“We have a strong life sciences background down in the San Diego area… we have industrial manufacturing up and down the Central Valley. There was a time when you had a lot of lumber manufacturing going on in the North State… but we are also home to the largest electric vehicle manufacturer in the country, Tesla, right there in Fremont,” Hastings explained.
According to the Governor’s Office of Business and Economic Development, California manufacturers produce around $155 billion worth of exported goods, and make up around 12% of the state’s economy.
Despite these numbers, Hastings said the increasingly globalized economy has changed the economic relationships between the United States and other countries, especially when it comes to trade conflicts.
“We rely on other countries to provide either goods, services, or components for products, or the or the actual finished product as well,” he said. “Everything's going to get more expensive.”
Hastings said claims made by Trump and some supporters of tariffs that the measures will lead to a boost in domestic manufacturing are not necessarily realistic.
“It’s taken 50 years to have those industries and products move offshore, and it’s been a slow simmer to lose that capacity here in the U.S.,” Hastings explained, adding that the country’s regulatory scheme also helped drive manufacturing abroad.
“We’ve been able to make some policy changes to reshore some of that, but it’s going to take almost the same amount of time as we lost all of those sectors to get them back… because it will be so capital intensive, that will take quite a few years,” he said.
Ultimately, Hastings said, consumers will bear the costs of tariffs. “It’s not a tax on the other country, it’s actually a tax on the consumer here in this country,” he said.
Tariffs and California’s complex manufacturing landscape
Hastings said even before the tariffs were imposed, the manufacturing business climate in California was already tough.
“It is much more expensive to do any kind of business in California relative to other states,” he said, “including - and largely because of - the inputs of energy, land and the workforce. Those three components are more expensive here than [almost] any state in the country.”
Hastings said some CMTA members have already begun feeling the impact of earlier tariffs imposed by the United States. Last month, the Trump administration implemented a 25% tariff on imported Canadian aluminum and steel, as part of an escalating trade war with the country.
This decision has affected various California industries, including local canning operations in Sacramento. Canadian retaliation and boycotts have also targeted billions of dollars in U.S. goods, such as California wine.
Hastings specifically noted that these steel and aluminum tariffs could impact the construction sector in California, with consequences ranging from short-term instability to potentially permanent stops.
“The longer term [impact] is if you're going to build a building that requires steel, you're going to rethink that,” he said.
“Steel, cement and aluminum… one could argue that's where the building begins. And if there's an interruption or hiccup in that, it will delay - if not ultimately cancel - plans.”
Cargo containers line a shipping terminal at the Port of Oakland on Friday, April 4, 2025, in Oakland, Calif.AP Photo/Noah Berger
CMTA members are also taking stock of the uncertainty around tariff amounts and the duration of the trade war, which clash with how manufacturers usually operate.
“Manufacturers and businesses generally like to be able to look down the road five, 10, even 20 years to see what the landscape is going to look like,” Hastings explained. “We make decisions based on that longitudinal view.”
“What our members are doing is assessing which countries they source products from, and measuring what the tariff level is in those various countries - it’s different depending upon what country you're in, and they're making those analyses right now.”
Newsom calls for exemptions, stronger partnerships
As Trump’s tariffs have been announced, California officials are taking steps to mitigate their potential impact.
On April 4, Gov. Gavin Newsom declared the state’s commitment to “fair, open, and mutually beneficial trade,” citing over $675 billion in two-way trade that passes through California.
In a release, Newsom said his administration would pursue “new strategic trade relationships” to build resilience and protect the state’s manufacturers, workers and economic interests. He said these steps would include supporting job creation, promoting economic stability and maintaining access to critical supplies.
Newsom also called on California’s trade partners to exempt state-made products from retaliatory tariffs, which he said would have an “outsized impact” on businesses in the Golden State. He noted that over a third of California’s exported goods in 2024 - around $183 billion - went to just three countries - Mexico, Canada and China, all of which have been targeted by tariffs.
Hastings voiced approval for Newsom’s outreach, calling it “interesting” and “well-timed,” but said that more time is needed to judge the reaction from other countries.
“Our imposition of tariffs first were met with retaliatory tariffs, we’re going to race to the bottom for the next 30-60 days,” he said. “The financial markets, the big banks are looking at it and analyzing what the impact is.”
Hastings said while it is not possible to get rid of tariffs at the state level, he hoped Newsom would take additional measures to mitigate their impact.
“We're hoping that the governor takes the additional step and signs legislation to create a manufacturers investment credit here in California,” he said. “That would send a great signal that we are in fact open for business.”
