Uncertainty abounds on regional tariff impact

Uncertainty is facing businesses across all sectors in an environment where tariffs are among the factors making it difficult even for experts to know where the economy is heading.

That message came from Katelyn Pay, manager of the Northwest region for the U.S. Chamber of Commerce government affairs. She spoke Thursday at a Lewis Clark Valley Chamber of Commerce lunch at Hells Canyon Grand Hotel in Lewiston.

“Things have shifted in the last two weeks in ways that are extremely hard to forecast,” she said.

The effects of the imposition of tariffs on imports such as aluminum and steel are far reaching, Pay said.

“There will be impacts in the real economy, as businesses are going to hold off on import decisions until they fully understand what’s going on long-term with the tariffs,” she said. “Which is to say that, basically, we don’t really know how that uncertainty is going to reduce growth or increase growth in quarter one.”

One forecast has the economy contracting this quarter at negative 2.6%, while another is predicting growth at 3%, Pay said.

“The bottom line is, we don’t know exactly what’s going on and the markets are having to play out a little bit more with the tariff discussion that’s happening,” she said.

The U.S. Chamber of Commerce has a large division that is monitoring tariffs minute by minute with every new proposal, Pay said.

“We would really like the administration to continue to boost the American economic growth and we would like for them to succeed,” she said. “Trade is essential for boosting growth.”

A total of 95% of the world’s consumers live outside the United States, Pay said.

“Selling them more made-in-America goods and services is a huge driver of economic growth,” she said.

International trade supports about one in five of all the jobs in both Idaho and Washington state, she said.

Canada,Taiwan and Mexico are among Idaho’s top trading partners, while Canada, Ireland and China are among Washington’s top trading partners.

“Tariffs are in fact, actually a tax, and it’s a tax paid almost entirely by Americans, not by foreigners,” she said. “Tariffs could send prices up significantly. … It could actually be the largest tax increase that Americans have seen in over 50 years.”

There is concern that tariffs would hurt American manufacturers more than almost anyone else, Pay said.

“Half of all imports in this country are raw materials,” she said. “They’re inputs used by manufacturers. These items right now simply are not available domestically.”

With aluminum, for example, “U.S. producers have basically zero capacity, because imports are more than 80% of what U.S. manufacturers use, 60% of which comes from Canada,” Pay said.

Foreign governments are preparing retaliation targets against American exports that could hit American farmers and ranchers first, Pay said.

“These very real decisions are being made,” she said.

Williams may be contacted at ewilliam@lmtribune.com or (208) 848-2261.