What Do the Tariff Threats Against Canada, Mexico, and China Mean for Washington?

The Proposal

On February 1, President Donald Trump issued three executive orders imposing steep tariffs on the United States’ top trading partners: Canada, Mexico, and China. Citing national security concerns over immigration and fentanyl trafficking, the administration invoked the International Emergency Economic Powers Act (“IEEPA”) to levy across-the-board 25 percent tariffs on imports from Mexico, 25 percent tariffs on Canada except for energy products, which is taxed at 10 percent—and a 10 percent across-the-board tariff on China and Hong Kong.

The tariffs on imports from China and Hong Kong took effect on February 4. Initially scheduled to take effect at the same time, tariffs on Canada and Mexico were postponed for one month.

There will be significant national economic implications should all these tariffs take effect. Based on 2024 data, the new rates would have resulted in an estimated $246 billion more tariffs, or over $928 million in extra taxes on U.S. importers per day.[1]

Impacts for Washington State

For Washington, which shares a 427-mile border with Canada, the economic impact would be severe. Canada, Mexico, and China account for nearly half of the state’s imports, totaling to $30 billion in 2024. Due to nearly universal duty-free treatment under the U.S.-Mexico-Canada Agreement (USMCA), Washington businesses paid $16 million in tariffs on $19 billion in imports from Mexico and Canda – or an effective tariff rate of just 0.08%. By contrast, Washington companies paid $1.3 billion in tariffs on imports from China – more than other any country – because tariffs averaged 11.9%.

With such robust trade relationships at stake, the cost of the newly proposed tariffs could have major consequences for Washington businesses and consumers. Altogether, the new measures would cost Washington an estimated $4.2 billion. For context, the state paid only $2 billion in total tariffs on all imports from all countries in 2024, meaning the new proposal could more than triple the total tariff burden.

Tariffs on Canada

Tariffs on Canada would have the largest impact by far. In 2024, Washington imported $18 billion of goods from Canada, about 30% of Washington’s total imports and over $6 billion more than any other trading partner. Despite this massive amount of trade, Washington paid only $13 million in tariffs on Canadian imports due to the USMCA. The new 10% tariff on energy imports and 25% tariff on everything else would have added an estimated $2.7 billion in new taxes based on 2024 data. This equates to nearly $7.4 million per day.

Crude oil, petroleum gases, lumber, live cattle, and wooden boards could face the most new tariffs. Despite the lower rate for energy, a 10% tariff on crude oil and natural gases is a major cost increase. Taxes on these two products alone would add over $900 million in additional costs for Washington importers.  

Canada is Washington’s sole import source of live cattle, electrical energy, beef fat, and many other products. No existing relationships with potential alternative sources makes it more difficult for Washington businesses and families to avoid the $110 million in new tariff costs associated with these products.

Tariffs on China

China is Washington’s second-largest source of imports. The $11 billion in goods purchases from China accounted for 18 percent of Washington’s total imports in 2024. The 10% tariff, which took effect on Feb. 4 and is imposed on top of current most-favored nation and Section 301 tariffs, could cost Washington businesses over $1.0 billion in tariffs annually, roughly $3 million per day. Among all states, Washington ranks 9^th in the potential costs of newly imposed China tariffs. 

Imports from Hong Kong, which now also face an across-the-board 10% tariff, were just 0.04% of total imports into Washington state in 2024, at $24 million. The additional tariff on Hong Kong will cost the state $1.2 million annually.

Unlike Canada, many of Washington’s imports from China are finished consumer goods where retail prices paid by Washington households could soon rise. Top imports from China include toys, video game consoles, seats and parts, heaters, exercise equipment, and footwear. These everyday goods will now be subject to hundreds of millions of dollars in annual new tariffs.

Tariffs on Mexico

Mexico is Washington’s seventh-largest source of imports in 2024. Total imports were approximately $1.5 billion. Like Canada, the products face very few tariffs due to USMCA, and the average tariff rate on Washington’s imports from Mexico was just 0.20%. That would change rapidly if the threatened tariffs on Mexico take effect in March, with potential new tariffs of about $969 million per day.

Washington’s top imports from Mexico include semitrucks and trailers, tractors, refrigerators, control panels, and miscellaneous electrical machinery. These products account for nearly half of all Mexican imports into the state and could face a collective $155 million in new tariff costs.

While import trade volumes from Mexico are lower than Canada or China, Washington ranks among the top 10 buyers of more than 100 different Mexican products, underscoring the deep trade ties between the two economies.

 Conclusion

Should President Trump’s newly announced tariffs take effect, it would have major consequences on Washington businesses with extensive trade relationships in all three countries. Even if the Canada and Mexico tariffs never come into effect, the China tariffs alone will cost several million dollars per day – money that could be better spent investing in companies and workers or lowering prices for their customers.

[1] All data are from Trade Partnership Worldwide’s State Tariff Tracker.