Cedar tree blight
Western red cedars (Thuja plicata) are stately trees, important to our Pacific Northwest forests. It does look like yours has may have been infected with a fungus. There are several that affect red cedars, and some infect one year, but don't show signs until the next year when the fungi mature. It would be a good idea to have a certified ISA arborist come out and examine it and give you advice on what it is and how to control it. ISA arborists are trained to observe tree diseases and have access to plant pathology labs to evaluate, culture and diagnose them. This site gives you access to certified arborists near you, https://pnwisa.org/hire-an-arborist/isa-certified-arborist-directory/. There are several in the Portland area, we recommend you talk to at least 3 to find the best one for your situation.
Western red cedars are tough trees, but they do require moist well-drained soil. Watering deeply once a week to thoroughly soak the root area is a good place to start. With prolonged periods of hot dry weather, you will need to water more frequently. Mulching around the tree would really help. Mulching with 2-4 inches of wood chips, shredded bark or compost will help retard surface evaporation. It will insulate and moderate soil temperatures, keeping the roots cooler. Mulch keeps down weeds and grasses by depriving them of light. Weeds and grasses compete with the tree for moisture and nutrients. Finally, mulch slowly adds organic matter to the soil as it breaks down. Leave about 6 inches around the trunk free of mulch. Having mulch too close around the trunk can lead to disease. This article has additional information on growing red cedar trees, Western Red Cedar https://plants.usda.gov/plantguide/pdf/cs_thpl.pdf.