Weekly Briefing | Reciprocal Tariffs: Nowhere to Hide

Reciprocal Tariffs: Nowhere to Hide

As protests broke out against the Trump administration around the nation this week, The New York Times reported one placard that caught my attention:

**“I’m tariffied — are you?”**

I’m sure that captures the sentiment of many Georgia firms, as they find themselves with nowhere to hide after years of efforts to diversify sourcing away from China, which former U.S. Sen. David Perdue of Georgia described last week in his ambassadorial hearing as perpetrating a “new kind of war” against the United States. Read my story on Mr. Perdue

But even if you agree with the sentiment, where do companies go now?

Those who rode a bipartisan consensus toward supposedly friendlier shores were blindsided by Mr. Trump’s so-called “reciprocal tariffs,” which hit Southeast Asia — the prime spot for diversification moves — devastatingly hard (ex. Vietnam at 46%, Indonesia at 32% and Cambodia at 49%). U.S. companies now face tariffs on Chinese goods at 54 percent, and retaliation from China at 34 percent on our exports there. (Trump said today he would hit China with another 50 percent if it doesn’t unilaterally disarm in the trade war).

Much has been written on how the math the Trump trade team used in its tariff formula is focused more on addressing trade deficits than barriers, so I won’t go into that here. But suffice it to say there’s a pretty significant overlap between Georgia’s biggest (and fastest-growing) trading partners and the countries slapped with the highest rates. See our story here

This makes sense if you think about it: If getting out of China meant moving to Vietnam, India or even Mexico, you would expect the state’s China trade to fall, with these places picking up the slack. That’s exactly what has happened, ironically thanks to the tariffs Mr. Trump himself instituted during his first term on China, which were largely kept in place during the Biden administration.

Made in the USA seems to be the only way to avoid Mr. Trump’s wrath, and while many companies would be fine with that, they don’t currently know how to plan. As the Belgian consul general told us nearly a month ago, a lack of clarity on trade can also delay investment:

“It’s not just like, ‘OK, I’ll move my company.’ Even if you move, you need certainty, you need visibility. A company does not make a million-dollar investment just like that. It will take many years.”

That’s especially true of markets where moving shop means relocating entire supply chains, not just a few machines, which is why companies can’t just pack up and move to the countries hit with the minimum 10%. Besides, no single market can soak up China’s excess capacity, and firms that have employed strategies like China + 1 (finding another big source market) and re-shoring (bringing factories back to the Western Hemisphere) are now seeing these alternatives get exponentially more expensive.

At least for this week, with the harshest reciprocal tariffs set to go into effect April 9, it seems there’s nowhere to hide.

Thanks for reading,

Trevor Williams

Managing Editor

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