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Question: Do TARIFFS affect companies that make their product in the United States and how do tariffs impact local and global construction companies?

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Question: Do TARIFFS affect companies that make their product in the United States and how do tariffs impact local and global construction companies?

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The construction industry, a cornerstone of economic growth and infrastructure development, is deeply intertwined with global trade dynamics. Tariffs, which are taxes imposed by governments on imported goods, can have far-reaching effects on this vital sector. This blog explores how tariffs impact the construction industry, from material costs to project timelines and overall economic health.

The role of tariffs in global trade

Tariffs are often used as a tool to protect domestic industries from foreign competition by making imported goods more expensive. While they can help local manufacturers, they also have the potential to disrupt supply chains and increase costs for businesses that rely on imported materials. In the construction industry, where materials such as steel, aluminum, and lumber are often sourced from abroad, tariffs can significantly alter the financial landscape.

Material costs and supply chain disruptions

One of the most immediate effects of tariffs on the construction industry is the increase in material costs. For instance, when tariffs are imposed on steel and aluminum, the prices of these essential materials rise. This increase affects not only the cost of raw materials but also the prices of finished products such as beams, pipes, and other structural elements. As a result, construction companies face higher expenses, which can lead to increased project budgets and, consequently, higher costs for clients and consumers.

Moreover, tariffs can cause supply chain disruptions. Construction companies often establish long-term relationships with suppliers to maintain a steady flow of materials. When tariffs are suddenly introduced or increased, these supply chains can be interrupted, leading to delays and shortages. This disruption can slow down construction projects, extend timelines, and increase labor costs as workers wait for materials to arrive.

Impact on project timelines and budgets

The ripple effect of increased material costs and supply chain disruptions is felt acutely in project timelines and budgets. When the cost of materials goes up, construction companies must either absorb the additional expenses or pass them on to their clients. Absorbing the costs can squeeze profit margins and limit the ability to invest in new projects or hire additional workers. Passing the costs on to clients can make new construction projects less attractive, potentially reducing the demand for new buildings and infrastructure.

Delays in material delivery due to disrupted supply chains can also extend project timelines. In an industry where time is money, these delays can be costly. Extended timelines mean that construction firms must pay for additional labor, equipment rentals, and other associated costs. These added expenses can further strain budgets and reduce the overall profitability of projects.

Broader economic implications

The construction industry is a significant contributor to the economy, providing jobs and stimulating growth through the development of infrastructure, commercial buildings, and residential properties. When tariffs increase the cost of construction, the broader economic implications can be substantial. Higher construction costs can lead to increased prices for homes, office spaces, and other buildings, making them less affordable for consumers and businesses.

Additionally, tariffs can create uncertainty in the market. Construction projects are often planned years in advance, and sudden changes in material costs can make it difficult for companies to budget accurately. This uncertainty can lead to a slowdown in new project starts as companies take a wait-and-see approach, further dampening economic growth.

Case studies and real-world examples

To illustrate the impact of tariffs on the construction industry, let's consider a few real-world examples.

In 2018, the United States imposed tariffs on steel and aluminum imports, leading to a sharp increase in the prices of these materials. Construction companies across the country reported significant cost increases, with some projects experiencing budget overruns of 10% or more. These cost hikes were passed on to consumers, leading to higher prices for new homes and commercial buildings.

In another example, lumber tariffs between the United States and Canada affected the availability and cost of wood products. Lumber prices soared to record highs, impacting the construction of residential properties. Builders reported delays in project completion due to the time needed to source affordable materials, and homebuyers faced higher prices as a result.

Strategies for mitigating tariff impacts

Despite the challenges posed by tariffs, there are strategies construction companies can employ to mitigate their impact. Diversifying suppliers, for instance, can help reduce dependence on any single source of materials and provide alternative options if tariffs are imposed. Companies can also explore using alternative materials that are not subject to tariffs or are less affected by price fluctuations.

Additionally, forward contracts and hedging can be used to lock in prices for materials in advance, providing some protection against sudden cost increases. Building strong relationships with suppliers and staying informed about potential changes in trade policies can also help companies better navigate the complexities of tariffs.

How CLA can help with ripple effects of tariffs

Tariffs have a profound impact on the construction industry, influencing material costs, supply chains, project timelines, and overall economic health. While they can protect domestic industries, they also introduce challenges that construction companies must navigate in the face of global trade uncertainties.

At CLA we can help you develop a good understanding of these impacts and start adopting strategies to mitigate them.

As the world becomes increasingly interconnected, the dynamics of tariffs and their effects on industries like construction will continue to evolve. Staying informed and adaptable will be key for the construction industry to remain a robust driver of economic growth and development.

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The Impact of Tariffs on the Construction Industry

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Tariffs affect material costs, supply chains, timelines, and economic health, creating challenges and ripple effects for construction companies.

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How Tariffs Impact the Home Building Industry

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For years, NAHB has been leading the fight against tariffs because of their detrimental effect on housing affordability. In effect, the tariffs act as a tax on American builders, home buyers and consumers. Learn more about current tariffs and NAHB’s advocacy efforts.

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Tariffs impact U.S. industries differently, with manufacturing the most exposed

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How tariffs on imported inputs could raise costs for U.S. industries and workers—with a novel interlinked dataset and code for researchers.

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Balls and Strikes on American Manufacturing: What Are the Facts?

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Catastrophic rhetoric about US manufacturing is not justified. The tariffs are extremely counterproductive. Still, all is not well in the US manufacturing sector. What should we do?

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FRESNO COUNTY, Calif. (KFSN) -- Following the 90-day pause on some sweeping global tariffs and the ongoing trade war with China, the Central Valley's manufacturing industry is already feeling the impacts just one week later.

On Tuesday, Mario Persicone gave Action News an inside look at PNM's manufacturing facility in Fresno.

Skilled employees were busy using heavy machinery to make metal parts for an array of industries.

Most are made of aluminum.

"We've seen some aluminum increase per pound that's gone up pretty minimal. So far, we don't know what the future is going to bring," said Lance Hastings, president and CEO of the California Manufacturers and Technology Association.

"We're kind of all waiting to see, but we're countering it in other ways."

Hastings forsees the price of aluminum continuing to rise with the Trump Administration's tariff policy.

"Future pricing of steel and aluminum is likely going to go up by half or 100%," said Hastings.

Like other manufacturers, Persicone has to get creative with his company, recycling his aluminum to keep prices low for customers.

With 47 employees and 33 machines, the use of robots has amplified the PNM's production in the last decade.

Persicone says the new technology hasn't minimized his workforce.

In fact, he's currently looking to hire to meet the increased demand for his products.

"I think in the Central Valley, we're saying tariffs, it's been inconsistent, but we're seeing opportunities like from the Bay Area companies that typically do work overseas. We are trying to get opportunities to quote those jobs, so it's bringing those jobs that are in Asia and China, Mexico, starting to come back to the US," said Persicone.

Hastings calls the tariffs disruptive, only adding to the uncertainty that looms over the industry as a whole, especially with the ongoing trade war with China.

"If there's something that's only made in China, only sourced in China, it's going to be quite difficult to magically find that item somewhere else in the world because the tariffs are being applied worldwide," said Hastings. "It's really going to be a challenging period of time for the next 90 days."

The Betts Company is the oldest manufacturer in all of California, producing springs and other parts right here in the Valley.

Mike Betts says his family's company has already shifted to buying their raw metals elsewhere.

"We are positioned, literally positioned, to be the beginning of the US economy, and we continue to do that. It just may be challenging here in the next 60 days, 90 days," Hastings said.
For news and weather updates, follow Brisa Colon on Facebook, Twitter and Instagram.

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Tariffs impacts on manufacturing industry in Central Valley

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Following the 90-day pause on some sweeping global tariffs and the ongoing trade war with China, the Central Valley's manufacturing industry is already feeling the impacts just one week later.

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How Trump tariffs could upend California farms, wine businesses and ports

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California’s agricultural industries face many possible effects from President Donald Trump’s tariffs, but some hope for opportunity.

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US Tariffs on Steel and Aluminum: Analyzing the Impacts

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New tariffs will have a far-reaching impact on manufacturing costs and supply chains across a range of industries including those using or producing derivative products.

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How Could Tariffs Affect Consumers, Business and the Economy?

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Tariffs on goods imported to the U.S. are not new, but today they are being discussed as much broader tools in a more complicated world.Since before the Constitution was signed, tariffs have reduced the competitiveness of American enterprise and increased the cost of goods. Today, they are proposed to bring back U.S. manufacturing jobs to communities that provided the president his strongest support while also being leveraged as expansive geopolitical tools with uncertain consequences.

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Why Tariffs Are a Disaster for Businesses in the U.S. and Canada

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Find out how tariffs work and how they affect prices and trade relations between countries like Canada and the United States.

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Tariffs: Estimating the Economic Impact of the 2025 Measures and Proposals

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Calculating the average effective tariff rate can help assess the impact of the proposed tariffs.

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How Tariffs May Impact the Construction Industry in 2025 | Dodge Construction Network %

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Since taking office, President Trump has rolled out a series of tariffs on imported goods, shaking up global trade dynamics and the U.S. economy. The following summarizes the recent changes to tariff policies and Dodge’s initial take on how the construction industry will be affected throughout this year.

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The Impact of Tariffs on American Manufacturing - JAGGAER

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Explore the balance sheet of tariffs on American manufacturing. Understand the benefits, risks, and sector-specific impacts of proposed tariff policies.

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A newer Economic Brief has been released that updates this analysis with the April 2 tariff announcement of a global tariff plan.
Tariffs are taxes imposed by a government on imported goods, typically calculated as a percentage of the import's value (known as an ad valorem tax). Governments use tariffs for various purposes, such as raising revenue, protecting domestic industries from foreign competition and influencing international trade patterns. By increasing the cost of imported products, tariffs encourage consumers to shift toward domestically produced goods, thus supporting local businesses and potentially stimulating domestic economic activity.

However, the overall impact of tariffs depends critically on how much of this cost increase is passed along to domestic consumers and producers, a concept known as pass-through. Empirical research has found that the pass-through rate is generally high (often near 100 percent), meaning that the burden of tariffs typically falls on domestic consumers and firms rather than foreign exporters.

The economic significance of tariffs is underscored by recent data from the First Quarter 2025 CFO Survey. As illustrated in Figure 1, more than 30 percent of surveyed firms identify trade and tariffs as their most pressing business concern, up sharply from just 8.3 percent in the previous quarter. This rapid rise highlights firms' heightened sensitivity to tariff-related disruptions, reflecting widespread concern among business leaders about the potential economic consequences of recent tariff proposals.

In this article, we first provide historical context on U.S. tariff policy to frame the significance of the proposed tariff changes for 2025. Next, we analyze how tariffs impact producers differently across industries due to varying reliance on imported inputs. Finally, we examine the specific implications of recent tariff proposals for all counties in the U.S.

A Bit of History on Tariffs

Historically, the U.S. relied heavily on tariffs - often exceeding 30 percent - as its primary source of federal revenue from the nation's founding until the introduction of income taxes in 1913. This is illustrated in Figure 2.

During this early period, these high tariffs also served to protect emerging industries through a strategy called import substitution. After World War II, international trade agreements like the General Agreement on Tariffs and Trade significantly reduced tariffs globally from an average of around 20 percent in 1947 to below 5 percent following the Uruguay Round in 1994. The globalization movement of the 1980s and 1990s further accelerated tariff reductions, culminating in the establishment of the World Trade Organization (WTO) in 1995. Since then, tariffs among WTO member countries have generally remained around 2.5 percent, reinforcing greater global economic interconnectedness.

The Benefits of Free Trade

Economist Greg Mankiw once noted, "Few propositions command as much consensus among professional economists as that open world trade increases economic growth and raises living standards."

Free trade - international commerce with minimal barriers such as tariffs or quotas - promotes economic efficiency, growth and consumer welfare by allowing countries to specialize according to their comparative advantages. By removing trade restrictions, countries benefit from greater access to a wider variety of goods at lower prices, fostering increased competition, increased innovation and improved productivity. In turn, free trade expands markets, encourages the exchange of ideas and technology, and raises living standards by enabling consumers to purchase a broader selection of goods at lower prices.

Although free trade can present challenges for certain industries or workers facing international competition, its overall effect is typically positive, enhancing global economic welfare and fostering international cooperation. Economists often describe free trade as a "win-win" for countries involved.

The Backlash Against Free Trade

The recent backlash against free trade policies largely stems from the economic disruptions known as the "China shock," a period characterized by rapid growth in imports from China following its entry into the WTO in 2001. The steep decline in manufacturing sector jobs as well as factory closures and economic hardship in many industrial regions of the U.S. have been attributed (in part) to a surge in Chinese imports, as well as "unfair trade practices" such as dumping and subsidization of Chinese production.

Although consumers broadly benefited from lower-priced goods and enhanced variety of goods, the uneven distribution of economic gains and losses fueled public skepticism about globalization. The backlash reflects frustration over insufficient support for displaced workers and the uneven distribution of trade gains, highlighting the need for better policies in addressing and mitigating the adverse effects experienced by specific groups, something often overlooked by proponents of free trade. Developed economies (including the U.S.) have since faced growing pressure to provide greater support and protections for negatively affected industries and communities.

The 2018-19 Tariffs

Between 2018 and 2019, the U.S. imposed tariffs ranging from 10 percent to 25 percent on hundreds of billions of dollars of imports from China. These tariffs significantly disrupted global supply chains, increasing input costs for American businesses and raising consumer prices. The resulting disruptions contributed to a decline in manufacturing employment, heightened investment uncertainty and substantial shifts in global supply chains. Rather than returning production to the U.S., many firms responded by shifting supply chains to other countries, such as Mexico and Vietnam. Consequently, the expected boost in domestic production and employment was modest.

Empirical research indicates that each 10 percent increase in tariffs generally raises producer prices by about 1 percent. Given the increase in the average effective tariff rate during 2018-19, this translated into roughly a 0.3 percent rise in the consumer price index.

Although these tariffs provided some targeted economic benefits by increasing employment in protected sectors, they ultimately produced a net loss to the U.S. economy. A 2019 working paper found that tariffs generated approximately $51 billion (about 0.27 percent of GDP) in losses for consumers and firms reliant on imported goods, though factoring in job gains within protected industries reduced the net loss to about $7.2 billion, or roughly 0.04 percent of GDP.

Additionally, although tariffs boosted employment in specific protected sectors, they resulted in a relative employment decline of about 1.8 percent - equivalent to approximately 220,000 jobs lost in industries heavily dependent on imported inputs - as firms faced higher production costs. When accounting for China's retaliatory tariffs on U.S. exports and subsequent economic impacts, a 2024 working paper estimates that the total employment reduction rises to approximately 2.6 percent, equivalent to about 320,000 jobs.

Thus, the economic effects of the 2018-19 tariffs - while beneficial for a limited set of domestic industries - resulted in a net negative outcome for the broader economy. These burdens were felt most by U.S. consumers, producers reliant on imported inputs and workers in adversely affected sectors.

The 2025 Tariffs

As of this writing (March 2025), the U.S. has introduced new tariffs, including an additional 20 percent on all imports from China and a 25 percent tariff on aluminum and steel imports from several countries. Further tariffs of 25 percent on goods imported from Canada and Mexico which are not subject to the United States-Mexico-Canada Agreement (USMCA) are scheduled to take effect in April 2025, along with potential tariffs targeting automotive imports and goods imported from the European Union (EU). These recent tariff proposals could have significant implications for industries and regional economies across the U.S., especially once fully implemented.

A natural question arises: How substantial are these tariffs compared to those implemented in previous periods? To assess the impact of the proposed tariffs for 2025 relative to historical tariffs, we use a measure known as the average effective tariff rate (AETR). The AETR aggregates tariffs across various imported goods and countries into a single number. Specifically, it is computed by weighting the tariff imposed on each good imported from each country by that good-country combination's share of total imports. For example, if the U.S. imports 20 percent of its steel from Mexico (facing a 10 percent tariff) and 80 percent from Canada (facing zero percent tariffs), the AETR for steel would be 2 percent (0.2 × 10% + 0.8 × 0%). Thus, the AETR represents the average tariff cost per dollar of imports, providing a useful metric to evaluate and compare the overall impact of tariff proposals across different scenarios and historical periods.

We construct a benchmark AETR using data from the 2024 U.S. Trade Census. We follow closely the work by Michael Waugh. The Census reports both duties (tariff revenue collected) and imports (the dollar value of goods imported) over time. The AETR is defined as the ratio of duties to imports: AETR = duties / imports.

In our benchmark scenario, the AETR is 2.2 percent. This means that, on average, the government collected 2.2 cents in tariff revenue for every dollar of imported goods. Establishing this baseline allows us to meaningfully assess the potential economic impact of new tariff proposals introduced in 2025 by comparing them to current trade patterns and tariff levels.

Because the Census data provide detailed information at both the product and country level, we observe imports and tariff revenues by country of origin and by product, classified at the six-digit level of the Harmonized Tariff Schedule (HTS). The HTS is an internationally standardized system used to classify traded goods. This granularity allows us to compute effective tariff rates at the level of individual HTS-6 products and trading partners by taking the ratio of duties collected to the value of imports for each good-country pair. This allows us to compute AETR by country of origin.

The first column of Table 1 displays the AETR for five geographical regions of interest: Canada, Mexico, the EU, the rest of the world (ROW) and China. The overall AETR can be found at the bottom of the table. The last column provides information on the share of imports of each country.

We then consider four distinct tariff scenarios.

The benchmark AETR of 2.2 percent reflects the tariff regime in place at the end of 2024, incorporating WTO most-favored-nation (MFN) tariffs, the China-specific tariffs imposed during the 2018-19 period, and any other tariff measures or exemptions still in effect. In Scenario 1, we simulate the impact of an additional 25 percent tariff on all steel and aluminum imports, as well as a 20 percent tariff on all imports from China.

The increase in the AETR from 2.2 percent to 7.1 percent may seem large, but it is driven by the size and composition of the affected import flows. The 25 percent tariff on steel and aluminum alone raises the AETR to approximately 4.4 percent. Although steel and aluminum represent a relatively narrow range of products, they generate a disproportionately large share of tariff revenue due to both the volume of imports and the uniform 25 percent duty applied.

According to U.S. Customs and Border Protection, Section 232 duties may not be waived due to a free trade agreement. As a result, these tariffs apply even to imports from close trading partners such as Canada and Mexico. This has a pronounced effect on the tariff burden faced by goods imported from these countries. In Scenario 1, Canada's AETR rises from just 0.1 percent to 1.5 percent, and Mexico's AETR rises from 0.2 percent to 2.8 percent. These are substantial increases, especially considering that Canada and Mexico account for 12.6 and 15.5 percent of total U.S. imports, respectively. The fact that Section 232 tariffs override free trade agreement provisions magnifies their impact on these key trading partners.

The additional 20 percent tariff on China further raises the AETR to 7.1 percent. While China's share of U.S. imports has declined from 22.0 percent in 2017 to 13.8 percent in 2024, it remains a major trading partner. The uniform application of the tariff across all Chinese imports - many of which were already subject to duties - results in a substantial increase in tariffs applied to goods coming from China. As a result, China's own AETR rises dramatically to 33.5 percent under this scenario.

In Scenario 2, we add 25 percent tariffs on goods imported from Canada and Mexico that are not covered under the USMCA to the tariffs in Scenario 1. As a result, the overall AETR rises from 7.1 percent to 10.4 percent. The impact is especially pronounced for these two countries: Canada's AETR increases to 11.9 percent (nearly 10 times higher than its benchmark level), while Mexico's AETR rises to 15.5 percent.

The increase in the overall AETR - just over 3 percentage points - reflects the composition of imports affected by the new tariff. While approximately half of imports from Canada and Mexico fall outside the scope of the USMCA and are therefore subject to the new measure, these goods do not make up the most import-heavy segments of U.S. trade with those countries.

In contrast to Scenario 1, where tariffs targeted high-volume sectors like steel and aluminum, the newly taxed goods in Scenario 2 are more dispersed across sectors with lower aggregate import values. As a result, the effect on the overall AETR is substantial but not as dramatic as the country-specific increases suggest.

Scenario 3 builds on the previous measures by adding a 25 percent tariff on all motor vehicles imports, regardless of origin. The products targeted by this policy fall primarily under Chapter 87 of the HTS, titled "Vehicles Other Than Railway or Tramway Rolling-Stock, and Parts and Accessories Thereof." Although this policy targets a single sector, it affects imports from all major trading partners. As a result, the overall AETR increases from 10.4 to 12.4 percent - with especially sharp effects in countries that are closely integrated into U.S. auto supply chains, such as Mexico, Canada and the EU.

The largest relative increase occurs in imports from Mexico and Canada, two countries with deep integration into North American auto supply chains. Mexico's AETR rises to 20.1 percent (a 30 percent increase relative to the previous scenario), while Canada's increases to 14.1 percent. This reflects the fact that a substantial share of U.S. auto imports originates from these two countries, and many of those goods fall outside of USMCA exemption provisions.

The most notable new impact, however, is on the EU. Its AETR increases from 2.5 to 4.4 percent - a substantial jump driven by its status as a major exporter of passenger vehicles to the U.S. In contrast, China's AETR remains unchanged at 33.5 percent, as autos from China were already subject to elevated tariffs under prior scenarios.

Overall, the addition of auto tariffs in Scenario 3 disproportionately affects North American and European trading partners, further raising the effective tariff burden on key sectors of U.S. imports.

Scenario 4 further expands the scope of tariff measures by introducing a new 25 percent tariff on all imports from the EU. This broad application leads to a substantial rise in the overall AETR, which increases from 12.4 to 17.0 percent.

The sharp increase reflects the scale of trade impacted: The EU accounts for approximately one-fifth of all U.S. imports, making it one of the U.S.'s largest trading partners. As a result, the imposition of a uniform tariff across this volume of trade has a pronounced effect on the aggregate tariff rate. The AETR for EU imports alone surges from 4.4 percent to 29.4 percent in this scenario, one of the steepest increases observed across all trading partners in our simulations.

The calculations above represent the immediate ("upon-impact") effects of the proposed tariffs without accounting for subsequent adjustments that importers or consumers might make in response. For example, the significant reduction in China's share of U.S. imports - from 22.0 percent in 2017 to 13.8 percent in 2024 - demonstrates how businesses adapted to the 2018-19 tariffs by shifting their supply chains away from China toward alternate trade partners. Similar adjustments could also occur under the new tariffs proposed for 2025. However, initially, these estimates highlight the direct and immediate economic disruptions industries and consumers could face, providing a valuable baseline to assess potential impacts before market reactions and supply-chain adjustments take place.

Average Effective Tariff Rates by Industry

By combining detailed data on imports and tariffs at the product-country level, we can estimate the overall tariff impact at the industry level. To achieve this, we aggregate tariffs using each product-country pair's share of total industry imports as weights. Note that we do not have data on the share of an industry that relies on imports, so this calculation informs us of the impact on industries that have inputs which are most exposed to the proposed tariffs. Industries are classified according to the North American Industry Classification System (NAICS) at the three-digit level. This method provides a clear picture of tariff exposure across different industries, allowing us to compare their vulnerability under various tariff scenarios.

Figure 4 highlights the sector-specific effects of the comprehensive tariff package introduced in Scenario 2, which includes a 20 percent tariff on all imports from China, a 25 percent tariff on aluminum and steel imports from all countries, and a 25 percent tariff on goods imported from Canada and Mexico that are not covered under the USMCA.

While these combined measures result in an overall AETR increase from 7.1 to 10.4 percent, the chart shows that the impact is far from uniform across sectors. The most affected industries are in manufacturing, particularly those with strong exposure to imports from China and North America. Fabricated metal products face the highest average tariff rate (above 30 percent) due to their direct inclusion under the steel and aluminum tariff measures. Leather, apparel and textile products also see steep increases, reflecting their reliance on imports from China and USMCA partners in categories not covered by the trade agreement.

On the other end of the spectrum, sectors like oil and gas, petroleum and coal products, and agriculture-related goods such as crops and forestry face much lower average tariffs. This is consistent with their more limited exposure to the targeted trade flows or their continued protection under existing trade agreements and exemptions.

Taken together, this chart illustrates how Scenario 2's multipronged tariff approach imposes concentrated costs on key segments of the U.S. manufacturing base, particularly intermediate and finished goods that depend on complex cross-border supply chains. While the average increase in tariff levels is significant, the real economic burden is felt most sharply in a handful of highly exposed sectors.

Figure 4 illustrates the AETR by industry under Scenario 2, in which tariffs on all imports from China increase by an additional 20 percent, all imports on aluminum and steel increase by 25 percent, and non-USMCA goods from Canada and Mexico are subject to a 25 percent tariff relative to the benchmark case. The burden of these tariffs falls predominantly on manufacturing industries, with fabricated metals, electrical equipment, apparel and furniture each experiencing average tariff rates ranging between 10 percent and 15 percent.

Although we assume full pass-through of tariffs to domestic prices, the industry's overall cost increase is estimated to be smaller than the headline 20 percent tariff. This occurs because these industries source a portion of their imports from other countries that remain unaffected by the tariff increase.

Figure 5 illustrates how expanding tariffs to cover automobile imports reshapes the distribution of tariff burdens across industries. Building on the measures in Scenario 2 - which already included 20 percent tariffs on all Chinese imports, 25 percent on aluminum and steel, and 25 percent on non-USMCA goods from Canada and Mexico - Scenario 3 adds a 25 percent tariff on all auto imports, significantly affecting sectors closely tied to the automotive supply chain.

This shift is immediately visible in the jump for transportation equipment, which now faces average tariff rates above 25 percent, placing it among the top three most affected sectors. This reflects the heavy dependence of U.S. auto manufacturing on imported parts and finished vehicles, particularly from Canada, Mexico and the EU.

Fabricated metals and leather products remain at the top of the distribution - consistent with earlier scenarios - as they continue to be impacted by the Section 232 tariffs on steel and aluminum and exposure to non-USMCA trade. Apparel, textiles and electrical equipment also continue to face elevated average tariffs, due to both their sourcing from China and regional trade partners.

Sectors with relatively modest exposure include food, chemicals, agriculture and energy, which remain near the bottom of the distribution. These industries are less reliant on affected countries for imports or benefit from trade exemptions under existing agreements.

Figure 6 reveals the far-reaching impact of the most aggressive tariff package simulated, which layers a 25 percent tariff on all EU imports on top of previously implemented measures: 20 percent on all Chinese imports, 25 percent on steel and aluminum, 25 percent on non-USMCA goods from Canada and Mexico, and 25 percent on auto imports.

The result is a broad elevation of tariff exposure across most manufacturing sectors, pushing the overall AETR to 17.0 percent and significantly amplifying pressures across key industries. Fabricated metals - already heavily affected by the steel tariffs - now face an average tariff burden of over 35 percent, with leather goods and transportation equipment close behind. The auto tariff and the full coverage of EU imports drive up the average rate on transportation equipment to over 25 percent, reflecting the EU's role as a major supplier of high-value finished vehicles and components.

Compared to earlier scenarios, more sectors are now pulled into the high-tariff range, with industry clusters like machinery, beverages and tobacco, electrical equipment, and textiles all facing average tariff rates of 18-22 percent. The inclusion of the EU broadens the reach of the tariff burden beyond China and North America and affects a wider set of capital-intensive and consumer-intensive industries.

Our analysis of AETRs indicates that manufacturing and mining industries face the highest exposure under the proposed 2025 tariffs. This finding aligns closely with evidence from the First Quarter 2025 CFO Survey, shown in Figure 7. According to CFO responses, manufacturing firms exhibit the strongest reactions to trade disruptions: Over 50 percent of manufacturing CFOs reported actively planning to diversify their supply chains, nearly 40 percent accelerated purchases in anticipation of tariffs, and a considerable share sought alternative foreign suppliers.

Similarly, firms in construction, mining and utilities reported taking proactive measures, such as diversifying supply chains and identifying new domestic suppliers, consistent with the significant tariff exposure calculated for these industries. This consistency underscores how tariff-related disruptions are prompting tangible strategic adjustments by firms, especially within industries identified as most vulnerable by our AETR analysis.

Average Effective Tariff Rates by County

We can also estimate AETRs at the county level by combining industry-specific tariff rates with the employment share of each industry within individual counties. Specifically, we weight the tariff faced by each industry by its employment share in the county, then aggregate across all industries in each given county. While this approach is necessarily approximate, it offers a useful proxy for assessing how tariff burdens differ across regions and helps identify counties whose workforces may be most affected. Figure 8 displays the geographic distribution of tariff incidence across U.S. counties as of December 2024. The impact in this case is spread quite evenly across counties, with relatively low imputed rates.

In Figure 9, we show the effects of Scenarios 3 (Figure 9a) and 4 (Figure 9b). Figure 9a illustrates the uneven geographic distribution of tariff exposure across the U.S. While the nationwide AETR rises to 12.4 percent under this scenario - driven by the addition of a 25 percent tariff on all auto imports - the local impact varies considerably depending on the industrial composition of each region.

Counties shaded in darker blue and green (indicating average tariff levels of 2-7 percent) dominate much of the country, especially in the Mountain West, Great Plains and Southeast, reflecting regions where trade-exposed sectors are less central to local economic activity. These areas are less reliant on global supply chains or major manufacturing hubs and thus feel more limited direct effects from the tariff expansion.

In contrast, counties shaded in red and orange - which face average tariff rates exceeding 10 percent - cluster heavily in the industrial Midwest, parts of the Great Lakes and some manufacturing-intensive areas of the South. These regions include major auto and parts manufacturing zones - such as southern Michigan, northern Indiana, central Ohio, and parts of Tennessee and Kentucky - where the 25 percent auto tariff hits hardest. The map reflects how deeply integrated these counties are in global automotive supply chains, especially with partners like Canada, Mexico and the EU.

Notably, Southern California and parts of the Bay Area also register higher average tariffs (4-7 percent), likely due to their significant exposure to global trade in both consumer electronics and automotive products, including imports from Asia and Mexico.

The map makes clear that while tariff increases are national in scope, their economic footprint is intensely local, with disproportionately high exposure in communities dependent on manufacturing and cross-border inputs. These areas may face rising production costs, disrupted supply chains and downstream employment effects if such tariffs are implemented.

Figure 9b depicts the geographical distribution under Scenario 4, which introduces the broadest and most aggressive tariff package in the analysis, adding a 25 percent tariff on all EU imports to the measures already in place under Scenario 3. The map vividly illustrates how this expansion intensifies and geographically widens the economic exposure to tariffs across the U.S.

Counties shaded in darker red and orange - which now appear more frequently across the map - signal areas where AETRs exceed 10 percent and, in some cases, reach above 14 percent. These high-tariff counties are concentrated in the Great Lakes region, Midsouth and parts of the South Atlantic, which are regions with strong manufacturing footprints and close supply-chain ties to the EU, particularly in automobiles, machinery, chemicals and fabricated metals.

Midwestern industrial centers - especially in Michigan, Ohio and Illinois - show increased intensity compared to Scenario 3, as the EU tariff hits imported inputs and finished goods from one of the U.S.'s largest trading partners. These areas are highly integrated into transatlantic trade and host production clusters that depend on EU-origin intermediate goods and capital equipment.

Meanwhile, manufacturing and trade hubs in North Carolina, South Carolina and Alabama - states with growing foreign direct investment and vehicle assembly plants - also show elevated exposure. These regions face the compounded effects of the EU tariff on top of previous measures on autos and metals.

This broadening geographic impact underscores how a full-scale EU tariff escalates tariff exposure from a mostly regional issue to a national economic concern, affecting a wide array of industries and communities. The increasing presence of mid- and high-tariff zones highlights the potential for more widespread supply chain disruption and cost pass-throughs in this most expansive scenario.

The geographic analysis of tariff exposure at the county level - which emphasizes employment composition across industries - aligns closely with recent CFO expectations about hiring in response to tariff policy. As illustrated in Figure 10 from the First Quarter 2025 CFO Survey, manufacturing firms - concentrated in regions heavily affected by the proposed tariffs - are significantly more likely to anticipate reducing employment, with about 32 percent reporting plans to decrease hiring due to tariff concerns. Similarly, firms in construction, mining and utilities also express notable employment concerns, with nearly 22 percent expecting decreased hiring. These concerns are echoed in retail and wholesale trade, with about one-quarter of them expecting declines in hiring due to tariff announcements.

These employment outlooks from CFOs reinforce our findings that counties specializing in manufacturing and mining face heightened vulnerability, suggesting potential negative economic consequences such as job losses and reduced local economic activity in regions most exposed to higher tariffs.

Uncertainties Remain

While this study provides our best estimates of the effect of tariffs on different industries and regions of the U.S., the analysis is incomplete, and several uncertainties remain. The scenarios we presented do not incorporate proposals to impose reciprocal tariffs or additional tariffs on copper, semiconductors, pharmaceuticals, timber and lumber, and certain agricultural products. There is a high degree of uncertainty regarding which of these tariffs will be implemented, as well as their timeline and magnitude. This, in turn, generates uncertainty to consumers and firms.

By making products more expensive, tariffs may lower demand, which could affect firms. A respondent to the First Quarter 2025 CFO Survey in charge of a manufacturing firm said, "We are in the steel industry. While the tariffs will increase costs for the company, we expect most of those costs to be passed on. The bigger concern is what will the impact be on the overall demand." Another respondent in the same sector said, "Tariffs remain an unknown that could have a large impact on our company due to both imports of our raw materials and exports of our finished product, not to mention the impact of demand on our industrial customers."

The analysis performed in the previous sections kept everything else constant. For example, the analysis used 2024 import shares, which assumes that firms' decisions regarding import sources remained unchanged. Figure 7 suggests otherwise, as some importers are planning to diversify their supply chains in response to proposed tariffs. However, these adjustments take time. This is illustrated by the response of a manufacturing firm in the CFO Survey: "How can we plan if we do not know what the tariff situation is for the next five years? Factory and supply chain sourcing decisions cannot be changed at moment's notice."

In addition, this analysis did not consider changes in investment or hiring, which could affect production and the level of imports. In that sense, the analysis is "static." A business services firm responding to the CFO Survey said, "The impacts of tariffs constraining global trade could be very impactful to our business in cross-border payments - the uncertainty of what tariffs, how high, reciprocal or not, etc., is spilling over into spending decisions." Around 25 percent of CFO Survey respondents were planning to reduce hiring and capital spending in response to tariffs in 2025. When focusing exclusively on the manufacturing sector, these numbers increase to about 32 percent and 29 percent, respectively. Construction, mining and utilities had a similar response.

Conclusion

The 2025 tariff proposals represent significant shifts in U.S. trade policy, with potentially large economic impacts varying across industries and regions. Our analysis highlights that the immediate tariff burden - measured by the AETR - could rise substantially, from a modest 2.2 percent in the benchmark scenario to as high as 17.0 percent under the most aggressive proposal (Scenario 4). While earlier tariffs on Chinese imports had relatively muted impacts due to shifts in supply chains, the new measures targeting Canada, Mexico, the EU and automobiles threaten widespread disruptions across key U.S. industries.

Regions deeply integrated into North American manufacturing supply chains - particularly automotive and metal-intensive industries - would bear the heaviest tariff burden under a scenario imposing 25 percent tariffs on Mexico and Canada and imports from aluminum and steel. This includes states like Michigan, Ohio, Indiana and others in the Midwest and Southeast, as well as the Pacific Northwest due to its resource-based trade ties with Canada. When tariffs on the EU and the auto sector are included, these effects are further amplified and severely affect counties heavily reliant on such imports, particularly those in transportation equipment, machinery and fabricated metals.

These concerns are echoed by business leaders, as shown by recent data from the First Quarter 2025 CFO Survey. Over 30 percent of firms now rank trade and tariff policies as their most pressing business concern, which is more than triple the share from the previous quarter. In particular, manufacturing firms are actively adjusting strategies, with more than half planning to diversify their supply chains and nearly one-third reducing their hiring plans. Firms in construction, mining and utilities also anticipate significant disruptions, reflecting the industry's heightened tariff exposure.

Ultimately, the proposed tariffs may raise input costs, disrupt supply chains and result in higher consumer prices, potentially outweighing any targeted employment gains in protected industries. Policymakers should carefully weigh these costs against intended policy goals and consider targeted measures to support the industries and communities most adversely impacted by these tariff changes.

Marina Azzimonti is a senior economist and research advisor, Zachary Edwards is a research analyst, Sonya Waddell is a vice president and economist, and Acacia Wyckoff is a research associate, all in the Research Department at the Federal Reserve Bank of Richmond.

To cite this Economic Brief, please use the following format: Azzimonti, Marina; Edwards, Zachary; Waddell, Sonya; and Wyckoff, Acacia. (April 2025) "Tariffs: Estimating the Economic Impact of the 2025 Measures and Proposals." Federal Reserve Bank of Richmond Economic Brief, No. 25-12.

This article may be photocopied or reprinted in its entirety. Please credit the authors, source, and the Federal Reserve Bank of Richmond and include the italicized statement below.
V iews expressed in this article are those of the authors and not necessarily those of the Federal Reserve Bank of Richmond or the Federal Reserve System.

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Tariffs: Estimating the Economic Impact of the 2025 Measures and Proposals

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Calculating the average effective tariff rate can help assess the impact of the proposed tariffs.

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FRESNO COUNTY, Calif. (KFSN) -- Following the 90-day pause on some sweeping global tariffs and the ongoing trade war with China, the Central Valley's manufacturing industry is already feeling the impacts just one week later.

On Tuesday, Mario Persicone gave Action News an inside look at PNM's manufacturing facility in Fresno.

Skilled employees were busy using heavy machinery to make metal parts for an array of industries.

Most are made of aluminum.

"We've seen some aluminum increase per pound that's gone up pretty minimal. So far, we don't know what the future is going to bring," said Lance Hastings, president and CEO of the California Manufacturers and Technology Association.

"We're kind of all waiting to see, but we're countering it in other ways."

Hastings forsees the price of aluminum continuing to rise with the Trump Administration's tariff policy.

"Future pricing of steel and aluminum is likely going to go up by half or 100%," said Hastings.

Like other manufacturers, Persicone has to get creative with his company, recycling his aluminum to keep prices low for customers.

With 47 employees and 33 machines, the use of robots has amplified the PNM's production in the last decade.

Persicone says the new technology hasn't minimized his workforce.

In fact, he's currently looking to hire to meet the increased demand for his products.

"I think in the Central Valley, we're saying tariffs, it's been inconsistent, but we're seeing opportunities like from the Bay Area companies that typically do work overseas. We are trying to get opportunities to quote those jobs, so it's bringing those jobs that are in Asia and China, Mexico, starting to come back to the US," said Persicone.

Hastings calls the tariffs disruptive, only adding to the uncertainty that looms over the industry as a whole, especially with the ongoing trade war with China.

"If there's something that's only made in China, only sourced in China, it's going to be quite difficult to magically find that item somewhere else in the world because the tariffs are being applied worldwide," said Hastings. "It's really going to be a challenging period of time for the next 90 days."

The Betts Company is the oldest manufacturer in all of California, producing springs and other parts right here in the Valley.

Mike Betts says his family's company has already shifted to buying their raw metals elsewhere.

"We are positioned, literally positioned, to be the beginning of the US economy, and we continue to do that. It just may be challenging here in the next 60 days, 90 days," Hastings said.
For news and weather updates, follow Brisa Colon on Facebook, Twitter and Instagram.

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Tariffs impacts on manufacturing industry in Central Valley

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Following the 90-day pause on some sweeping global tariffs and the ongoing trade war with China, the Central Valley's manufacturing industry is already feeling the impacts just one week later.

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How Trump tariffs could upend California farms, wine businesses and ports

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California’s agricultural industries face many possible effects from President Donald Trump’s tariffs, but some hope for opportunity.

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The Role of Trade in California’s Economy as Tariffs Loom

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The Trump administration has proposed tariffs on goods from Mexico and Canada and has already imposed tariffs on Chinese goods. We look at California’s imports and exports with these three counties—our state’s main trade partners—and what tariffs might mean for the California economy.

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Explainer: How do tariffs work and how will they impact the American and global economy?

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Harvard Kennedy School international trade expert Robert Lawrence discusses what higher tariffs will mean for the United States and the world.

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State of California - Department of Justice - Office of the Attorney General

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STANISLAUS COUNTY - California Attorney General Rob Bonta and Governor Gavin Newsom today filed a lawsuit challenging President Trump's unlawful use of power to impose tariffs and direct the Department of Homeland Security (DHS) and Customs and Border Patrol (CPB) to implement and enforce those tariffs without the consent of Congress. Since early February, the Trump Administration has issued over a dozen executive orders under the International Emergency Economic Powers Act of 1977 (IEEPA) to impose tariffs that have sent shockwaves through financial markets, businesses, and consumers in every corner of the globe. In the lawsuit today, Attorney General Bonta and Governor Newsom challenge the President's use of the IEEPA to levy those tariffs, arguing that the IEEPA does not authorize the President to impose these tariffs. The emergency tariffs challenged under the lawsuit are projected to, at a minimum, shrink the U.S. economy by $100 billion annually, increase inflation by 1.3%, and cost the average American family $2,100. The economic impact of the President's unlawful tariffs could have resounding impacts on California's economy, budget, and consumers. California is a significant and frequent purchaser of goods impacted by the tariffs and the projected increase in cost to the state is significant.

"The President's chaotic and haphazard implementation of tariffs is not only deeply troubling, it's illegal. As the fifth largest economy in the world, California understands global trade policy is not just a game," said Attorney General Rob Bonta. "Californians are bracing for fallout from the impact of the President's choices - from farmers in the Central Valley, to small businesses in Sacramento, and worried families at the kitchen table - this game the President is playing has very real consequences for Californians across our state. I am proud to go to bat alongside Governor Newsom to fight for California's vibrant economy, businesses, and residents."

"President Trump's unlawful tariffs are wreaking chaos on California families, businesses, and our economy - driving up prices and threatening jobs," said Governor Gavin Newsom."We're standing up for American families who can't afford to let the chaos continue."

California is the nation's largest importer and second-largest exporter. The President's tariffs will impact California's businesses, including its ports and small businesses that rely on trade. California's agricultural sector, which exports goods around the world, will also face particularized challenges as other countries impose retaliatory tariffs and decrease trade in response to President Trump's tariffs. Furthermore, the tariffs directly harm California's ability to contract, purchase, and sell goods. These effects are already too real: vendors who contract with California have indicated that they will pass their increased costs from President Trump's tariffs on to the state directly.

Claiming authority under the IEEPA, President Trump has issued multiple executive orders to impose, pause, re-start, and modify 25% tariffs on Mexico and Canada and a universal 10% tariff on every other U.S. trading partner. Separately and in addition, the President's actions have goaded China into a full-blown trade war, with tariffs reaching 145% on Chinese goods, and China imposing reciprocal 125% tariffs on U.S. goods. Additionally, President Trump has imposed individualized reciprocal tariffs of up to 50% on nearly 90 specific countries; they are currently paused for 90 days before going into effect. Once the 90-day "pause" expires, the harms will only compound further. And new tariffs are being contemplated or announced nearly every day.

To justify his tariffs, the President has declared national emergencies and extended prior declared emergencies beyond the bounds of reason. But with or without emergencies, the President does not have the power to levy tariffs under the IEEPA.

The impacts of President Trump's dizzying array of tariff plans have already wreaked havoc on our financial systems: the U.S. stock market suffered the largest two-day loss in its history in the two days following the announcement of President Trump's most sweeping tariffs. These actions and the near-daily threats to impose new tariffs have already inflicted and continue to inflict serious financial harms on California.

The complaint filed today alleges that the Constitution expressly gives the authority to impose tariffs to Congress, not the President, and the IEEPA does not provide the required congressional authorization for President Trump to impose tariffs - Congress enacted the IEEPA to limit Presidential authority and to prevent Presidential abuse of power - not to give the President these powers. The complaint asks the court to declare that tariff orders made under the purported authority of the IEEPA are unlawful and void and to halt DHS and CPB from implementing and enforcing these orders.

A copy of the complaint is available here.

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Protecting the World's 5th Largest Economy: Attorney General Bonta, Governor Newsom Sue Trump Administration Over Unlawful Imposition of Tariffs

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Tariffs threaten California's economy, people, small businesses STANISLAUS COUNTY - California Attorney General Rob Bonta and Governor Gavin Newsom today filed a lawsuit challenging President Trump's unlawful use of power to impose tariffs and direct the Department of Homeland Security (DHS) and Customs and Border Patrol (CPB) to implement and enforce those tariffs without the consent of Congress.

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US tariffs: Impact on the US construction industry

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The US construction market will be most affected by tariffs as they are set to raise the cost of imported building materials.

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How Tariffs Impact the Home Building Industry

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For years, NAHB has been leading the fight against tariffs because of their detrimental effect on housing affordability. In effect, the tariffs act as a tax on American builders, home buyers and consumers. Learn more about current tariffs and NAHB’s advocacy efforts.

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California businesses are reeling from Trump’s on-again, off-again tariffs

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Business owners around the state struggle to keep up with an ever-changing slew of trade policies.

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California becomes the first state to sue Trump over tariffs

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California is suing Trump administration over tariffs it has imposed on most of the U.S.’s trading partners, Gov. Gavin Newsom and Attorney General Rob Bonta announced.

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State of U.S. Tariffs: September 4, 2025

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The Fears and Risks of Tariffs and Their Impact on the Design and Construction Industry

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Explore the significant impact of tariffs on the design and construction industry, including increased material costs, supply chain disruptions, project delays, and economic uncertainty. Learn strategies to mitigate these risks and navigate the challenges posed by tariffs.

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California builders warn of price hikes should Trump tariffs begin Feb. 1

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The timing also would mean higher costs for rebuilding efforts in L.A. County communities destroyed by wildfires.

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‘It’s scaring the crap out of me’: How Trump’s tariffs are colliding with rebuilding fire ravaged L.A.

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Uncertainty about which imports will be socked with new tariffs and when they’ll go into effect has thrown a cloud over home builders and other real estate developers trying to pay for new construction throughout Southern California.

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New tariffs could raise home prices in California, builders warn

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Not all industry leaders believe the impact will be severe, and they don’t see it as a bad thing since it would force domestic production.

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How Tariffs May Impact the Construction Industry in 2025 | Dodge Construction Network %

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Since taking office, President Trump has rolled out a series of tariffs on imported goods, shaking up global trade dynamics and the U.S. economy. The following summarizes the recent changes to tariff policies and Dodge’s initial take on how the construction industry will be affected throughout this year.

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Lea esta historia en Español
A range of experts, from Nobel Prize-winning economists to an internet-famous menswear writer, have a message for Americans who voted for Donald Trump based on his promises to bring down prices: This likely won't go how you want.

Some voters cited the cost of living as a factor in their decision to elect Trump to a second term as president. But with inflation actually starting to ease, his proposed tariffs, which the president-elect has called the " most beautiful word in the dictionary," could actually raise prices again.

While some experts don't think more tariffs are a bad idea, the majority of economists and other experts who spoke with CalMatters echoed 23 Nobel laureates who warned that Trump's policies would be worse for the economy than the ones proposed by Vice President Kamala Harris. Those economists wrote a letter last month calling Harris' economic agenda "vastly superior" to Trump's, and mentioned tariffs as one reason.

"His policies, including high tariffs even on goods from our friends and allies and regressive tax cuts for corporations and individuals, will lead to higher prices, larger deficits, and greater inequality," the economists wrote.

Businesses that import goods into the country must pay the tariffs. They tend to pass on their increased costs to consumers, with some executives recently promising to do just that during their earnings calls. So economists largely view tariffs as a tax, especially on the lowest- and middle-income families in the nation.

While tariffs could raise prices for all U.S. consumers, California could feel the brunt of the impact in part because of the countries Trump singled out during his campaign: China and Mexico. Those two countries accounted for 40% of the state's imports in 2023.

"The port and logistics complex in Southern California is a very important part of the economy, and directly tied to the countries he threatened," said Stephen Levy, an economist and director of the Center for Continuing Study of the California Economy, an independent, private research organization in Silicon Valley.

Trump imposed tariffs during his first presidential term, and President Joe Biden maintained some of them. During his campaign this time around, Trump said he intends to impose tariffs of 10% to 20% on all imports, and has mentioned even higher tariffs on goods from China (60%) and Mexico (100% to 200% on cars).

Such tariffs could exacerbate California's already high cost of living and raise the prices of cars, technology and electronic products, medical devices, groceries and more. Also, as the state saw during Trump's first term - which included a trade war, with countries retaliating with their own tariffs on U.S. exports - California's agricultural industry is likely to feel the effects. Trump's proposed tariffs could also have an adverse effect on the state's ports, which are among the nation's busiest.

And all of those outcomes could have a ripple effect on jobs in the state, including those in agriculture, trade and manufacturing.

What the state's ports expect

Trade experts say it's too early to tell how the state's ports could be affected, though some of them also said they expect a near-term surge in activity as businesses brace themselves for tariffs by importing more goods now.

"Long Beach and Los Angeles are two of the largest ports in the U.S.," said Jonathan Aronson, a professor of communication and international relations at the University of Southern California, who studies trade and the international political economy. "Their traffic would presumably slow in both directions" if Trump imposes tariffs, Aronson said. Like other experts, though, he wondered if the president-elect is using the threat of tariffs as a negotiating tactic - say, to pressure Mexico into doing more to limit immigration into the United States.

The most recent available data for the Port of Los Angeles, which is the busiest in North America and handles nearly 10% of all U.S. imports, shows that trade activity rose nearly 19% at the port in September from the same month a year ago. September imports totaled $27.9 billion, a 20% increase year over year. There's a chance those numbers could head the opposite direction as a result of tariffs.

"Significant increases in tariffs, and the possibility of retaliatory tariffs, could have a significant impact on traffic - and jobs - at the port," said Phillip Sanfield, a spokesperson. "We're monitoring developments closely."

"As a West Coast seaport, our primary trading partner is Asia, and what's happening right now is that retailers are expecting a short-term shipping surge in advance of new tariffs."
Robert Bernardo, spokesperson, port of oakland

The Port of Los Angeles says nearly 1 million California jobs are related to trade at that port.

The Port of Long Beach handles about 3% of all U.S. imports and has about 575,000 Southern California jobs tied to trade. Chief Executive Mario Cordero said, through a spokesperson, that he is waiting to see what trade policies Trump actually will adopt: "At this point we expect that strong consumer demand will continue to drive cargo shipments upward in the near term."

The Port of Oakland, whose trade-related jobs at both the airport and seaport number about 98,000, also expects a traffic boost at first. Spokesperson Robert Bernardo: "As a West Coast seaport, our primary trading partner is Asia, and what's happening right now is that retailers are expecting a short-term shipping surge in advance of new tariffs."

Mike Jacob is the president of the Pacific Merchant Shipping Association, a not-for-profit maritime trade association whose members facilitate trade. They include ocean carriers, marine terminal operators and more.

Jacob, too, said he is expecting trade activity to pick up ahead of whatever tariffs Trump imposes: "Given the lack of understanding of the timing, scope and scale (of the tariffs), you're more likely than not to move cargo earlier."

As a result of tariffs during Trump's first term, Jacob said there was "a small bump in cargo back in 2019 that resulted in additional impacts on our logistics chain." He said after that experience, which was then followed by pandemic-related chaos, the industry might be a little more prepared to deal with possible supply-chain disruptions.

Possible effects on manufacturing

The San Diego Regional Chamber of Commerce is worried about potential tariffs on goods from Mexico. Kenia Zamarripa, a spokesperson for the group, said the CaliBaja region - which includes San Diego and Imperial counties and the Mexican state of Baja California - is interconnected, with a multibillion-dollar supply chain. The region's logistics facilitate 80% of the trade between California and Mexico, she said.

The nation's top imports from Mexico in September - worth at least $2 billion for each category - were petroleum and coal products, computer equipment and motor vehicle parts, according to the most recent statistics from the U.S. Census Bureau's Bureau of Economic Analysis.

Some specific products that are imported into the U.S. from Mexico through California include the Toyota Tacoma. The truck and its components are made in Baja California and elsewhere in Mexico. "Imagine taxing each component before it goes to Mexico and back," Zamarripa said.

She added that the region also leads in producing medical devices, and that the importance of that became apparent during the beginning of the pandemic when "a bunch of companies shut down, not knowing that a little metal piece they were producing was a vital part of a heart monitor, for example."

Mexico's economy minister, Marcelo Ebrard, said this week that he would hit the U.S. with tariffs if Trump imposes tariffs, though President Claudia Sheinbaum has seemed more open to negotiations.

Lance Hastings, chief executive of the California Manufacturers & Technology Association, said he's well aware of the disruption tariffs can cause. When Trump put tariffs on aluminum and steel imports, aluminum prices rose at least 25%, Hastings said. "I was in the beer industry when it was put in, and we felt it," he added.

Hastings also said the anxiety around Trump's proposed tariffs stem in part from the fact that "we're still trying to get the supply chain back to normal" after the pandemic. Because "California is the gateway to Asia, the state would feel the impact of more tariffs first and more than everybody else," he said.

Made in the USA

Yet there is a bit of optimism among those who think some tariffs could actually help California manufacturers.

Sanjiv Malhotra, founder and CEO of Sparkz, a maker of lithium batteries, said tariffs could benefit his company and the rest of the domestic battery industry amid the increasing popularity of electric vehicles.

Sparkz, which will get its materials from West Virginia and make batteries at a plant in Sacramento, "is all U.S.-sourced. Nothing is coming in from China," Malhotra said.

During his campaign, Trump indicated he would try to roll back emission-reduction rules and said he would oppose banning gas-powered vehicles. But Malhotra, who served in the U.S. Energy Department under the first Trump administration, said that as demand for lithium batteries grows, he believes Trump's incoming administration will understand that they "need to be made here in the U.S. so we are not dependent on China for batteries."

"The port and logistics complex in Southern California is a very important part of the economy, and directly tied to the countries he threatened."
Stephen Levy, economist and director, Center for Continuing Study of the California Economy

Kate Gordon, CEO of California Forward, a nonprofit organization that focuses on the state's economy, said that while it's important to get back some of "what we've lost over the past couple of decades" - the nation once led in solar panels - it "needs to happen deliberately and with attention to where we're really competitive."

"What would be terrible would be tariffs on things where we're no longer competitive, like parts of the solar supply chain, which have been held by China for a long time," she said. All that would do is drive up prices, Gordon said.

Americans may say they want things to be made in the USA, but they also don't want to pay higher prices for them, said Derek Guy, a menswear writer based in San Francisco who has covered the clothing industry for more than a decade. A few years ago, Guy wrote about American Apparel, under new ownership, offering U.S. consumers the option of paying a little bit more for clothing made here vs. similar pieces made overseas.

"Even based on a few dollars, when someone wasn't looking over (their) shoulder, people chose the foreign version," Guy said.

"A lot of manufacturing in the U.S. has long shifted toward the higher-end," Guy said. "The kind of cheaper clothes we're talking about (what most Americans buy) are made elsewhere." Tariffs would raise those prices.

The price of almonds

California's top agricultural exports include almonds, wine, dairy products, pistachios and other nuts.

During Trump's first term as China imposed retaliatory tariffs on the U.S., California exports of wine, walnuts, oranges and table grapes to China fell, according to the University of California Giannini Foundation of Agricultural Economics.

In addition, almond prices sank, with the foundation's researchers saying prices fell from $2.50 a pound to $1.40 a pound in 2018. That had a negative impact on an industry that generates $4 billion to $5 billion a year and employs about 110,000 people, according to the website of lobbying group Almond Alliance.

Amanda Russell, a spokesperson for the Almond Alliance, said in an emailed statement: "In previous trade negotiations, President Trump demonstrated a commitment to supporting agriculture, and we are optimistic about continuing this partnership to address the challenges and opportunities facing our growers and stakeholders."

Besides tariffs, another likely action by Trump that could affect the state's agriculture industry is mass deportations - a threat that has immigrants and advocates on edge.

"I can't see any benefit to California if he goes through with mass deportation," said Levy, the economist in Silicon Valley. "Even the threat of deportation will affect the labor pool."

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Trump's proposed tariffs, especially on China and Mexico, could hit California hard

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Trump has threatened new, higher tariffs on two of California's biggest trade partners, China and Mexico. The state's workers and economy could feel the most impact.

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Trump tariffs already severely impacting Port of Long Beach, CEO says

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“We are at a critical point at the Port of Long Beach,” the CEO said. He said he’s anticipating reduced business somewhere in the neighborhood of 35% to 40%.