Tariff Challenges Hit Tennessee Businesses Amid Trade War Uncertainty

Tariff Impacts Loom Over Tennessee Business Landscape In a significant development for Tennessee's business community, local entrepreneur Greg Asadourian faced a daunting financial blow recently when he received a tariff-included invoice from the U.S. Department of Homeland Security. This invoice, which marked an 80% tariff on his imported materials from China, is indicative of the turbulence that has characterized the global trade environment since President Donald Trump initiated a trade war in February. The trade tensions have led to numerous changes in tariff policies, creating uncertainty for business owners who are grappling with how these costs will affect their operations. Trump has publicly stated that the primary objective of imposing such heavy tariffs is to encourage more consumers and businesses to purchase American-made products. He believes these tariffs will also serve as leverage in negotiations with foreign governments regarding American goods. “We will take in trillions and trillions of dollars and create jobs like we have never seen before,” Trump stated before the tariffs began to roll out, reinforcing his view that “Tariffs are about making America rich again and making America great again.” However, the actual impacts of these tariffs are beginning to manifest, and local economists, including those from Middle Tennessee State University’s Business and Economic Research Center, have expressed concerns about the negative repercussions for the state's economy. Asadourian, who leads Allvan— a manufacturer based in La Vergne that primarily sources materials locally—revealed that the effects of the tariffs have been delayed but are now becoming pronounced. “I anticipated some really shocking Chinese tariff invoices early on, but those never happened. But everything is in effect now,” he noted, referring to the orders he had placed before the tariffs were in full swing, which are now subject to considerable tariff charges. The specific invoice that triggered Asadourian's concerns arrived in mid-September, indicating that for a single order worth $14,413, he would need to pay $11,977 just in tariffs. This unexpected financial burden poses challenges not only for his company but also for his suppliers, some of whom are adjusting pricing structures in anticipation of these tariffs. A recent incident where one of the limited aluminum production facilities in the U.S. caught fire has further complicated sourcing for manufacturers like Allvan. Asadourian emphasized, “For the little amount that we buy offshore, it’s becoming a lot to manage, and it’s not China paying for these tariffs; it’s me.” This situation reflects a broader trend observed in a recent survey from the University of Tennessee Boyd Center for Business and Economic Research, where it was reported that 75% of local business leaders are feeling the impact of tariffs. Half of these respondents have begun passing these additional costs on to their customers as a means of coping with the financial strain. The Boyd Center Director, Don Bruce, commented on the evolving situation, stating, “The bottom line is that we’re now seeing the tariffs in the prices of the things that we buy. It has taken a little bit of time to get to the point where the tariffs are final, but now they’ve been imposed for a couple months, and they’re starting to show up for customers in the store.” Bruce pointed out that businesses have limited strategies to deal with these rising costs, including absorbing the expenses themselves, engaging in negotiations with overseas suppliers to reduce prices, or increasing retail prices. Despite these challenges, he noted that many customers seem willing to accept these hikes thus far. In addition to raw materials like aluminum, the implications of tariffs extend to consumer goods. Recent data shows grocery prices have escalated, with particular mentions of coffee, wine, fruits, and vegetables—many of which face increased prices due to these tariffs. The consumer price index revealed a 0.6% increase in grocery costs from July to August, a growth rate not seen since late 2022. Despite the heavy toll that tariffs are taking on operations and pricing, Tennessee business leaders maintain a generally optimistic outlook. A significant 69% of business respondents from the Boyd Center survey believe that the state is on the right trajectory, largely due to robust business investments and favorable governmental leadership over the past several years. “We’ve attracted a large number of new businesses and new residents to the state over the last five to 10 years,” Bruce stated, pointing to a promising outlook for long-term economic growth in Tennessee.