With tariffs on Colorado’s top two trade partners set to begin Aug. 1, Gov. Jared Polis took steps Monday to calculate financial damage to local businesses, consumers and the state’s economy.
He ordered the state’s labor, agriculture and trade departments to collect and analyze all data related to the tariffs to calculate the impact that the on-again, off-again and back on-again trade policies by the Trump administration have had on Coloradans. The departments have 45 days to provide an estimate on the state’s tariff burden and 100 days to submit plans on how state services and programs can mitigate them.
“It’s really important to be able to use objective data to talk about the harm to the economy, the harm to consumers who have to pay more, the harm to job growth, including jobs lost due to these expensive trade wars,” Polis said. “Tariffs are both bad for made-in-America and … exports, because there’s often retaliatory tariffs.”
Polis joined fellow Democratic governors in Illinois, Arizona, New York, Oregon and Washington in plans to measure the financial impact and scale of the import tariffs on citizens. The latest, announced in the past week by President Donald Trump on social media, add 30% on goods imported from Mexico and the European Union and 35% on Canadian imports, starting Aug. 1.
But the topic of tariffs has been extremely confusing for businesses since Trump introduced “discounted reciprocal tariffs” in April of up to 50% on dozens of countries. Many weren’t purely reciprocal tariffs matching those countries; rather, the taxes were to cover a trade imbalance with foreign countries that sold more goods to America than they bought from the U.S.
Then Trump paused many of the tariffs for 90 days as global leaders began negotiations on new trade deals. Some countries, mainly China, retaliated until the U.S.-China trade war tariffs reached 145%. Those have since come down, at least temporarily.
“I commend the governor for trying to understand the impact of tariffs,” said Karen Gerwitz, president and CEO of World Trade Center Denver, which works with local businesses to find trade partners. “The challenge is that it feels like such a moving target right now. Companies are finding it difficult to predict their own path, so how is an agency going to identify it?”
Gerwitz said current and proposed tariffs continue to fluctuate. There are exemptions, different time frames and differing rates. And businesses are beginning to take a wait-and-see approach, especially as her organization provides tips on easing potential tariffs, she said. WTC sessions scheduled for September will help businesses make sure they’re using all they can to potentially offset higher tariffs, as well as introduce companies to beneficial trade policies like foreign trade zones and duty drawbacks.
“All I’m saying is that companies are struggling right now with the uncertainty so it’s hard to predict anything. It’s hard to enter into contracts. It’s hard to even decide what to do with your supply chain when you don’t know what the price is going to be,” Gerwitz said. “I’m hearing that they’re just numb to it and are waiting for things to settle down. When that will be, who knows.”
Last year, Colorado exported $10.5 billion and imported $17 billion in goods, according to the Office of the U.S. Trade Representative. Mexico and Canada made up more than 30% of the state’s exports, with Mexico at $1.7 billion and Canada at $1.6 billion last year.
Documenting the financial impact to the state’s economy will help raise awareness, especially for Colorado farmers, said Brian Kuehl, executive director of Farmers for Free Trade, which works with local agriculture businesses.
Before the blanket tariffs went into effect in April and then were pulled back, his organization calculated that the impact of the then-25% tariffs on Canadian and Mexican imports and 20% on goods from China added up to $1.4 billion in new taxes for Colorado businesses.
“The harder challenge is to calculate the cost of uncertainty and to calculate the cost of lost exports. Those are both unknown,” Kuehl said. “But businesses are making decisions. I’ve talked to dozens of businesses across the United States and in Colorado who say they’re not making investments because this climate is too risky. You can’t decide to hire employees. You can’t decide to build a new plant or a new office if you don’t know what your cost structure is. Everyone’s kind of parking the capital while they wait to see how this plays out.”
Colorado joined a dozen states in April in a multistate lawsuit to halt the president’s tariffs because they violated the U.S. Constitution, which grants “only Congress, not the President, the ‘power to lay and collect taxes, duties, imposts and excises,’” said the suit filed in the U.S. Court of International Trade.
A federal international trade judge invalidated Trump’s tariffs in late May based on the illegal use of the International Emergency Economic Powers Act. But the federal government has appealed and a hearing is set for July 31, according to the Colorado attorney general.
Polis said the tariffs and Trump’s budget bill were the two top concerns he’s heard from Coloradans regarding our economic future.
“I think the president really needs to see the damage that his unilateral imposition of tariffs is causing on jobs and on increasing costs for American consumers,” Polis said. “It’s one thing to say we have all these stories but it’ll be another to have the actual data showing the devastating economic impact of these new taxes imposed by President Trump.”