WA businesses fear higher costs, tougher exports due to Trump tariffs

Washington’s aerospace and agriculture industries, among others, began bracing Saturday for major impacts from steep tariffs announced by the Trump administration, with warnings of higher prices for consumers and major losses for some businesses.

The Trump administration announced tariffs Saturday of 25% on all imports from Mexico and Canada — except for a lower 10% on energy imported from Canada like oil, natural gas and electricity — and 10% on all imports from China. The tariffs are set to go into effect at 12:01 a.m. EST Tuesday.

President Donald Trump has said the tariffs are both a punishment and a negotiating chip, as he has accused Mexico and Canada of allowing migrants and drugs to cross borders into the United States. Trump has downplayed the impact on the American economy, but many economists and business leaders say the effects will be large, especially for a heavily trade-dependent state like Washington, which is both a major importer and exporter.

“President Trump just started a trade war that will raise prices on American families and invite retaliation against American businesses, workers, and farmers,” Rep. Suzan DelBene, D-Medina, said in a prepared statement Saturday.

Canadian Prime Minister Justin Trudeau announced retaliatory tariffs of 25% on up to $155 billion of U.S. imports Saturday night.

“We don’t want to be here, we didn’t ask for this, but we will not back down,” Trudeau said in a somber speech. “We need to respond to this.”

He urged Canadians to choose Canadian products and Canadian businesses and to reconsider vacations to the United States.

Mexican President Claudia Sheinbaum also ordered retaliatory tariffs.

The premier of British Columbia, Washington’s neighbor to the north, announced a retaliatory move Saturday designed to inflict political pain on Trump’s Republican Party. He said the province’s liquor distribution would immediately stop buying American liquor from Republican-controlled states.

Experts predicted consumers could begin to see higher prices within days or weeks for perishable produce from Mexico, things like avocados, tomatoes and cucumbers.

“There’s going to be a really substantial price impact on consumers and producers,” said Theo Eicher, a University of Washington professor of economics and an expert on trade. “My heart goes out to any company that does trade with these nations.”

About 60% of the oil imported to the U.S. comes from Canada, so even with the lower tariff on Canadian oil, drivers could see higher prices at the pump.

For two major Washington industries — aerospace and agriculture — it can be difficult to pass on the price of tariffs, meaning the businesses must either eat the cost increases or fold.

The Western United States gets about 90% of its fertilizer from Canada, said Casey Chumrau, CEO of the Washington Grain Commission.

“Any additional cost, of course, will be passed on to the farmers,” Chumrau said. But as wheat is sold on commodity markets, a wheat farmer can’t just decide to charge more for wheat.

“Our biggest concern is how it’s going to affect our farmers and their ability to stay in business,” Chumrau said. “If these tariffs go in, and if they have the major impact that we would expect that they will, then we’re going to need to have some kind of assistance again to be able to get our farmers through this period.”

For Boeing, already teetering after a disastrous few years, there’s likely no way to pass the costs of tariffs on to consumers. The company has preexisting contracts with airlines that almost certainly don’t contain clauses for tariffs, experts said.

“I’ve never heard of a clause of a contract saying, ‘Oh, if tariffs are imposed, we can pass that on to you,’ ” said Kevin Michaels, managing director of AeroDynamic Advisory, an industry consulting firm. “That doesn’t exist.”

Both Canada and Mexico export about $10 billion of aerospace products a year to the U.S., Michaels said.

For Canada, that’s divided roughly half and half between Bombardier business jets and intermediate parts for other planes.

The Toronto area, for instance, is “the landing gear capital of the world,” Michaels said. It makes the landing gear for the 787, the 777 and the 777X, he said.

“It’s items like that that Boeing is going to have to pay more for,” Michaels said. “Someone’s going to eat that and it’s not going to be the airline, it’s going to be Boeing or its extremely fragile supply base.”

Mexico is more complicated. Almost all the aerospace products it sends to the U.S. are intermediate goods — sheet metal, forgings, engine parts, components — rather than finished products.

Many of those parts get passed back and forth across the border multiple times before they wind up on a finished plane, Michaels said, so if Mexico retaliates with tariffs of its own the cost increases could compound exponentially.

He likened the imposition of tariffs to an arterial blockage.

“It’s an integrated ecosystem; you’re just putting blood clots in the ecosystem,” Michaels said.

The retaliatory tariffs already announced by Canada, and potentially other countries to come, could be just as important. The Trump administration has already threatened even higher tariffs if Canada and Mexico enact their own.

Jacob Vigdor, a UW professor of public policy and governance, said retaliatory tariffs could have significant impacts on upcoming agricultural harvests.

Washington exported $7.5 billion of agricultural goods grown and processed here in 2023, and the state sent out an additional $11 billion in agricultural goods grown and processed in other states. Canada is Washington’s biggest international customer.

Most affected could be the fishing industry: Washington sent $321 million worth of fish and seafood to Canada in 2023.

China and Mexico are also big buyers of Washington produce, meats and grains. China is Washington agriculture’s third-largest export market and Mexico is fourth.

China bought $207 million of Washington beef in 2023; Mexico bought $199 million of Washington apples.

And the rippling uncertainty caused by the tariffs and the threat of more to come could affect Boeing’s future sales, Vigdor said.

Trump has already vowed to impose tariffs on the European Union, home to Airbus.

“Boeing might suffer relative to Airbus for orders from the affected countries,” Vigdor said. “Even if this week’s tariffs are quickly rescinded, the uncertainty of the next four years could steer global aircraft purchases away from the U.S.”

Staff reporter Caitlyn Freeman contributed to this report.