Survey: WA employers wary of recession, tariffs, increased state taxes

(The Center Square) – A spring survey of more than 400 Washington state employers indicates rising fears of a possible recession, concerns related to President Donald Trump’s tariffs, and anxiety about possible increased state taxes and regulations.

In the quarterly survey conducted by the Association of Washington Business, the state’s oldest and largest business association, 44% of respondents said they expect the Evergreen State’s economy to enter a recession in the next year. That’s up from 17% in AWB’s previous winter survey.

Nearly three-quarters – 72% – of those surveyed said they are concerned that Trump’s tariff policy could negatively impact their business, and nearly half – 48% – of respondents indicated they have already experienced direct negative impacts from the recently implemented tariffs or retaliatory tariffs.

Of those businesses already impacted, 76% said tariffs have raised the cost of business inputs, and 45% claimed tariffs have caused supply chain disruptions.

With the state Legislature considering a slew of revenue-generating bills to address a projected $16 billion operating budget shortfall over the next four years, employers in Washington are worried about the state of the economy and what the future could bring.

Reducing taxes is the best thing state government could do to aid businesses, 43% of respondents said. That’s up from 37% in the winter survey.

The percentage is business owners who planned to expand in Washington in the coming years dipped to 18% from 20% in AWB’s winter survey. Meanwhile, the percentage of businesses wanting to expand outside Washington is at 26%, up from 21% in the winter survey.

Some 12% of employers say they want to relocate out of state, an increase from 9% in the winter. Idaho was the most popular destination for those planning to leave Washington.

Of those planning to move out of state, 61% cited taxes as the primary reason for leaving. Slightly more than half – 52% – of respondents rated Washington’s overall tax burden as the biggest challenge faced by their business, with 48% citing government regulations.

“These numbers should be a flashing red light for lawmakers in Olympia as they debate passing the largest tax increases in state history,” AWB President Kris Johnson said in a news release. “Washington employers are bracing for impact from federal tariffs and preparing for a recession that now seems far more likely than it did just a few months ago. They’re cutting back on new spending, pushing pause on hiring, absorbing higher costs where possible, and raising prices where they must. And they continue to cite Washington’s tax burden as their biggest challenge.”

When asked to rate Washington’s economy, 61% of respondents rated it moderate, 19% rated it weak, 16% rated it strong, 4% rated it very weak, and 1% rated it very strong.

Regarding business health, 42% characterized their business as flat, 24% said their business was growing, 23% said their business was starting to experience a downturn, and 11% said their business was struggling.