Weekly Briefing | Tariff Pause — A ‘Stay of Execution?’

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Tariff Pause — A ‘Stay of Execution?’

Happy Easter Weekend, all,

President Trump’s 90-day pause last week on his so-called reciprocal tariffs on most countries was a relief for metro-area importers — existentially so for some small businesses.

One CEO I talked to, who sources her product from Pakistan, was pacing the floors at night as she worried about a $156,000 charge that would hit when her latest $400,000 shipment arrived in port. Pakistan was facing a stiff 39 percent tariff as a result of what another importer snidely characterized to me as “MAGA math” — the Trump administration’s widely panned formula for calculating its tariff rates.

For the worried importer, the reprieve was a “90-day stay of execution.” For others, it was the latest signal that we’ve entered an era of extended volatility, with policy dictated by an individual rather than deliberated on by institutions.

Speaking at an off-record chamber event just before the pause, one person familiar with the administration’s thinking ventured that the president is dedicated to his plan to bring back U.S. manufacturing and is unlikely to be deterred by warnings of short-term cost increases and scant availability of industrial labor. Wages, he argued, are still too low, especially outside major metros.

Still, this person conceded, Mr. Trump faces a tough balancing act in prosecuting the trade war: He must strike a balance between rigidity — standing firm enough to give threats credibility, and flexibility — openness to deals that drive greater purchases of American goods.

So far, Washington seems to be leaning toward the latter, which means the trade war could be kicked further down the road, with further ups and downs on the horizon before businesses gain that coveted commodity: certainty.

That means companies should proactively evaluate their supply chains now, Georgia Chamber CEO Chris Clark said in a press call this week.

“I’ve encouraged the small businesses I’ve talked to to look at India, look at Indonesia, look at other market partners, and go ahead and start ordering and diversifying your product line today. You should not be waiting, thinking in 90 days this will all go away.”

That’s because the one thing that does seem clear is that the U.S. and China are locked in a protracted standoff, evidenced by Mr. Trump’s decision to ratchet Chinese tariffs up to 145 percent while limiting the across-the-board rate on other countries to 10 percent, effectively putting “Liberation Day” on hold until July.

Now, the big question for many Georgia companies that have spent more than a decade moving away from China, both for practical and political reasons, is whether putting the screws to America’s chief rival was Mr. Trump’s plan all along. Or, whether the other countries in which they’ve built up capacity — Vietnam, Cambodia, Indonesia and beyond — will ever actually face the threatened tariffs.

For a deep dive into this question, check out China Plus None? where we spoke to and looked at contract manufacturers, consumer products giants and apparel brands still wrestling with the tension, as well as one Atlanta-based makeup brush company staying put after 20+ years growing with China.

We also look this week at the unintended consequences for Georgia poultry’s market access in China if this “game of chicken” continues, and ways that companies, to Mr. Clark’s point, can avoid powerlessness by making moves to recover duties and re-classify their products.

🍻Next week we’re getting to the important stuff: how Georgia craft beer producers and wine importers are weathering steel, aluminum and retaliatory tariffs.

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/// 5 THINGS THIS WEEK

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/// PASSPORT MEMBERSHIP UPDATE

If you haven’t yet purchased your Global Atlanta Passport, this week’s Consular Conversation with Frank Groome, Ireland’s consul general in Atlanta, was yet more proof that you’re missing out. 

Mr. Groome outlined Ireland’s posture on tariffs and trade, discussed the importance of sports diplomacy in light of last year’s Georgia Tech football game in Dublin, and heralded the promise of the new Enterprise Ireland office in Atlanta, which will help Irish firms in life sciences, fintech, manufacturing and more set up shop in the Southeast U.S. Mr. Groome was joined on stage by Anderson Graves of EI and Foster Finley from the reconstituted Irish-American Chamber Southeast. 

Our Global Atlanta Passport membership program now has over 180 members, including a few recent joiners (See our full Passport “wall”): 

• Daniel Dames, Shea Roberts, Wei Siong Tan, Sosena Kabede and Steven Fernandez all came in at the main Passport level 
  
• Ramona Houston was kind enough to become the last of our Legacy (lifetime) Passport holders; we closed the category a few weeks back after 30 people joined. 

• And in early March, Al Arrington became a Digital Supporter: This level doesn’t include event access, but it does let you peruse our 30 years of archives and avoid email ads for just $50/year.  

NOW INTRODUCING – Company Passports: If you were waiting to put the membership on your company’s tab and invite some co-workers along, we’ve got a solution for you: Team and Corporate Passports. Questions? Contact mjensby@globalatlanta.com

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