WA Commerce chief warns tariff fallout could hit state hard

Washington’s top commerce official says the state cannot shield its economy from the fallout of rapidly escalating tariffs, particularly in sectors like agriculture, aerospace and technology. “There is no way in Washington state that we can cover the gap for a global tariff trade war,” said Department of Commerce Director Joe Nguyen in a wide-ranging interview on “Inside Olympia”. “We haven’t recovered from the last trade war [in 2018],” he told host Austin Jenkins, “We’re still down 30% of exports to the Asia Pacific region because of the previous ones.”

Washington is among the most trade-dependent states in the nation, with more than $58 billion in exports in 2024 and 40% of jobs tied to trade. According to the governor’s office, new and retaliatory tariffs could cost the state’s agriculture sector $7.5 billion, with significant hits expected to apples, cherries, potatoes, wheat and dairy. India, for example, has imposed a 20% retaliatory tariff on U.S. apples, which the state says has caused shipments to fall dramatically.

Nguyen emphasized that while the state has launched a tariff information resource and is engaging international partners like Canada, Vietnam and Mexico, its capacity is limited. “These tariffs are even worse than what we saw last time,” he said. Nguyen described the Department of Commerce’s role as pivotal — but constrained — in navigating such external pressures. With 485 programs and an $8 billion portfolio, the agency manages everything from housing and behavioral health to economic development and small business grants. “If this was a publicly traded company, you’re talking about a Fortune 500 company,” he said. “It is a behemoth in terms of the reach that we have.”

Among Commerce’s most visible challenges is the state’s growing housing crisis. Washington needs more than 1.1 million additional housing units by 2040, according to state projections, with more than half required to serve the lowest-income residents. Nguyen acknowledged that even with a proposed $600 million investment in the Housing Trust Fund — the largest in state history — gaps remain. “It amounts to about 2% of what we actually need on an annual basis,” he said. “So we can do as much as we can at the state to enable, in this case, affordable housing … but we need the capital markets. We need other investments.”

Interest in streamlining

Nguyen said the state’s regulatory landscape often slows or derails projects, despite good intentions behind the rules. He cited conflicting definitions between two housing bills — one related to middle housing and another to accessory dwelling units — that have created confusion among local governments trying to comply with growth management laws.

Nguyen said he is developing a new proposal he calls a “Fast Track,” which would apply an “abundance mindset” to housing policy by targeting areas with high need and fewer regulatory hurdles. He said the idea is still in early stages and has not yet been publicly vetted. “I have a proposal that I’m shopping with the governor’s policy team right now, said Nguyen. “The concept aims to demonstrate that faster, more affordable construction is possible under a streamlined permitting model. “If your goal is to build more housing, [then let’s] build more housing,” he said.

Nguyen’s critique of bureaucratic inefficiency is grounded in his personal experience. He described the difficulty of navigating complex compliance rules required to administer state and federal grants, saying the state’s administrative and accounting manual alone is 1,067 pages. When combined with federal guidance and additional rules, it can exceed 1,500 pages per program. “That’s longer than ‘Game of Thrones’. That’s the whole of ‘Lord of the Rings’. That’s double the longest ‘Harry Potter book’,” he said. There’s at least $300,000 to $400,000 of compliance costs associated with that.”

To tackle the problem, Nguyen spent a recent weekend building a custom GPT chatbot using publicly available data from the state accounting manual, federal compliance guidelines and program rules. He fed in sample invoices and used the tool to rate their compliance risk as high, medium or low. “I made a custom GPT… and it came back, and it’s fairly accurate,” he said. “There are ways for us to be much more effective so that we can still be compliant, provide the tools for our staff to be much more effective with their time and our resources.”

Nguyen said the goal isn’t to replace state workers but to free them from rote administrative tasks so they can focus on designing programs and serving communities. “We’ve essentially built a system where you’re trying to catch 1% who might cause a problem, and you punish everybody else,” he said.

This article was first published by TVW, Washington’s Public Affairs Network, providing unedited coverage of the state legislature and state government, on statewide cable TV and online at tvw.org. It also produces original interview shows, including Inside Olympia and The Impact. A media nonprofit, it exists to give Washingtonians access to their state government, increase civic access and engagement, and foster an informed citizenry.