Georgia businesses brace for tariff impact amid uncertainty

ATLANTA - Georgia businesses are bracing for impacts from tariffs that have been threatened or already imposed on countries by the Trump administration.

Will tariffs hurt small businesses?

Local perspective:

McGee Eyewear has operated out of Marietta for around 45 years. "We manufacture eyeglass frames and sunglasses," said Executive Vice President Matt McGee. 

At their warehouse on Friday, dozens of workers were busy boxing up eyeglasses to ship out to retailers like Walmart and Costco. McGee showed FOX 5 some of the materials they use to make the eyewear. "We make acetate frames, so celluloid acetate, and this is how eyeglass frames start with a sheet of acetate…this is what's called a core wire. And this basically gives it its shape," McGee said. 

He said many of these materials and eyeglasses they sell are imported from China. The Trump administration recently increased the tariff on Chinese goods to 20%. "Right now, we're dealing with probably about 27.5% on all these components right now as they come out of China," he said, adding that it hurts a company of around 100 employees. "That's where it hurts and makes things difficult sometimes…we don't want to gouge our customers, and we don't want our prices to go through the roof. But we also have to pay our people and we have to meet payroll," McGee said. 

He says inevitably prices will go up, but they’re trying to find the balance. "Our company, and others like us, will absorb some of that cost, and some of it we’ll have to pass on to the consumer as well. "So those are some things that we're trying to figure out right now," McGee said.

Prices will go up with tariffs

What they're saying:

"The consumers are going to feel short-term pain," said Christopher Fagan, a partner and Transaction Advisory Leader at the business consulting firm Moore Colson. He says noticeable price increases due to tariffs are inevitable. "That's how [companies] protect jobs. What you don't want is businesses absorbing 100% of these costs and having to cut headcount as a result of it," Fagan said. He says tariffs impact everyone in the economy, from the banks financing companies to the everyday consumer. "It ripples through the entire economy," Fagan said.

Made in the USA

Dig deeper:

One of President Donald Trump’s stated goals for tariffs is to encourage more companies to manufacture goods in the U.S. "If the long-term gain is that we restore a lot of this manufacturing that has gone overseas, then yeah, it'll be worth it. But it's not something, frankly, that would be resolved in this administration's term or perhaps even the next administration's term," Fagan said. 

Fagan says just the process of bringing more manufacturing to the U.S. could take years. "These supply chains that you're trying to reconfigure are decades in the making," Fagan said. "That's not an overnight process. Re-shoring a lot of these manufacturing products that are exported from Georgia takes time. You're looking at 24 to 36 months just to get the equipment. You're testing the equipment for a year or two. You've got R&D associated with it. So that’s a 5- to 6-year runway." 

McGee says about five years ago they started doing some of their own manufacturing in Marietta. He says he supports the goal of bringing more manufacturing back to the States. "I still do believe in the American consumer and American manufacturing. So I feel like this probably was needed," he said. 

They only produce about 2% of the goods they sell. McGee acknowledges just how long it would take for them to scale up manufacturing enough to replace much of what they import. "I think for us it'll probably take us another 5 to 10 years. One of the things about eyewear manufacturing is that there's just not a lot of it done here. So we don't have the infrastructure, we don't make the raw materials, we don't make the components here," McGee said. He says tariffs actually make it harder to even do that. "As our costs grow, that only stops our progress a little bit. So, some of the tariffs are kind of hitting us where we're having to pay a tariff, whereas we could be investing into our manufacturing facilities here at home," McGee said.

What businesses should do

What's next:

Fagan says that with President Trump announcing and pausing tariffs seemingly by the hour, it can make things very uncertain for businesses. "There is whiplash involved," he said. But he advises businesses to act as if tariffs will be going into effect. "You're doing a disservice to your business if you don't take them seriously. It's important that businesses have contingency plans in place in case the tariffs do go live," Fagan said. "Our advice has revolved around buying as much as you can to hedge against it."