Spokane consumers likely to see higher costs for cars, groceries, homes with new tariffs

Spokane consumers can expect to pay more for cars, lumber, appliances and electronics once President Donald Trump’s higher tariffs on goods from China, Mexico and Canada kick in on Tuesday.

The tariffs, which earlier were paused to allow Mexican and Canadian officials to address border security issues, were confirmed Monday in one of Trump’s social media posts after some members of his administration said he might again postpone or alter the tariffs.

Assuming they start on Tuesday, as Trump said they would, the 25% tariffs on Mexico and Canada likely will mean that Spokane consumers will see higher costs passed on to them, said Steve Scranton, chief economist for Washington Trust Bank.

“Where Washington has the highest exposure for imports from Canada is primarily oil and gas,” which will face a lower 10% tariff, Scranton said. “Clearly, the housing industry, wood products for construction, could be an area for exposure.”

Lumber futures on Monday rose to $650.49, which corresponds to the price for 1,000 board feet of lumber. That’s the highest mark since May 2022.

However, the Monday mark remains far behind the record of $1,668.60 per 1,000 board feet set in May 2021.

While the trading on Monday was not close to the record, it’s still significantly higher than lumber prices from last year. Lumber hit its low mark July 15, 2024, when the lumber futures market came in at $418.54 per 1,000 board feet.

For the month of February, lumber prices already were up 14.58% based on the uncertainty from Trump’s on-again, off-again tariff approach.

All three major indexes on the New York Stock exchange declined sharply Monday.

“You can see it pretty directly, when (Trump) announced the tariffs is when the stock market started to fall,” Scranton said. “I would conclude that the market’s message is that they don’t like all this uncertainty, and a trade war is not a good thing.”

Washington state Commerce Director Joe Nguyen said last week that officials from the Evergreen State already have been meeting with business leaders and Canadian officials about how they can continue to operate with the tariffs.

“So what we’re trying to do is help mitigate the impacts by working with our local companies to figure out diversity options for them in terms of their trade product and their business,” Nguyen said. “I had a very good conversation with the Canadian consulate.

“They get it. That’s not us in Washington state. It’s Trump,” Nguyen continued. “There will be, you know, innocent bystanders who are impacted as well.”

According to data released Monday from Sen. Maria Cantwell’s office, A 25% tariff on Canada and Mexico would add an estimated $144 billion a year to the cost of manufacturing in the United States.

“Trade is the lifeblood of the State of Washington’s economy. Farmers in our state exported $7.5 billion worth of agricultural products in 2023. Under President Trump’s trade war, our state’s farmers will be the first victims,” Cantwell said in a prepared statement. “When retaliatory tariffs hit our farmers in the first Trump administration it cost Washington farm jobs.”

Impending tariffs on Canada and Mexico could increase U.S. car prices by as much as $12,000 per vehicle, according to Cantwell’s office.

According to the Yale Budget Lab, a research institute at Yale University, Trump’s proposed tariffs could result in increased costs of between $1,600 and $2,000 per household.

Scranton, the Washington Trust economist, said that Mexico’s top exports to Washington state are automobiles, followed by household appliances, motor vehicle parts, electrical equipment and components, and fruits and tree nuts.

“Consumers are going to see the impact on grocery stores because of our dependence on Mexico for fruits and vegetables,” he said. The higher prices will depend “on how quickly these tariffs get implemented and how quickly businesses will pass through those costs to consumers.”

While China’s new tariff is 10%, it’s 10% added to other tariffs imposed last month. That means some imports from China would see tariffs of 45%.

Canada’s top exports to Washington state include petroleum and coal, sawmill and wood products, livestock and livestock products, and veneer plywood and engineered wood.

So, two of the state’s biggest Canadian imports would impact the construction industry, Scranton said.

In addition, both Canada and Mexico are the top importers of several Washington products, including apples and construction equipment.

“The toughest thing, especially for a small business with that kind of uncertainty, is how do they plan and budget it?” Scranton said. “With this type of volatile back-and-forth, things changing rapidly, it’s leaving a lot of business owners’ heads spinning.”

The stock market may be the key for how long a potential trade war with the nation’s traditional trading partners will last.

“I’m not convinced that they will stay on for an extended period of time,” Scranton said of the tariffs.

He noted that Trump liked to tout how well the stock market performed during his first term.

If a market downturn “sustained itself for a week or more, that may stimulate more negotiations to bring it to a peaceful conclusion,” Scranton said. “Financial markets do not like uncertainty.”

Nguyen, the commerce director, said this latest potential trade war also comes with a new twist. Trump has eliminated the “de minimis” exemption that allows imports to come into the country duty free if they are below $800 in value.

“So before, if it’s under $800, it’s not subject to any tariffs or rules,” Nguyen said. “They’ve taken that away from China, too. The Post Office no longer will take envelopes from China because they technically are then required by law to check if it requires to be tariffed.”

Edmund Schweitzer, founder and chairman of the board of Pullman-based Schweitzer Engineering Laboratories, posted to the company website Monday its support for colleagues in Canada and Mexico.

“SEL is committed to economic and political freedom, and that includes free trade,” Schweitzer wrote. “No matter what happens (Tuesday), we will ‘be there’ for our customers in our three countries and around the world.

“I hope you will join us in embracing free trade, and bear with us as we navigate the uncertainties of politics these days,” he continued in part. “We’re united by free trade, with much more in common than in difference.”