Editor’s note: This is a developing story and has been updated.
Many top Georgia stocks rallied Monday with an announcement by U.S. and Chinese officials of a deal to reduce recent tariffs and continue negotiations during a 90-day truce in their trade war.
But economic uncertainty is likely to linger, and the tariffs that remain in place will probably weigh on business and consumer sentiment, experts said.
“Ninety days of clarity provides a welcome respite, but it’s just a temporary break from the uncertainty. We increasingly hear from businesses that predictability is their most important external factor,” said Jerry Parrish, the chief economist at the Metro Atlanta Chamber. “Georgia businesses can adjust and adapt — but only if they understand the operating environment.”
The Dow Jones Industrial Average surged more than 1,100 points Monday, the Nasdaq gained about 4.4% and S&P 500 climbed about 3.3%.
Big movers among Georgia stocks near the end of Monday’s trading day included heavy equipment maker AGCO, auto dealer group Asbury Automotive, Delta Air Lines, Home Depot, flooring giant Mohawk Industries, consumer goods maker Newell Brands and UPS.
Credit: AP
Credit: AP
President Donald Trump initiated the trade war after slapping hefty tariffs on top trade partners, including China, Canada and Mexico. Levies he called “reciprocal tariffs” further roiled financial markets, though the White House put many of them on pause. He kept the highest levies, up to 145%, on most goods from China.
Foreign steel, aluminum and automobiles also carry steep import taxes.
U.S. Trade Representative Jamieson Greer said the U.S. agreed to drop its 145% tariff rate on Chinese goods by 115 percentage points, to 30%, while China agreed to lower its rate on U.S. goods by the same amount, to 10%.
The reduced tariffs are likely to remain an economic drag and continue to cost businesses and consumers money. But the reductions buy time for the countries to continue talks while curbing economic damage.
Credit: AP
Credit: AP
Home Depot, the metro Atlanta-based retail giant, sells many U.S.-made goods, but also relies on Chinese imports. The company said in a statement Monday: “This is a fluid environment, and we, together with our vendors, are monitoring developments and will work closely to manage with the goal of being our customers’ advocate for value.”
The truce announced Monday did not immediately address the so-called de-minimis exemption on small goods. Previously, shipments of products below $800 in value were not subject to tariffs, which had been a boon to e-commerce companies such as Shein and Temu. But packages from such companies were hit by U.S. tariffs in recent weeks.
Dan Ellsworth, whose Roswell-based company World Micro is an aerospace distributor that imports components, said he thinks the U.S.-China trade deal is yet another change in the trade war that “is going to create a lot of confusion for the (shipping) carriers to interpret.”
Credit: Jason Getz / Jason.Getz@ajc.com
Credit: Jason Getz / Jason.Getz@ajc.com
“There’s just still no guarantee. We could buy, you know, a million dollars of parts from China today, and they arrive in four months, and the rate could be back to 145% by the time they arrive,” Ellsworth said.
What’s more, for his company, “the biggest challenge on the tariffs is really the steel and aluminum content that applies to every country globally,” still at 25%, he said.
“It’s the third kind of back step that the United States has done,” Ellsworth said. “it just shows that I think we really overplayed our hand in many ways. And in essence, it put the rest of the world — it bound them closer and closer together in my mind.”
The steep tariffs essentially put trade between the U.S. and China, the two largest economies in the world, on ice.
Credit: Joe Sohm/Visions of America/Univ
Credit: Joe Sohm/Visions of America/Univ
The full Trump tariffs and Chinese retaliation have led to mass cancellations of cargo ship sailings across the Pacific, with U.S. ports on the West Coast largely empty. Sailings to Georgia’s main container port in Savannah have been expected to slow substantially this month.
The slowdown in trade has raised the prospects of shortages in stores, as well as layoffs in logistics, retail and manufacturing, and increased prices.
Holly Wade, executive director of the research center at the National Federal of Independent Businesses, said the 90-day pause provides a little relief and time to plan for small businesses.
“At least it gets them unstuck for a little while if they’re able to absorb a 30% increase, but the uncertainty element is still there,” she said.
Some companies may stockpile goods and eat the 30% tariff increase. Others may wait to see if a deal is struck and tariffs are reduced even further.
“This might be a stop-gap for some,” Wade said. “It might not move the needle at all for others, depending on what the product is that they’re importing.”
With the 90-day pause, sailings are likely to restart, but it’s unclear by how much. Many companies tried to front run tariffs by stocking up on goods ahead of their implementation in April. That could happen again. But uncertainty remains, and not all companies have the financial wherewithal to get ahead of further import taxes or can afford to shoulder those that remain.
In a post on X, the social media website formerly known as Twitter, Scott Lincicome, a vice president of the Libertarian-leaning Cato Institute, said the temporary reduction in tariffs will allow commerce between China and the U.S. to resume. The U.S. could see the restart of another mad scramble to get imports into the country.
The remaining tariffs, he said on X, are “still VERY high (and) surely prohibitive for many US importers. And even 30% will still cripple many US (businesses), plus all the uncertainty. Surely better than where we were yesterday, but not actually good.”
The Associated Press contributed to this article.
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