Colorado is bracing for economic turbulence as sweeping federal tariffs—imposed by the Trump administration earlier this year—send shockwaves through key industries and household budgets. According to a comprehensive report released by the Governor’s Office of State Planning and Budgeting (OSPB), the state’s effective tariff rate has skyrocketed from 3.0% in 2024 to 21.0% in 2025, marking the steepest increase in over a century.

Governor Jared Polis, who commissioned the report through Executive Order D 2025 008, is now confronting the challenge head-on, seeking ways to shield Colorado residents from rising costs and economic fallout.

Governor’s Response: Policy, Lawsuits, and Local Resilience

Governor Polis has taken a multi-pronged approach to mitigate the impact of tariffs:

Legal Action: Colorado joined a multi-state lawsuit challenging the legality of the federal administration’s use of emergency powers to impose tariffs. A federal appeals court recently ruled against the executive branch’s authority to levy broad-based tariffs, opening the door for potential reversals if the Supreme Court upholds the decision.

State-Level Relief Measures: Polis has directed agencies to explore targeted subsidies and tax credits for sectors most affected—particularly agriculture, construction, and healthcare. These measures aim to offset rising input costs and prevent layoffs.

Infrastructure Prioritization: With construction costs climbing due to tariffs on steel, aluminum, and copper, the governor is pushing for a reallocation of capital construction funds to prioritize essential projects and controlled maintenance, especially in schools and healthcare facilities.

Housing Strategy: Proposition 123, Colorado’s flagship affordable housing initiative, is under pressure from both rising material costs and declining revenue. Polis has called for emergency adjustments to funding formulas and is working with CHFA to preserve development momentum despite inflation.

Economic Impacts: From GDP to Groceries

The OSPB report outlines a sobering forecast:

Key sectors—including agriculture, energy, and advanced manufacturing—are facing steep declines in exports and profitability. For example, Colorado’s beef exports dropped nearly $39 million in the first half of 2025, translating to 265 lost jobs and $80 million in GDP loss.

What It Means for Residents

Colorado households are already feeling the pinch:

Higher Utility Bills: Tariffs on energy infrastructure components are expected to raise electricity and heating costs statewide.

Medical Costs: Imported pharmaceuticals and medical devices face new tariffs, potentially increasing out-of-pocket expenses and insurance premiums.

Food Prices: Tariffs on imported meat, dairy, and fertilizer are driving up grocery bills, especially in rural regions.

Polis has emphasized the need for transparency and community engagement, urging Coloradans to stay informed and participate in local planning efforts. “We must protect our communities from the unintended consequences of federal trade policy,” he said in a recent statement. “Colorado will lead with data, compassion, and resilience.”

 What’s Next?

If the Supreme Court overturns the federal tariffs, Colorado’s effective rate could drop to 4.2%, offering relief across the board. However, the administration has signaled it may pursue alternative protectionist measures, keeping uncertainty high.

In the meantime, Governor Polis is expected to announce a statewide economic resilience package later this month, focused on stabilizing vulnerable sectors and supporting working families.

Stay tuned to the Dispatch for updates on legislative developments, community responses, and the evolving economic landscape.

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