Tennessee is among the manufacturing-heavy states "most vulnerable" to U.S. import tariffs levied against China and other trade partners, according to a new report by Pew Charitable Trusts this month.

The report revealed that states with large manufacturing industries, like Tennessee, Indiana, Kentucky and Michigan, could be more susceptible to negative fiscal impacts from changing trade policies. Tariffs impacting Chinese imports specifically could affect Tennessee manufacturing, the report said, because businesses rely on those materials and because goods from China are subject to some of the steepest duties.

The report also said states like Tennessee might eventually see the costs of tariffs influence their budgets. Any potential fiscal impacts will take time to show up in state budget data.

"When the federal government imposes tariffs on imports, the effects often ripple far beyond cargo ships and customs offices," the report said. "Tariffs have the potential to significantly influence state budgets by increasing uncertainty in economic forecasts, raising the costs of public projects, and disrupting revenue streams."

When it comes to the full effects on Tennessee business owners and consumers, the outcome of new tariff policies is largely yet to be seen. Tennessee Chamber of Commerce and Industry CEO Josh Brown said the issue is a top priority, as he monitors rising import costs and growing uncertainty in manufacturing.

"The Tennessee Chamber of Commerce and Industry is hearing reports from businesses across the state about the effects of ongoing tariff uncertainty," Brown said. "We are closely tracking manufacturing and revenue data to evaluate potential impacts on Tennessee's economy and competitiveness. Our priority remains ensuring that Tennessee manufacturers and employers can continue to thrive in a stable and predictable trade environment."

According to the Pew report, Chinese imports accounted for 3.8%, or $21 billion, of Tennessee's economy in 2024. Nationally, the U.S. imported $440 billion worth of goods from China in 2024, representing 1.5% of total economic activity.

Those imports were concentrated in the following groups:

Computer & electronic products ($9.1 billion)

Chemicals ($4 billion)

Transportation equipment ($1.4 billion)

Miscellaneous manufactured commodities ($1.1 billion)

Electrical equipment, appliances & components ($1.1 billion)

Tennessee's manufacturing industry includes major players like Bridgestone, Nissan, Volkswagen in addition to several automotive parts manufacturers and industrial chemical manufacturers.

Some smaller manufacturing companies have seen tariffs impact recent shipments coming from China. Allvan, a van and truck manufacturer based in La Vergne, said a fall shipment included tariffs ranging from 25% to 80%. For a purchase order of $14,413, Allvan had to pay $11,977 in tariffs.

While larger manufacturing companies with more robust and flexible supply chains are able to adapt to shifting trade conditions, smaller businesses, like Allvan, are hit hard, according to Federal Reserve Bank of Atlanta President Raphael Bostic.

"Small businesses are managing much worse than large businesses," Bostic said. "Many businesses have used strategies to forbear. Maybe we don't hire that extra person or maybe someone leaves? Small businesses, they don't have a lot of those people to lose, and at some point, you're cutting to the bone."

Smaller manufacturers in Tennessee, it follows, could be the most vulnerable to volatile trade conditions between the U.S. and China.

Molly Davis covers growth and development in Nashville. You can email her with comments, questions and tips at mmdavis@tennessean.com.

This article originally appeared on Nashville Tennessean: Tennessee economy most vulnerable to tariff issues per Pew