“Don’t panic” is the message from a Bend banking professional regarding the looming widespread tariffs being implemented by the Trump administration. Corey Allen, SVP, Central Oregon team leader for Washington Trust Bank, urged local business operators to proceed cautiously and assess options — especially in light of the “moving target” of uncertainty over exactly where and when the economic sanctions may occur. “There are still a lot of unknowns — and we would advise taking a cautious approach when the messaging on policy seems to change by the hour,” he said. “It is hard to know how to make useful decisions when dealing with such a moving target, so patience would be advisable. We would urge local businesses to look at ways to adapt to whatever the new reality turns out to be, rather than act hastily and, say, load up on inventory before price hikes take effect.
“A prudent strategy may be to explore alternate supply sources, including on the domestic side, or maybe it is an opportune time to renegotiate contracts with suppliers, which could impact the bottom line,” Allen continued. “It is always a good idea to periodically analyze current business models and to have any alternative options, rather than none. It is inevitable that costs of doing business if tariffs are imposed will go up, but as to how that is addressed — whether additional costs are absorbed, passed on completely, or somewhere in between — that is dependent on the particular business model and industry.”
Allen said that lower margin industries like food, which would be particularly affected by the imposition of tariffs for products from Mexico scheduled to begin April 1, would likely have a more immediate response compared to sectors with longer cycles.
Though much remains uncertain about President Donald Trump’s plan to impose wide-ranging tariffs on U.S. trade partners, business sectors around primarily trade-dependent Oregon are already readying for impact. After announcing 25% tariffs on goods from Canada and Mexico, Trump cut last-minute agreements with those countries to delay tariffs by a month. But a 10% tariff on goods from China — America’s largest trade rival — is now in effect. China responded with retaliatory tariffs on energy and agricultural tools. And most recently, Trump announced 25% tariffs on all foreign steel and aluminum imports to the U.S.
Concern is mounting that an escalation of tariffs on goods imported from China, Canada and Mexico, and potential retaliatory tariffs on our exports — something already triggered by Canada and the European Union — could undermine trade with some of Central Oregon’s most significant trading partners. It is also a given that tariffs could further hamper the construction industry and deepen Central Oregon’s and the wider state’s, housing affordability crisis.
Homebuilding and other construction would be hit by price increases in materials like softwood lumber — a major export of Canada — gypsum board for drywall, electric transformers, and kitchen appliances. Trump’s stated rationale is that tariffs would hold countries accountable for border security/illegal immigration and trafficking of the deadly drug fentanyl, but the knock-on effect is that companies will either take the losses and earn fewer profits or, more likely, pass costs along to consumers in the form of higher prices.
Some of the local businesses most affected by the imposition of tariffs include those involved with imported liquors, such as Canadian whiskey and tequila shipped in from Mexico. Middle to lower-middle-class groups would also be disproportionately affected by increased costs for food, fuel, and utilities, which represent a higher proportion of their budget. And if higher prices are passed on to the consumer, it would likely lead to a reduction in consumer spending and slowing of economic growth.
Aluminum and steel tariffs could also significantly impact the construction, automotive —including the best-selling Ford F-150 truck line — and general manufacturing industries. It would certainly negatively impact Oregon’s stated need to double current production of new housing to 30,000 units to keep up with population growth.
On the housing front, the National Association of Homebuilders (NAHB) estimates that tariffs would see an increase in materials costs for new home construction, as some 8% of such products come from overseas, while Allen said NAHB’s chief economist estimated that as a consequence the average home price would increase by $7,500-$10,000.
Allen said it would behoove local businesses to keep up with latest developments and take proactive steps, such as looking at ways to mitigate the effect of tariffs on margins — analyzing the flow of imports, assessing costs for goods against which tariffs may be levied, and exploring alternate supply sources.
Central Oregon leaders have expressed concern about tariffs eroding the area’s competitiveness or deepening its manufacturing challenges, while higher prices could disrupt supply chains, especially in the agricultural and automotive industries. “It may be an indirect policy goal, but given tariffs will increase the costs of doing business, maybe it now does make more sense to manufacture in the U.S. versus overseas?” Allen added. “You should make sure as a business owner to be ready to adapt to shifting parameters, including analyzing the costs of goods sold to look for potential greater efficiencies.
“Maybe it is time to reassess contractual agreements in place, especially in the context of technological advances over the last decade. In 2034, Oregon imported $28 billion in electronic components and automotive sectors and exported 34 billion, primarily tied to the semiconductor and auto industries. Tariffs will affect affordability; there is no way around that. But there are ways to offset the impact — mitigate, and adapt, and look at other options. It is important to identify the key areas regarding margins — you still have to be competitive, but we have a more diversified economy now.
“We also don’t know the longevity of the tariffs policy either,” he continued. “No economist can predict what the end result may be or define timeframes. The stock market certainly would rather see consistency. The takeaway is: be aware, not reactive, and leverage/work with the resources of your local professional team, including a banker, to go over areas like capital needs and contractual status.”
