Crosswinds Ahead: The Turbulent Tariff Toll on Washingtonians
The federal government has proposed a variety of substantial tariff increases in 2025. If the “Liberation Day” tariffs are enacted, Washington state residents and businesses could experience significant economic impacts across prices, growth, state revenues, and employment. As a trade-intensive state, Washington is particularly exposed to both the direct effects of U.S. tariffs and the likely retaliatory responses from key trading partners.
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Key impacts of tariffs
Higher prices
Consumer prices are expected to rise if tariffs are passed on to buyers. Model projections suggest that essential goods—including automobiles, clothing, furniture, food, natural gas and electricity—could see cumulative price increases over multiple quarters, with some categories such as used cars reaching up to 25% over two years.
These increases would put pressure on household spending, particularly for low- and middle-income families, whose budgets are more sensitive to price changes in basic goods.
Lost jobs
Employment losses could be considerable if retaliatory tariffs reduce foreign demand for Washington products. In the Liberation Day scenario, over 30,000 jobs are projected to be at risk, particularly in crop production, aircraft manufacturing, and related industries.
These job losses may spill over into the broader economy, affecting support services like transportation, education, and health care.
Declining state and local resources
State revenues would also likely decline in response to reduced economic activity. Forecasts estimate cumulative general fund revenue losses of $2.2 billion by 2029 under current tariff assumptions, with even greater losses possible under more aggressive foreign retaliation.
Trade-dependent communities could be especially vulnerable.
Slower Growth
Washington’s economic growth may also slow as a result of reduced trade activity and rising production costs. Simulations indicate that quarterly state GDP growth could decline by 1.2% to 1.8% between 2025 and 2029 under a baseline tariff scenario, with more severe impacts in sectors heavily dependent on exports, such as aerospace, agriculture, and food manufacturing.
About OFM’s Forecasting and Research Division
OFM provides vital information, fiscal services, and policy support that the Governor, Legislature, and state agencies need to serve the people of Washington. The Forecasting and Research Division is uniquely positioned as a source for data, research, and statistical analyses and is home to in-house analytical research and databases ranging from health care, education, demographic characteristics, criminal justice, traffic safety, and economic trends. As data custodians, we value privacy, security, and access. We are committed to promoting diverse and inclusive research communities, reliable data sources, rigorous program evaluations, and accessible information. The Forecasting and Research Division houses the Economics Unit, Public Safety Policy and Research Center (PSPRC), Population Unit, Forecasting Systems Unit, Health Care Research Center (HCRC), and Education Research and Data Center (ERDC).
About the Economics Unit
The Economics Unit of the Forecasting and Research Division is crucial in shaping policy through its detailed economic analyses. We manage tasks like updating the Washington State Input-Output model, analyzing median household income, forecasting long-term employment and income, and refining the state’s net migration model for population projections. Additionally, we provide regular economic updates, highlighting recent economic events to support informed policymaking at OFM, state agencies, and the Governor’s Office. Our unit also tackles special research projects that influence policy, assist communities, and inform budgetary decisions, using data-driven evidence and rigorous methods to enhance Washington state’s economic resilience and growth.
