By The Herald Editorial Board
Throughout his campaign for a second term as president, candidate Donald Trump — in describing tariffs as “the most beautiful word in the dictionary” — insisted that it was foreign countries and not consumers who would pay the additional costs of tariffs he promised to impose once in office.
In threatening tariffs of 25 percent on Canadian and Mexican imports, scheduled to have gone into effect Monday at 9 p.m. local time, as well as an additional 10 percent added to the existing tariff on Chinese imports, President Trump was admitting to the potential consumer pain. Sort of.
“WILL THERE BE SOME PAIN? YES, MAYBE (AND MAYBE NOT!)” Trump posted on Truth Social on Sunday night. “BUT WE WILL MAKE AMERICA GREAT AGAIN, AND IT WILL ALL BE WORTH THE PRICE THAT MUST BE PAID.”
Whether upper case or lower case, “yes, maybe and maybe not” is not the most definitive of statements. For a more certain admission of how the tariffs — especially those placed on Canadian imports — would affect U.S. consumers, look at the tariffs themselves; while all other goods and services from Canada would face a 25 percent surcharge, the tariff on oil and natural gas from Canada faced a 10 percent tariff, a reduction that Trump apparently hoped would cushion the impact on fossil fuel prices from the United States’ largest foreign supplier of petroleum.
Early Monday, Trump negotiated at least a one-month pause of threatened tariffs on Canada’s and Mexico’s imports. Still, the reprieve doesn’t end the threat to economies in Washington state, the U.S., and across borders.
The impacts of a trade war — with Canada and Mexico having promised their own retaliatory 25 percent tariffs on U.S. exports and China potentially imposing its own — would hit Washington state and its residents coming and going.
Consumers in Washington state, who purchased $21 billion in products from Canada in 2023, were threatened with higher prices for a range of products, including natural gas and crude oil, lumber and wood products, aircraft and aircraft parts and electricity.
While export businesses and producers can absorb some portion of tariffs, those costs, according to economists, are substantially passed along to consumers. Estimates from various sources have said American consumers can expect tariffs — if implemented as promised — to add between $850 to $1,200 to household costs in 2025.
Meanwhile, if agreements don’t hold, businesses and their employees can expect reduced demand for their exports to Canada, Mexico and China, as they levy their own surcharges on Washington-made products and services in retaliation. Washington’s $9.6 billion in exports to Canada in 2023 — the state’s No. 2 export market — included electricity, aircraft and parts, fuel oil, paper, fruit, other produce and fish and seafood. For the state’s largest export market, China, Washington sold $11 billion in goods in 2023, representing 18 percent of the state’s worldwide exports. (Mexico was fourth at $3.5 billion.)
Those export markets support about 40 percent of the jobs in the state, according to the Washington Council on International Trade, a Seattle-based organization that represents the state’s export and import businesses.
And it’s more than airplanes and apples, Lori Punke Otto, president of the WCIT told The Herald in December. The range of jobs include manufacturing, food and agriculture, retail, science and technology. And 95 percent of the goods and services produced in Washington state go to consumers in those global markets.
Adding to concern over trade with Canada, Mexico and China, is what Trump seeks in negotiations over the tariffs. The Trump administration, in his first term, renegotiated what was the North American Free Trade Agreement and produced the United States-Mexico-Canada Agreement, which set trade terms that Trump celebrated when adopted.
His latest tariffs and threats this time are aimed at winning concessions on reducing the flow of undocumented immigrants and drugs — including fentanyl and its precursor chemicals — across the U.S. borders with Mexico and Canada and from China. Mexico, as part of its last-minute deal with Trump on Monday, agreed to send 10,000 of its national guard troops to the border, enough for a one-month reprieve.
Trade agreements are difficult enough. Non-trade issues, Punke Otto said in December complicate the arguments and negotiations.
“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.”
Even if a longer-term trade impasse is avoided, even a brief trade war and continued threats of tariffs can prolong the harm.
Punke Otto said that was the experience during the first Trump administration, over the struggle to adopt the new trade agreement and the tariffs that preceded it.
“Even after the (USMCA) phase one deal came to fruition, overall trade for Washington state was still overwhelmingly down. So I think it’s a hard problem to solve and fix,” she said. “And we just know that, from a jobs perspective, we’re pretty nervous and worried about what the impacts might be.”
Trump’s quick deal with Mexico and Canada may point to the proposed tariffs as a threat meant to win concessions from the three countries. But that’s a game of chicken that risks harm to Washington state consumers, jobs, businesses and our relations with allies and rivals alike.
Is that worth the price we may pay?
Maybe. And maybe not.
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