RICHMOND, Va. — As President Donald Trump's latest tariffs take effect at midnight, Virginia businesses and consumers face uncertainty about the impact on importing and purchasing goods.
That was the main takeaway from a meeting of a state advisory committee — the Virginia Economic Development Partnership's (VEDP) Advisory Committee on International Trade (ACIT).
ACIT Chair Mike Ligon, who worked for the Universal Corporation for 39 years before retiring, said the meeting was to learn as much as they could about the tariff situation and what it could mean to Virginia.
"I think we're still early in the process. I think we still have a ways to go before we really know all the impacts that are going to be out there," he said.
"There's still quite a bit of uncertainty," added Stephanie Agee, senior vice president and chief administrative officer of VEDP. "It's very early days."
While part of the meeting about the impact was in closed session, the open portion featured a presentation from the international trade law firm Sander, Travis, & Rosenberg.
"In the short term, the expectation is you're going to be facing tariffs at least for the next few months," said associate David Olave. "That's going to create, certainly was going to create cash flow constraints for many companies who are not planning for this at the moment, it's certainly going to create headaches. It likely will immediately result in tariff in price increases."
According to slides presented at the meeting, China, Mexico, and Canada are the three countries Virginia imports the most (in dollar figures) from, with mechanical appliances, electrical machinery, and aircraft being the top three commodities.
Agee said imports rose 20% from 2023 to 2024 and attributed a lot of that to manufacturers stocking up on materials in the fourth quarter, once Trump had been elected, before tariffs were implemented.
Olave said businesses should closely examine how their imports are classified to minimize the tariff impact.
"Somewhat similar to taxes as there are deductions or there are things that you can do to lower your overall tax bracket every year," Olave said. "There are some things that companies can do to try to keep that impact to the minimum."
As for the impact on Virginia's exports (with Canada, China, and India being the top three markets), ACIT leaders said they are most concerned with how other countries may retaliate that could impact their ability to do international business.
Mineral fuels, plastics, and mechanical appliances are Virginia's top three commodity exports, but Agee noted that Virginia's biggest export are services — like consulting and data centers (of which Virginia houses around 70% of them in the world).
"Two-thirds of Virginia's approximately $70 billion in exports are actually services," Agee said.
She added along with tariffs, other countries could impose other measures that impact the service export industry.
"They could implement regulatory actions and things that would negatively impact American service-oriented companies that are currently selling a lot to Europe and to many other countries," Agee said.
"Many countries, including the European Union, have tried to pass regulations that mandate that servers and data must be in the countries where that of origin, where that data is is coming from and that that data must be held in in certain ways," added Olave. "Many Europeans could use this as an excuse to to push hard on those issues and and to use additional conditionalities for service providers. So, even though it's we're hitting them with tariffs, they can hit us back with what's called NTBs, or non-trade barriers where it's based on regulatory issues or certain permits that need to be provided in order for companies to be able to do business."
Olave said that while Trump has promised more reciprocal tariffs against countries that impose them on the U.S., he does not know if Trump would respond in kind to regulatory changes.
As for how this all ends, Olave said while there has been mixed messaging about what the goal is with the tariffs, he believes Trump is focused on returning manufacturing into the US.
"My view is the President wants to bring it. He wants the political points...to have him be the father of a renaissance of manufacturing in the United States. I think that is very clear," said Olave.
"There could be positive impacts down the line. I mean, obviously the goal, some of the stated goals of the tariffs, have been to improve opportunities for manufacturing in the United States," added Agee. "We're very hopeful that that is what would end up coming from these. If the tariffs do stick around, if we keep them in place, that hopefully there would be plenty of motivation for companies to set up operations in rural Virginia, even in more developed parts of parts of Virginia."
Olave said businesses should stay in touch with their Congressional delegation and let them know to how they are being impacted by the tariffs and hope that Trump to start negotiations with countries to lift the tariffs. Although, he added, doing that would be contradictory to what Trump's stated goal of the tariffs is.
"If he starts making trade deals of some sort with countries, that takes away from on the other side — inviting investors to come into the US."
In the end, Olave said what he is hearing from people in D.C. is the same that the ACIP leaders were feeling — uncertainty.
"That's what hits businesses the hardest, not being able to project and know what to do with this tomorrow," Olave said.
Moving forward, state leaders plan to monitor the data on tariffs' impacts and will send a letter to both the Trump and Virginia Governor Glenn Youngkin administrations outlining their concerns discussed at the meeting.
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