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.
The Crosswinds report assesses the economic impact of recent U.S. trade policy changes on Washington State.
Key impacts of proposed tariffs highlighted in the Crosswinds report
Consumer prices are expected to rise if tariffs are passed on to buyers. We developed a statistical model to project price impacts. 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.
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.
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.
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.
Overall, while the tariffs have not yet been fully implemented, the potential impacts on Washington state are wide-ranging and significant. The policy could lead to higher consumer prices, slower economic growth, job losses in key sectors, and fiscal pressure on both state and local governments. The magnitude of these effects will depend on the final structure of the tariffs, the scale of retaliation, and how households and firms respond to changing trade conditions.
