Cars, cans, construction. How tariffs on metals could hit Georgians

With the metal tariffs alone, the price increases won’t just affect mammoth companies, said Mike Dunham, CEO of the Associated General Contractors of Georgia. It will trickle down to products made with those metals and anyone who has construction needs.

“Add 25% to the cost of anything and the consumer will feel that increase,” he said. “Now that these tariffs could go in place and are seen coming, it’s going to affect the price of any future contracts ... The owners will feel that impact.”

Other industries that use steel for manufacturing would also feel the impact.

“Here in Georgia … the automobile industry is going to be impacted,” said David Yates, a corporate attorney at Greenberg Traurig. Tariffs would affect the cost of components, ranging from auto body frames and ball bearings to seat belt parts, he said.

Because of its economic growth, Georgia stands to be hit harder than most states by the steel and aluminum tariffs due to take effect March 12.

Construction cranes have been a mainstay of Atlanta for years, while factories and data centers are popping up across the Peach State. In a Tuesday trends report, global construction firm Skanska lists Atlanta as a busy construction market where price inflation is expected to be between 4-6%, which is above average.

Cole Porter, CEO and president of Gwinnett County-based Porter Steel, said he agrees in principle with the tariffs as a negotiation tactic to reforge trade deals. But he would have preferred slowly escalating tariffs rather than a stark 25% jump, since steel fabricators like his work on long-term contracts.

“I’ve already signed my name on agreeing to my contract price,” Porter said. “So if the cost of steel goes up, I lose margin, and that directly impacts the ability to invest in my business and my employees.”

Credit: AP

Credit: AP

Dunham added that his organization established a tariff resource center for its members in early February to help contractors navigate sudden cost increases and try to keep their projects on track.

“It’s going to impact (Georgia) simply because we are in a very positive economy experiencing growth across the board,” he said.

‘Reliance on imports’

Since he took office last month, Trump has used tariffs, either enacted or threatened, to try to bring trade partners to heel.

He slapped 25% tariffs on most goods from Canada and Mexico, since put on hold until March 4, and 10% tariffs that have gone into effect on all goods from China.

Trump also on Thursday announced “reciprocal tariffs” on nations that already had import taxes on U.S. goods that could hit in the months ahead.

Raw material costs, which include steel and aluminum, usually represent between 40-60% of a typical construction project budget, according to Skanska.

The firm, which works on big Atlanta projects including airport expansions and the city’s high-rises, said U.S. manufacturers could likely meet about 75% of those raw material needs, but imports fill the gap.

“While the U.S. manufactures much of its steel and aluminum domestically, there is a reliance on imports, and these tariffs could lead domestic providers to increase pricing as a result,” Steve Stouthamer, executive vice president of project planning for Skanska’s U.S. division, said in an email.

Credit: HYOSUB SHIN / AJC

Credit: HYOSUB SHIN / AJC

The Trump administration argues steep tariffs will help spur more domestic steel and aluminum production. While tariffs have a track record of influencing where companies make investments, those efforts often take years to come to fruition. Porter added the international tariffs will give extra price control to domestic smelters.

“It’s really going to be on the (U.S.) mills not to take advantage of the situation,” he said.

Trump slapped tariffs on steel and aluminum in his first term in office. But there are far more U.S. manufacturing jobs that use steel and aluminum than there are in producing the metals.

One study by economists at Harvard and the University of California, Davis found that those earlier levies helped create about 1,000 domestic steel production jobs but likely led to about 75,000 fewer manufacturing jobs in the U.S. because of higher costs.

“None of this stuff can be put in place overnight,” Dunham said. “Building the (smelting) plants, retooling the plants, increasing the production of existing plants inside the U.S., none of that will be fixed overnight.”

Some manufacturers also expect to see higher costs from the higher duties.

Companies in Georgia including tractor makers AGCO in Duluth and Kubota Manufacturing in Gainesville are among the businesses represented by the Association of Equipment Manufacturers, which said the tariffs and retaliatory responses “will raise the price of steel and aluminum domestically and drive up the cost of manufacturing equipment in America.”

The Trump administration said the tariffs are in response to foreign nations “flooding the United States market with cheap steel and aluminum, often subsidized by their governments.”

“The United States does not want to be in a position where it would be unable to meet demand for national defense and critical infrastructure in a national emergency,” the administration said.

The Association of Equipment Manufacturers said it supports the administration’s goal of strengthening trade relationships and creating “fair and favorable terms for America” but said tariffs will “disrupt supply chains, threaten market expansion, place unnecessary strain on customers and undermine our global competitiveness.”

Bill Anderson, president and CEO of the Associated Builders and Contractors of Georgia, said his organization’s members have been able to prepare for these anticipated tariffs by stockpiling construction materials. He said the tariffs are also just one piece of Trump’s economic agenda.

“While these (tariff) policies will drive costs higher, other policies being implemented by the Trump administration, like deregulation, more streamlined approval process for certain segments and less red tape surrounding infrastructure projects will have an opposite effect,” Anderson said in an email.

Industries on notice

Other major metro Atlanta firms are also closely monitoring tariff developments, including Home Depot.

“In general, any tariff would have a broad impact on our industry,” according to a Home Depot spokesperson. However, the home improvement giant said it sources a majority of its products from the countries where it operates stores — the U.S., Canada and Mexico.

“Our merchandising and supply chain teams continuously work with our suppliers to identify opportunities to diversify product sourcing,” a Home Depot spokesperson said in a written statement. “We’ve been through this before and will manage through the new tariffs similarly to how we have done so in the past.”

Atlanta-based Coca-Cola this week said tariffs on aluminum will increase costs of cans, but it has ways within its supply chain in which it can adapt.

Credit: AP

Credit: AP

Novelis, an Atlanta-based aluminum recycling and producing company, said during its earnings call Monday that it has goods traveling between Canada and the U.S., and “our historical experience is that we get exemptions when we apply,” Novelis Chief Financial Officer Dev Ahuja said.

Without exemptions, “The impact on the growth of all the countries in the region is going to be very severe, and none of the governments are going to live with that,” Ahuja said. “So let’s just believe that this is going to be short term noise, and we have the ability to absorb the short term noise.”

However, when Trump said signed the executive orders for 25% tariffs on aluminum and steel in the Oval Office later on Monday, he said it was with “no exceptions, no nothing.”

Novelis said in a written statement Thursday that it “will continue to partner with the Administration to ensure actions support U.S. investments and supply and safeguard the long-term competitiveness of aluminum as the material of choice for U.S. beverage can, automotive and specialties markets.”

Nationally, auto manufacturers are among the companies expected to be hit by steel and aluminum tariffs.

“What we’re seeing is a lot of cost and a lot of chaos,” said Ford CEO Jim Farley during an investor presentation this week.

During a discussion with analysts on the paused tariffs on goods from Canada and Mexico, Farley said “tariffs would also mean higher prices for customers.”

Hyundai and Kia each have factories in Georgia. Hyundai Motor Group said it is “closely monitoring new U.S. policy developments.”

“We are currently reviewing the potential impact of the proclamation on our supply chain,” Hyundai said.