Colorado's Economy Hit Hard by Federal Tariffs in 2025

Colorado’s economy has been feeling the impact of federal tariffs as revealed in a recently published report by Governor Jared Polis on September 4, 2025. This report indicates a dramatic rise in the effective tariff rate in the state, which is now seven times greater than last year, largely due to extensive tariffs introduced during the Trump administration. According to the findings released by the governor's office, “One thing that’s clear is that everyone loses a trade war,” expressed Polis during a press briefing. He emphasized the destructive nature of a trade conflict, describing it as “a race to the bottom.” Tariffs, which are taxes levied on imported goods, have seen a significant increase as a result of policies imposed under Trump’s administration. A baseline tariff of 10% was set on all imports starting in April, with additional rates such as 50% for Brazilian goods, 39% for Swiss imports, and 15% for European Union products. Moreover, high tariffs are impacting goods from Canada, Mexico, and China, which comprise nearly half of Colorado’s imports. Businesses that import these goods bear the burden of these tariffs. Jeff Kraft, deputy director of the Colorado Office of Economic Development and International Trade, points out the dilemma faced by companies in this situation: “When businesses face high tariffs and the associated uncertainty and confusion, they have difficult choices.” He elaborated that companies often must either increase prices for consumers or redirect internal funds to manage tariff costs. In light of growing concerns, Governor Polis initiated the tariff impact analysis through an executive order in July. The report shows that Colorado's estimated effective tariff rate has surged from 3% last year to a current 21%. Certain sectors in Colorado appear particularly vulnerable to these tariffs. For instance, the agriculture and aerospace industries are poised to bear the brunt of these changes. Notably, beef exports from Colorado have seen a significant decline, dropping nearly $40 million in the first half of the year, with projections estimating a loss of 265 jobs and a reduction of $80 million in the state’s economic output. The aerospace sector could also be adversely affected, especially given that around 73% of materials used in this industry are sourced from Switzerland which faces new tariffs. Projecting a potential 5% decline in foreign demand for these products, the analysis forecasts losses of approximately 195 jobs alongside a $61.6 million dip in gross domestic product. Additionally, imported construction materials subject to tariffs could lead to a 4% to 6% increase in new housing construction costs. “There’s no doubt that any costs associated with tariffs are directly incorporated into construction costs and into housing costs,” noted Polis, reflecting the challenges in mitigating construction costs amid such pressures. Impact on State Revenue The lasting effects of these tariffs may also extend to the state’s revenue, with forecasts suggesting a potential loss of about $240 million in general fund revenue for the current fiscal year, and $450 million for the next fiscal cycle if tariffs remain unchanged. These figures are preliminary estimates, pending the upcoming official economic forecast. Recently, the Colorado Legislature concluded a special session aimed at increasing revenue to alleviate the adverse effects stemming from the federal economic policy changes involving tariffs. Colorado was part of a coalition that challenged the Trump administration's tariffs, asserting they were unlawfully implemented through emergency authority. A recent appellate court ruling indicated that while many tariffs were deemed illegal, they remain in effect as Trump pursues an appeal with the U.S. Supreme Court. Governor Polis has voiced hope that judicial intervention may overturn the tariffs and has urged Congress to act. He stated, “We really hope that Congress shows a spine and pushes back against costly increases through tariffs.” He emphasized that Congress