A year into Trump’s tariffs, Georgia businesses grapple with uncertainty

Credit: Miguel Martinez/AJC

Credit: Miguel Martinez/AJC

Henke now orders fewer instruments and instead is focused on selling back stock. With his profit margin narrowing, he’s also cut staff and now runs the shop mostly by himself.

“I definitely worry about stability,” said Henke, who previously worked as an orchestra teacher in Gwinnett County. “Every year, profits shrink from other companies passing their increased costs on to me due to these nonsensical changes. It’s frustrating.”

Henke is among the Georgia business owners who say they are reeling from a tumultuous year since Trump started his second term.

Hours after his inauguration in January 2025, Trump announced 25% tariffs on Canada and Mexico, which he later paused, then enacted, then hiked, setting the tone for constantly shifting trade policies.

In an end of a January editorial for The Wall Street Journal, Trump claimed his tariffs “have brought America back.” He said his economic policies have led to foreign investment, a soaring stock market and low inflation, though it remains above the Federal Reserve’s target.

A recent study, however, shows consumers and American businesses are absorbing almost all of the tariffs, not foreign countries.

“When I imposed historic tariffs on nearly all foreign countries last April, the critics said my policies would cause a global economic meltdown,” Trump wrote. “Instead, they have created an American economic miracle, and we are quickly building the greatest economy in the history of the world, with other countries doing just fine!”

Trump was referring to his “Liberation Day” levies, which in April scrambled markets. Trump later backed off or reduced many of those taxes, but used the threats to try to seek new trade deals with embedded tariffs.

Tariffs are a tax on imported goods; they are costs that generally get passed along to the end buyer, often consumers. They can be a tool used to protect domestic industries or encourage foreign investment here, but building new factories takes time and money.

Sometimes, businesses will eat some or all of the tariffs, but that could come at the cost of investments made elsewhere, such as hiring.

Consumer confidence fell in January to its lowest level since 2014, according to a new report from the Conference Board, a research group. Though employment and spending have proved resilient, in a survey, consumers referenced prices, inflation, tariffs, trade, politics and the labor market for their pessimistic economic views.

There is a blanket 10% tariff on goods from all countries, but some nations have higher rates, which Trump has sometimes imposed as a geopolitical tool to influence foreign policy.

In early January, eight European nations became the latest target of tariff threats when they pushed back on Trump’s plan to acquire Greenland. The president later backed away from those threats.

Then at the end of January, he threatened Canada with more import taxes, including 50% tariffs on aircraft coming from the country, alleging Canada was not certifying certain jets from Georgia-based Gulfstream. The episodes have underscored uncertainty and confusion for Georgia entrepreneurs.

The U.S. Supreme Court has delayed a ruling on whether Trump has the authority to use emergency powers to impose tariffs. If the high court declares the tariffs illegal, the administration might have to refund over $135 billion in revenue collected from more than 300,000 importers, according to investment bank J.P. Morgan, though it’s unclear how a process like that could unfold or how long it would take.

And, the White House has vowed to find other paths to enact its trade plans if the court rules against the administration.

Increased uncertainty

Roger Tutterow, economist and professor at Kennesaw State University, said at a recent Pinnacle Financial-Synovus Economic Forecast Breakfast that the president should avoid frequently changing tariffs.

Businesses want to know the rules of the game and how to manage them, he said.

“Constantly changing tariffs is probably not the best idea, because it brings uncertainty into the equation,” Tutterow said.

George Lawes, who operates an antiques, furniture and gift business, said he was horrified and angry when Trump in January announced the proposed tariffs on European nations that opposed his efforts to control Greenland.

Trump then retracted those threats.

“It makes for such an uncertain business climate for small businesses,” said Lawes, who along with his wife, Kate, owns Kudzu Antiques + Modern in Decatur and its sister store in Sandy Springs.

Credit: Natrice Miller

Credit: Natrice Miller

“Small businesses have a hard time adjusting to and weathering these ups and downs, these price increases,” he said. “It’s very difficult for us to plan for it and to budget for it.”

Kudzu buys its antiques from overseas, including England, France, Belgium and Western Europe. It also imports some of its new products, such as furniture.

“You can’t make antiques,” Lawes said. “So why would you put a tariff on it? It doesn’t do anything to support American industry.”

For Brandon Eley, Trump’s trade policies over the past year have left him in limbo. He’s the president of 2BigFeet, an online retailer and manufacturer of large shoes for men based in LaGrange.

It took about four years for Eley and his team to find the right factories to manufacture their own shoe brand, called Michael Ellis Footwear, but they finally started producing the line in early 2021. The shoes start at size 14 and go all the way up to size 25 for some styles.

Credit: Handout

Credit: Handout

They are manufactured in Brazil and China, which both face some of the steepest tariff rates. The effective tariff and customs fees on the last shipment Eley received from his Chinese manufacturers was about 60%, he said.

He hasn’t yet increased the prices of his products, but he has also not ordered new shipments because then he would have to hike prices by about $50 to $60 to offset the cost of tariffs.

“We’re just selling down what we’ve got,” he said. “We’ve kind of just been in limbo for the whole last year because, you know, we can’t make the risk of investing the money in those styles without being confident that our customers would even pay that much.”

Eley had been thinking of trying to move production to Portugal to avoid the Brazil tariffs, but after Trump threatened the eight European countries with increased tariffs over Greenland, he said that could be risky.

Credit: handout

Credit: handout

“We’re a small business, and we don’t really have unlimited funds to be able to keep investing,” he said, “but six months from now, if somebody makes somebody mad, we could be right back, and then all of that money is just down the drain.”

Eley said he “would love” to manufacture his shoes in the U.S., but the raw materials would still have to be imported from overseas, even American leather, which is often exported to be tanned and then reimported, he explained.

“There’s no capability for a company like ours to manufacture in the United States at this time,” Eley said.

Domestic production impacted

Trump has said his tariff policies are aimed at spurring more domestic production.

But Tutterow said at the Wednesday economic forecast that he doesn’t expect tariffs to lead to significant reshoring of foreign production.

For example, Tutterow said, he talked to one global manufacturer who said it would take a 175% tariff for the business to reshore production from Mexico.

“Not going to happen,” he said.

In fact, one company with Georgia operations is now saying it could make more sense to produce overseas.

Seafood brand Chicken of the Sea opened a facility in Lyons, between Savannah and Macon, in 2009, which state officials at the time heralded as the company’s first domestic canning operation.

“At the time, it was very attractive to place operations in Georgia,” said Chicken of the Sea President Andy Mecs. “The wages were low. There were some incentives from the local government to do it.”

Credit: sour

Credit: sour

But more than 15 years later, production at the Lyons plant has dwindled, Mecs said. The company is grappling with new tariffs on imported tuna, olive oil and steel for its cans.

“Before the tariffs were implemented, we were cranking out as much inventory as we could,” Mecs said. “We were running five days a week. We were running overtime, and now we’re down to four days a week, one shift. Sometimes we don’t even run all our lines.”

Mecs said he’s frustrated because there is effectively no domestic supply of tuna, a migratory fish found , in warm waters near countries around the equator, such as Thailand, Vietnam, Ecuador and Indonesia.

His company has been lobbying Congress and the Trump administration for an exemption on tuna tariffs, similar to exemptions granted by Trump for products such as bananas and coffee, which are hard to source domestically.

“In a lot of cases, it’s actually cheaper for us to pack a finished good in Asia and import it than it is to pack it here in the U.S.,” Mecs said. “We understand the administration’s position on tariffs and making America more competitive, but this really goes against that goal.”

Mecs added the Lyons facility, which employs about 250 people, could soon become “the last domestic operation packing tuna within the continental U.S.” because of tariffs.

“Some of these measures are actually discouraging domestic production, and we may be the last one standing here on this soil,” Mecs said.

Foreign investment

The White House has touted announcements of trillions in overseas manufacturing investments in steel, semiconductors and other technologies coming to the U.S. since Trump returned to Washington.

But many of those investments are likely years away.

Some Georgia leaders told the AJC they’ve seen Washington’s trade stances give foreign entrepreneurs pause.

Over the past few years, Fulton County officials, alongside the Georgia Indo-American Chamber of Commerce, have been courting Indian manufacturers to set up a U.S. presence in Georgia.

The effort has been working. Last year, 13 Indian entrepreneurs affiliated with the group decided to set up a business in Fulton County, according to SK Raj, the former chair of GIACC. But that momentum has recently chilled.

Raj said GIACC was hoping to attract 50 exhibitors from India for its Atlanta India Trade Fair in April, but so far only about 20 have signed on.

Credit: Ben Gray

Credit: Ben Gray

“In the past, they were so excited to come. They’ve started the company. They’ve hired people here. They’ve opened offices. All of that is happening. But recently, in the past three, four months, we have not had any more new enrollments,” Raj said.

The cooling is a combination of the Trump administration’s tariffs and aggressive immigration policies, he explained.

One of the trade fair attendees asked recently “Will we be safe in the U.S.?” Raj said. “That was an extremely challenging question that we have never been asked before.”

In late January, India and the European Union reached a free-trade agreement after nearly 20 years of negotiations. The deal could impact as many as 2 billion people.

Then on Monday, Trump announced on social media he had made a trade deal with Indian Prime Minister Narendra Modi that would lower previously announced tariffs after little movement between the two countries for months.

Anita Ninan, the incoming chair of GIACC and an immigration lawyer, said the EU-India deal could make the bloc more attractive than the U.S. to Indian entrepreneurs, along with the tariffs and immigration.

“I think this is a deadly combination and will certainly have an immediate chilling effect on … Indian companies into the U.S.,” Ninan said.

Katherine Lafourcade, executive director of the French American Chamber of Commerce Atlanta-Southeast, said the chamber has recently seen a couple of companies not renew their memberships, which she attributed to uncertainty over import costs.

She said she also senses an uneasiness from some French companies trying to locate or expand in Georgia. The state is already home to more than 200 French companies.

“We help companies that are looking to start up their activity in the U.S.,” she said. “I think a lot of them might want to just put a pause on that” because of heightened risks from new tariff policies.

On the flip side, she said some businesses may look to establish a footprint in the U.S. to avoid tariffs.

“It’s really on a case-by-case level,” she said. “Everybody just feels nervous, and that means that you’re not going to throw yourself as easily into new projects.”