American dye business in mid-West state (8)
I believe the answer is:
colorado
'mid-west state' is the definition.
(American state)
'american dye business' is the wordplay.
'american dye' becomes 'color' (US spelling of 'colour').
'business' becomes 'ado' (both can mean happenings or commotion).
'color'+'ado'='COLORADO'
'in' acts as a link.
(Other definitions for colorado that I've seen before include "State in the Rockies" , "American river" , "Boulder's state" , "US state, capital Denver" , "US state in the Rocky Mountains" .)