Colorado Businesses Fear Tariff Uncertainty

Business Confidence Dips Amidst Shifting Trade Policies

Mounting global trade tariffs and the constant threat of new duties are casting a shadow over Colorado’s business landscape, impacting sentiment and future planning despite seemingly modest overall trade data.

Trade Data Masks Deeper Concerns

While Colorado’s total exports saw a 10.5% increase to $4.84 billion in the first five months of the year, a closer look reveals significant drops with key trading partners. Exports to China plummeted by 30%, and imports from the nation fell by 15%. Similarly, imports from Mexico decreased by 11.1%, while Canadian imports experienced a 14.2% decline in May after new tariffs were implemented.

Brian Lewandowski, executive director of the University of Colorado Leeds Business Research Division, described Colorado as “not a big export state,” with recent gains being “modest.” He noted that the impact of federal tariffs hasn’t hit the state as severely as other parts of the country.

Leeds Index Reveals Business Pessimism

However, a recent Leeds Business Confidence Index survey indicates significant unease among local business leaders. The third-quarter outlook registered a low 37.9 on a scale of 1 to 100, a figure that remains in negative territory despite a slight improvement from the previous quarter’s 31.9. This marks the fifth-lowest quarterly outlook in 23 years, with 44% of surveyed executives citing tariffs as a primary reason for their sentiment.

Karen Gerwitz, CEO of World Trade Center Denver, highlighted the disruptive effect of the “on-again, off-again tariffs.” She stated, “I feel like it’s the confusion that is out there right now. It’s real. 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.”

Trade Partners Show Varied Performance

Not all trade relationships have suffered. Italy, for instance, saw a remarkable 5,700% increase in Colorado exports during the first five months of the year. The state’s top export to Italy was “Polypeptide Protein & Glycoprotein Hormones & Derivatives,” a component used in collagen supplements.

State Initiatives Track Tariff Impact

In response to these economic shifts, Governor Jared Polis issued an executive order directing the state’s labor, trade, and agriculture departments to document the impact of tariffs and provide an estimate by the end of August. Meanwhile, federal tariffs of 30% or more are slated to affect goods from Canada, Mexico, and Europe starting August 1.

Coloradans Prioritize Politics in Economic Concerns

A broader perspective on the state’s economic concerns comes from the sixth annual Pulse Poll. For the first time, “government/politics” emerged as the top economic worry for 32% of surveyed Coloradans, a significant jump from previous years. This shift is notable, as political concerns have never before reached such a high percentage of responses.

Dave Metz, the pollster for Pulse, commented on this trend, noting, “This marks a departure from what we’ve seen in past years… In that top category of government/politics, we’ve never even had 20% of respondents who named that as their top concern.” Cost of living and housing affordability followed as the next most significant concerns, with immigration issues seeing a substantial decline in public worry.

Labor Market Shows Mixed Signals

Colorado’s unemployment rate edged down to 4.7% in June, a slight improvement from May. However, job growth continues to decelerate, with employers adding fewer positions. Over the past year, job creation has been modest at 0.4%, largely driven by government sector employment. Private sector industries like construction and wholesale trade experienced job losses. For context, the U.S. unemployment rate stood at 4.1% in June, with national job growth at 1.1% year-over-year, according to the Bureau of Labor Statistics.

Housing Affordability Remains Critical Issue

The cost of housing remains a significant burden for Coloradans, with a recent report indicating that a renter needs to earn $36.79 per hour to afford a two-bedroom apartment at fair market rent. This translates to an annual income of $76,523. While rents in the Denver metro area have seen a slight year-over-year decrease, the affordability gap persists, particularly for those on minimum wage who would need to work 82 hours weekly.

The Colorado Automobile Dealers Association reported an 8.3% increase in new vehicle registrations in the first half of the year. However, higher prices influenced by tariffs are expected to lead to an 8.8% decline in registrations for the latter half of the year. Tesla’s registrations, in particular, continued to fall in the second quarter.

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