(The Center Square) – Stalled trade talks between the U.S. and Canada could negatively impact Washington state’s $29 billion annual trade relationship with its northern neighbor by increasing business costs, disrupting supply chains and hurting key industries.
Washington is one of the most trade-dependent states in the U.S., relying on both exports and imports, with an economy deeply integrated into the global flow of goods, particularly in the agriculture sector.
Trade discussions between the North American countries have been on hold since Oct. 23, when President Donald Trump terminated negotiations in response to an anti-tariff television advertisement by the Canadian province of Ontario, which featured edited remarks from former President Ronald Reagan.
Trump called the ad “fake” and “egregious behavior,” claiming it was an attempt to influence U.S. courts and that the use of Reagan’s image and words was fraudulent.
Washington Council on International Trade President Lori Otto Punke says tariffs are the major issue, making it more challenging to do business with Canada.
“We’ve sort of picked a fight with one of our closest friends in terms of the impact,” she told The Center Square during a phone interview, noting that Washington and Canada’s reliance upon each other has made it a challenging trade environment.
“I think when the ‘Tariff Liberation Day’ was initially announced, you know, the impact on Washington state, from a tariff perspective, was $1.4 billion,” Punke said.
“Tariff Liberation Day” is the name given to April 2, the day when Trump implemented a new set of tariffs on imported goods, which he declared would “liberate” the country from trade deficits. The policy involved a baseline 10% tariff on most imports, along with higher, country-specific tariffs on goods from about 60 nations, aimed at creating more reciprocal trade balances.
“Forget just the cost of paying tariffs, you know, to bring goods into Washington state; we’re going to pay retaliatory tariffs on the outbound stuff because other people are going to say, ‘Well, if you’re tariffing us, we’re going to tariff you,’” she explained.
The results, according to Punke, might not be pretty, noting the possibility that markets could disappear as people choose to do business where prices are lower and they don’t have to worry about the instability of those prices.
She gave an example of “very specific specialty equipment that was coming over from Holland for, you know, potato harvesting, was one price when it was leaving and really expensive when it landed, and you know, it’s really hard from a small business perspective to kind of plan for that and absorb those costs. You just see a lot of pullback.”
The uncertainty of tariffs, Punke said, could also lead businesses to become too nervous to invest and hire more people.
“It’s not a light switch,” she said of business relationships built over decades. “So once the relationship goes away, it’s not going to come right back just because the tariff rate went down a bit.”
Patrick Connor, Washington state director for the National Federation of Independent Business, urged the state Legislature to get involved in making Washington more appealing to Canadian consumers.
“NFIB recognizes the importance of cross-border sales to Washington state’s small-business owners,” he emailed The Center Square. “While the treaty is being renegotiated on the national stage, it’s important to our local members that the state Legislature look for ways to encourage our northern neighbors to cross the border to make purchases – food, fuel, entertainment, and consumer goods. There’s much more Washington state can do to keep our Main Streets attractive to Canadian consumers, and more affordable to our own residents.”
Possible ideas include tax exemptions or streamlined purchasing processes, particularly for high-value goods such as prescription drugs. The Legislature could also address issues like the nonresident sales tax exemption to avoid confusion for cross-border shoppers.
Dillon Honcoop, communications director with Save Family Farming, provided some perspective from the state’s agriculture sector.
“For Washington’s farmers, uncertainty is often one of the most harmful outcomes of extended, unresolved trade negotiations,” he emailed The Center Square. “When many Washington crops are harvested only once a year, it can take months for farmers to feel the impact of market fluctuations. But in the meantime, the seasons continue their inevitable move forward, and on-the-ground decisions have to be made for each farm’s future.”
In 2023, Washington’s agricultural trade with Canada was valued at $1.3 billion. This made Canada Washington’s largest agricultural export market, with top products including fish and seafood, apples and fresh onions
“When the markets’ future landscape is particularly unclear due to trade uncertainty, farms’ ability to invest in their own future is fraught with risk,” said Honcoop, who grew up on a farm. “With the crushing burden of increasing costs already pushing many Washington farms to the brink of survival, markets clouded by trade uncertainty can present more risk than some can bear.”
“I think the sooner the U.S. and Canada start talking, the better,” Punke said. “Because I think the longer it kind of hangs out there without, sort of, negotiations, the worse it is, for the cross-border relationship.”
“My hope would be that, you know, negotiations and conversations start tomorrow. That may be optimistic,” she continued. “But I do think the sooner, the better.”
She concluded: “Having a strong relationship with Canada is essential.”
