of issues that are not directly related to fairness of trade,” she said. “The challenge that we’re trying to unpack is that fentanyl policy and immigration policy are not something that we as an industry can help solve from a trade perspective.”

As it did during Trump’s first term, the trade council — with California, the only two such state-focused trade organisations in the nation — will focus on outreach and advocacy: among its industry partners; the state’s congressional delegation and its two new House members; and the Trump administration’s trade team, including the nominee for U.S. trade representative, Jamieson Greer, who Otto Punke said served with Trump’s trade team in his first term and has bipartisan respect in Congress.

Otto Punke sees those conversations taking two tracks:

“One, we hope that the agricultural community, which we think we did an excellent job of breaking through last time, has continued success in those conversations with the administration;

“And two, given the inflation issues, a lot of domestic spending is going to continue to be on the minds of the administration, knowing that we could trigger higher costs for American consumers as we tax ourselves more through an aggressive tariff policy.” she said.

The Washington Council on International Trade was an outgrowth of the talks and advocacy with China during the 1970s, led, among others, by Washington Sens. Warren G. Magnuson and Henry M. “Scoop” Jackson. That work brought China’s Deng Xiaoping, then vice premier, to Seattle and Everett in 1979 at President Carter’s invitation, to tour the Boeing plant, from which China had ordered three Boeing 747s, the Seattle waterfront and more.

“That’s one of the reasons Washington was an early adopter to this whole international trade thing,” Otto Punke said. “And a lot of the legacy of that is why we’ve always had bipartisan support for smart trade policy.”

That’s a legacy that Otto Punke wants to preserve.

“There’s a lot of concern and trepidation that if the U.S. continues to retreat from the international stage and from the international trade space, that’ll have negative impacts for (the state’s) livelihoods, employees and businesses,” she said.