Pop quiz: What’s one word that does not appear in the body of the report issued several weeks ago by the Governor’s Prosperity Council?

Answer: Tariffs.

To be clear, the word “tariffs” appears several times in the attachments to the main report, such as responses to surveys and polling information. But nowhere does it show up in the Prosperity Council’s explanation of the challenges facing Oregon’s economy and its recommendations.

That omission is glaring, especially following this week’s release of a report by state economists examining the impact of tariffs on Oregon’s economy. The report takes a deep dive into how the shifting tariff regime established by the Trump administration has hurt our state’s economy. It concludes,

As one of the nation’s most trade-dependent states Oregon experienced both the direct and indirect consequences of a sudden, volatile shift in U.S. trade policy. While tariffs were not the sole force shaping the state’s economy during this period, they contributed meaningfully to higher costs, greater uncertainty, and a measurable slowdown in economic activity.

The paper reminds us that the disruptive impact of tariffs dates back to 2018, to the start of trade wars during the first Trump administration:

It should be noted, however, that prior to the 2018 trade war Oregon was leading the national average in GDP growth. The state dropped below the national average in 2019 and spent most of the last decade continuing to lag.

The report also makes clear that while Oregon exports have fallen “sharply,” tariffs are only one reason for the rough stretch Oregon has endured. As the state economists explain, “structural and cyclical factors within Oregon’s semiconductor industry played a much larger role in shaping the state’s trade outcomes.” 

While the state economists’ report does not explore in detail what’s been going on in Oregon’s semiconductor industry, the story is fairly well-established. As we explained in a report on Oregon’s economy a few months ago, the woes within the sector stem largely from the fact that Intel missed the boat on the demand for AI chips, as companies like Nvidia raced ahead. Intel, Oregon’s largest for-profit employer, stumbled badly, leading to massive layoffs at the company. Intel’s woes, in turn, spilled over into the broader regional economy.

It’s important to point out that the troubles at Intel and the semiconductor industry — and export manufacturers generally — have nothing to do with Oregon’s tax system. We discussed why that is the case in our economy report, but as Mike Rogoway of The Oregonian summed it up nicely in a recent article:

Unlike other states, Oregon levies no sales tax on the expensive equipment chipmakers use to build semiconductors. Manufacturers also are mostly exempt from Oregon’s corporate income tax and corporate activity tax, because they do most of their sales out of state.

Local property tax incentives save Oregon manufacturers hundreds of millions of dollars more. Intel, for example, saved more than $230 million last year thanks to tax breaks from Hillsboro and Washington County.

So to sum it up, the new report by the state economists confirms much of what we said in our report on Oregon’s economy. Specifically, our report explained that (1) Oregon’s economy has significantly outperformed the national economy over the long haul; and (2) the economic slowdown that Oregon has experienced in the near term is in large part due to the Trump tariffs and the business stumbles of the state’s two biggest private sector employers, Intel and Nike  — factors unrelated to state policy. 

None of this reality receives a mention in the Prosperity Council’s document. Instead of exploring the true causes of Oregon’s recent economic weakness, the corporate-dominated council convened by the Governor clings to incoherent arguments about “competitiveness.” It does so to advance an agenda of deregulation and tax cuts for the wealthy and corporations — the same old failed playbook of trickle-down economics.

There’s an old saying that the most revealing thing is what is not said. That’s very true when it comes to the Prosperity Council’s document.