Georgia braces for impact of Canada, Mexico and China tariffs

China on Tuesday announced retaliatory tariffs of up to 15% on key U.S. farm products including imports of chicken, pork, soy and beef, the Associated Press reported. Canada has also announced retaliatory tariffs.

Consumers could see significant impact from tariffs, since many of the everyday items that people buy rely on imported supplies from those countries.

Trump said in remarks Monday afternoon that the 25% tariffs on the two countries would take effect Tuesday, and U.S. stock exchanges reacted with big sell offs.

“What they have to do is build their car plants, frankly, and other things in the United States,” Trump said on Monday.

He also added “as an example, North Carolina, they had the great — I used to go there to buy furniture for hotels, and it’s been wiped out. That business all went to other countries. And now it’s all going to come back into North Carolina.”

Supply chains are complicated and onshoring production of furniture and other goods, if it is triggered by import taxes, will take time with consumers paying more, experts say.

Consumer impact

Tariffs are a tax on imported goods; they are costs that generally get passed along to the end buyer, typically consumers.

The proposed tariffs on China, Mexico, Canada and other U.S. trading partners could raise prices for consumers on everyday items by up to 2.6%, according to a study released Friday by the Federal Reserve Bank of Atlanta.

The tariffs on Mexico and Canada drive almost half the price effect, the study’s authors found.

According to experts at Cornell University, consumers could quickly see price hikes.

“The automobile sector, in particular, is likely to see considerable negative consequences,” because its supply chains crisscross the U.S., Canada and Mexico and tariffs are expected to drive up the price of vehicles, which could dampen demand, according to Gustavo Flores-Macias, a professor of government and public policy at Cornell. And, he added, “both countries are likely to retaliate in kind even if they stand more to lose economically.”

Businesses on alert for fallout

The trade war Trump launched with new tariffs and threats has sent executives at some Georgia Fortune 500 companies scrambling. Some said during their earnings calls in February that they were unsure how their supply chains and sales will be affected in the days, weeks and months to come.

At Duluth-based tractor maker AGCO, Chief Financial Officer Damon Audia said last month the company was preparing for “an array of scenarios” involving tariffs.

“Do we shift the landing of some certain products into Canada versus the U.S.? We’re looking at things,” Audia said then.

“We want to make sure we have some clarity before we actually execute any of these things,” Audia said.

Credit: Massey Ferguson

Credit: Massey Ferguson

“Let’s start out that we have no idea what they’re going to be, how they’re going to be executed and what’s going to happen,” said Jeff Lorberbaum is CEO of flooring giant Mohawk in Calhoun, in response to an analyst’s question during an earnings call in February.

There was still uncertainty at the start of March in the days before the Canada and Mexico tariffs were set to take effect, about what exactly would happen and how much the tariffs would be.

For some small businesses, the tariffs come at a particularly difficult time.

Maïré Bavarday-Rosa, CEO of Atlanta-based Ecomspaces, has customers with e-commerce businesses in the U.S., Africa, Europe and Canada who send their inventory to her hub for shipping to American consumers.

She said the end of 2024 was the worst quarter her business and other brands she works with had ever faced, as inflation-driven shifts in consumer habits led to a steep drop in sales.

“The ones that are still up and running are wondering how it’s going to affect the cost of their products,” Bavarday-Rosa said, “because even if you make your product in the U.S., a lot of things you actually import from other countries, like the containers for your product.”

UPS Supply Chain Solutions, which provides shipping and logistics services, was scheduled to hold a webinar Tuesday for clients on how to comply with Canada customs requirements and prepare for U.S. “shifting tariffs policies, economic sanctions and their possible repercussions,” on importers.

International trade is big business in Georgia

Georgia’s role as an international trade juggernaut means tariffs could have a significant impact for local companies.

Georgia posted its fourth straight record year for international trade in 2024.

Total trade last year surpassed $198 billion, nearly a 7% increase compared to 2023, according to a state report released last month.

Credit: TNS

Credit: TNS

The bulk of that activity was imports, nearly three-fourths — one reason tariffs are a major concern.

Retaliatory tariffs could also have a significant effect on exports, which account for roughly 6% of Georgia’s gross domestic product.

“You hit that 6%, you hit the economy of the state,” State Economist Robert Buschman told the Georgia House Appropriations Committee last month, referring to the potential downsides of escalating tariffs.

Georgia’s top exports are civilian aircraft and ancillary parts, a sign of strength for the state’s burgeoning aerospace sector. Other forms of advanced manufacturing, including motor vehicles, computers, telephone sets and medical devices, round out the state’s top five exports.

Georgia now ranks sixth in the U.S. for its dollar value of total trade.

Economic uncertainty

The tariffs threat means that most maligned U-word is making a comeback — uncertainty.

Businesses and consumers typically don’t like uncertainty. It makes many people feel less confident about the future. That lack of confidence is starting to show up in gauges of consumer and business sentiment.

The Conference Board’s Consumer Confidence Index fell in February by 7 points, its largest amount in a single month since August 2021.

“This is the third consecutive month on month decline, bringing the Index to the bottom of the range that has prevailed since 2022,” Stephanie Guichard, the Conference Board’s senior economist on global indicators, said in a news release. “Consumers became pessimistic about future business conditions and less optimistic about future income. Pessimism about future employment prospects worsened and reached a ten-month high.

The Federal Reserve Bank of Atlanta’s GDPNow indicator, which had shown expected economic growth when Trump entered office and in the president’s first month, has swiftly turned negative.

On Monday, the indicator predicted economic contraction of -2.8% on an annualized basis in the first quarter amid reports of declining personal consumption and private investment. That’s down sharply from a prediction of -1.5% for the first quarter on an annualized basis on Friday. On Feb. 19, the same indicator predicted 2.3% growth.

Even tariff threats have impact

Economists say even the threat of tariffs can influence businesses. Last month, Trump said he would enact tariffs on foreign-made steel and aluminum starting March 12.

Businesses make buying and sourcing decisions that sometimes must be done well in advance of specific projects, making it difficult to adapt to swift changes in trade policy.

The prices of U.S.-made steel and aluminum have surged even before the tariffs on imported metals go into effect.

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.

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.