Georgia’s builders and manufacturers steel themselves for tariff price hikes

Georgia builders and manufacturers are bracing for impact not only from the trade war, but tariffs to come.

As President Donald Trump implemented broad tariffs Tuesday on Canada, China and Mexico and promises more in the future, it leaves Georgia’s construction and manufacturing industries exposed to cost increases out of its control. Many costs will be passed on to consumers.

“If the trade war continues to escalate, it could permanently reshape global supply chains and leave some industries in the U.S. significantly weakened,” said Sina Golara, assistant professor of management at Georgia State University’s Robinson College of Business.

Tariffs are taxes on imported goods. Canada, Mexico and China have already hit American goods with taxes or threatened retaliatory measures. Many economists consider tariffs inflationary.

In addition to the 25% tariffs on most goods from Canada, all goods from Mexico and combined 20% tariffs on Chinese goods, Trump has promised levies on foreign steel and aluminum that will go into effect March 12. On Wednesday, the White House announced an delay in implementation of tariffs on vehicles amid outcry from automakers.

Credit: AP

Credit: AP

During Trump’s speech Tuesday night to Congress, he called tariffs “a beautiful word” that he said will force companies to make new investments in the U.S.

“We just want to protect our businesses and our people, and they will come because they won’t have to pay tariffs if they build in America,” he said.

The U.S., however, is the top importer in the world, leaving its businesses and consumers vulnerable to retaliation on American goods, which the leaders of Canada, China and Mexico have promised to deliver. Georgia just posted its fourth straight record year for international trade in 2024, meaning the Peach State is also exposed.

Georgia has experienced a construction boom in recent decades, and many of its largest industries center on advanced manufacturing. Tom Park, national strategic supply chain vice presidency for global construction firm Skanska, said those industries are the most vulnerable because of how embedded existing supply chains are between America and its allies.

Because of the North American Free Trade Agreement in the 1990s, Park said, many industries “have been built on a very fluid supply chain that crosses back and forth across borders.”

The successor to NAFTA, the U.S. Mexico Canada Agreement, which was negotiated during the first Trump administration, kept trade largely free across the continent.

“You have these compounding tariffs that get multiplied,” he said.

Credit: Atlanta Journal-Constitution

Credit: Atlanta Journal-Constitution

Built on trade

The construction industry, which has seen costs balloon in the years following the COVID-19 pandemic, is bracing for even more price hikes if tariffs escalate.

The National Association of Home Builders said $13 billion of housing construction goods were imported in 2023, roughly 7% of all materials used in new residential construction. About 70% of softwood lumber and gypsum, which is used for drywall, is sourced from Canada and Mexico. The NAHB estimated that Trump’s first wave of tariffs against those countries and China will raise the cost of imported construction materials by $3 billion to $4 billion.

Credit: Miguel Martinez-Jimenez

Credit: Miguel Martinez-Jimenez

“For some materials, where imports are critical to supply, prices could see dramatic increases, adding layered costs that could substantially impact builders’ ability to deliver new projects,” the association said in a tariff fact sheet.

Steel and aluminum are also critical materials used in everything from Midtown’s skyscrapers to Coca-Cola cans.

Skanska, which works on big Atlanta projects including airport expansions and the city’s high-rises, said raw material costs usually represent between 40-60% of a typical construction project budget. In anticipation of additional tariffs on steel and aluminum from Canada and Mexico set to take effect March 12, Park said U.S. steel prices have already increased 15%.

“Regardless of whether it’s domestic or foreign sourced, the overall price of steel is going up,” he said.

Park added that the March 12 tariffs, if they take place, would compound atop the tariffs Trump enacted Tuesday, which would result in a 50% hike on steel and aluminum between those countries. Trump on Tuesday also indicated additional tariffs will go into effect next month.

“April 2, reciprocal tariffs kick in,” Trump said. “And whatever they tariff us, other countries, we will tariff them.”

While tariffs have a track record of influencing where companies make investments, those efforts often take years to come to fruition. Trump said in his speech to Congress that the tariffs are a manner of national security, equating metal smelting capabilities with the country’s future.

“ … If we don’t have, as an example, steel and lots of other things, we don’t have a military,” Trump said. “And frankly we won’t have — we just won’t have a country very long.”

Protecting profitability

The auto industry, which relies on a supply chain that stretches across North America, has been given a brief reprieve from tariffs, although their impacts still loom large.

Georgia has a fast-growing auto industry whose stakeholders are watching for trade developments.

Hyundai Motor Group and Kia, which both operate factories in Georgia, said in separate statements they were monitoring policy developments and reviewing business strategies.

Other manufacturers have already been affected by uncertainties driven by tariffs and other factors.

The Association of Equipment Manufacturers represents companies major Georgia operations including Duluth-based tractor maker AGCO, Kubota Manufacturing, construction equipment manufacturer JCB, and tractor maker Yanmar America Corp. The group said “imposing 25% tariffs on imports from Canada and Mexico will hurt American manufacturers and farmers.”

— Staff writer Kelly Yamanouchi contributed to this report.