Soon after President Donald Trump announced his administration would impose new tariffs on steel and aluminum imports, Bob Best saw the price of equipment for his Kennesaw-based business shoot up.
“It happened within about a minute of the tariffs,” said Best, who manages D. McKeon Heating & Air Conditioning. “Pretty much all of the makers raised their prices.”
Trump won the White House with a populist message of putting America’s economic interests above other national priorities. He framed trade wars as “easy to win,” a way to force better terms with trading partners, and this spring he rolled out plans to impose duties on goods from China to Canada.
But the tariffs — and the retribution they immediately sparked from abroad — have given heartburn to many of the president’s conservative Georgia allies, who’ve long treated free trade as dogma.
Many in business fear that higher prices will damage the state’s economy, from agricultural exports like broiler chickens and cotton to the state’s booming ports, housing and auto manufacturing.
“Georgia businesses and their employees depend on imports and exports to keep our economy growing,” said Chris Clark, president and CEO of the Georgia Chamber. “Tariffs have a negative impact on businesses of all sizes.”
Some local companies are right in the crosshairs.
Novelis, which makes aluminum, now faces a 10 percent tariff on imports.
The company, which has 500 people at its headquarters in Atlanta and 150 employees at a manufacturing plant east of the city, believes the Chinese unfairly subsidize their rivals, said Fiona Bell, a company spokeswoman.
But the administration’s tariffs are not surgically targeted, she said.
“We are disappointed. Aluminum trading partners that operate as market economies such as Canada and the European Union should not be subject to tariffs,” Bell said. “Instead, the tariffs bring the unfortunate potential to increase costs for the end consumer.”
While some Trump supporters say they’re not happy about higher costs, they’re hoping it’s just a toll on the road to a rejuvenated economy.
Best, the HVAC business manager, says he’s a “100 percent supporter” of Trump’s policies. He said his company, which has nine employees, so far can pass the equipment price increases onto customers.
“It’s not like it’s a deal-breaker,” he said.
But if prices rise 25 percent, that could chill business, he said. Yet Best predicted that won’t happen.
“I think it’s all negotiation,” he said of the administration’s strategy. “It is one big chess game.”
Also arguing that the fears are overblown is economist Robert Scott at the Economic Policy Institute, a left-leaning group that typically does not praise Trump.
The eventual impact will be tiny, he said – maybe 15,000 jobs in an economy of 149 million. “Not even a rounding error. It is going to be like searching through a haystack for a needle.”
Others are unnerved about the uncertainty surrounding the new tariffs.
Costs are added into products all along the chain to consumers, whose spending account for 70 percent of the U.S. economy, said Thomas Cunningham, chief economist of the Metro Atlanta Chamber.
The impact depends on whether people and companies cut spending, he said. “If consumers get skittish, you could get a self-fulfilling recession.”
And the less demand for things, the less there is trade – which accounts for hundreds of thousands of Georgia jobs in the ocean ports and airports, along with trucking, warehouses, logistics and corporate offices.
Flexport manages freight shipments around the world. The company has a crucial and growing office with 75 employees in Atlanta that is scrambling to help customers respond to tariff costs, said Kaitlyn Glancy, senior vice president.
Not everyone is affected, but those that are, can be hit hard, she said.
Housing is another critical sector of Atlanta’s economy. Tariff-related increases in material costs now add $6,300 to the price of a home, said Bobby Cleveland, president of the Home Builders Association of Georgia.
The price of steel rose 35 percent between January and June in the United States, but only 5 percent in the Far East and 2 percent in Germany, said Donald Cameron Jr., a partner in the international trade practice of Atlanta-based Morris, Manning & Martin.
“Yes, it depends on the product you are making. But if you are Caterpillar or an auto company, and you are using lots of steel, your competitiveness is being eroded,” Cameron said.
Caterpillar’s plant near Athens is one of many factories in the state relying on steel and aluminum. Kia has a massive auto assembly plant in West Point. Blue Bird makes buses in Fort Valley. Lockheed in Marietta and Gulfstream in Savannah make jets. And then there are the Savannah and Brunswick ports, which are crucial gateways for imports and exports from those industries.
Meanwhile, a tweet from Trump on Friday that he’s considering a 20 percent tariff on imports of all European cars was like a warning to Mercedes-Benz, whose glistening, new glass-enclosed U.S. headquarters opened in Sandy Springs earlier this year. In that same lane is Porsche, which operates a 7-acre, $100 million complex adjacent to Hartsfield-Jackson Airport.
The potential economic pain has prompted even some of Trump’s most ardent Georgia allies to publicly denounce White House actions.
Several Georgia Republicans, including Karen Handel, Johnny Isakson and David Perdue, have pushed back against tariffs, warning they could have a negative impact on everything from Coca-Cola’s aluminum cans to small newspapers in rural Georgia.
But they have also made sure not to directly criticize the president, coupling critiques with compliments about Trump’s goal of forcing trading partners such as China to enact “fairer” policies toward the U.S.
Isakson has signed onto a bipartisan Senate bill that would require Congress sign off on tariffs levied in the name of national security.
Perdue, one of Trump’s closest Capitol Hill allies, has slammed that bill, but has also urged the president to take a narrower approach to tariffs.
“As a business guy, I know what [tariffs] do to supply chains,” Perdue said. “At the same time, I applaud the president for trying to create a level playing field.”
The tariff fight has also engulfed former Gov. Sonny Perdue. As secretary of agriculture, Perdue is Trump’s top emissary to farm country, where fears of a trade war have been acutely felt in recent months.
The EU, Canada, Mexico and China have all singled out U.S. agricultural exports for tariffs, including peanuts, pecans, cotton and paper products. Those moves would hit Georgia farmers and Atlanta-area companies like Georgia-Pacific and WestRock.
But Perdue has told farmers that Trump understands the stakes and “will not allow our great farmers and producers of America to be the casualty in this conflict.”