The booming Southeast is Trump’s secret trade-war weapon
Rob Preiditsch lucked into the boom of a lifetime. Originally from Kitchener, Ont., about an hour west of Toronto, he landed a cross-country and track scholarship at Georgia State University in Atlanta and arrived in the run-up to the 1996 Summer Games. He’s been in love with the U.S. Southeast since.
Early on, the job opportunities were lucrative. In his 20s, he got to work for the Canadian Olympic Association, then the Atlanta Thrashers, an NHL expansion team. Along the way, he met a Southern girl from Georgia. “Before long,” Mr. Preiditsch says, “I was hosting pig pickins and making boiled peanuts.” Two kids later, they were tired of the hustle and bustle of Atlanta’s legendary sprawl, so they switched states and moved to Charleston, S.C. That’s where the financial boom hit.
Charleston has always had tourist appeal – it was an English port city and has historic architecture – but hardly anyone saw it as an economic powerhouse. Over the past decade, though, it has built up a manufacturing base that would make Southern Ontarians salivate.
Originally from Kitchener, Ont., Rob Preiditsch moved to Atlanta to attend Georgia State University in the early 90s and has been in love with the U.S. Southeast since. Now, Mr. Preiditsch lives and sells real estate on Daniel Island in greater Charleston, a magnet for wealthy people with second homes.
Last year, South Carolina’s economy grew by 4.2 per cent, one of the fastest rates in the United States – and nearly triple that of Ontario. Much of this expansion came from the Charleston metro area, which has seen major investment from multiple industrial giants. North Charleston is now home to a Boeing Co. 787 manufacturing plant, a Mercedes-Benz sprinter van assembly complex and a Volvo manufacturing campus.
Charleston has also become a sensation for remote workers. The metro area’s population is now almost one million people – and growing – sending home prices soaring. In 2017, Mr. Preiditsch (pronounced pry-ditch) and his wife moved to Daniel Island, a suburb built on land originally owned by the Guggenheim family. Their house cost about US$700,000, but today, he explains as we drive around in his Mercedes-Benz GLS 450, it’s worth US$1.7-million – a US$1-million increase in under a decade. Not even Canada’s real estate bubble grew that quickly.
And it’s not just Charleston. The entire Southeast is humming. Charlotte, N.C., has ballooned into a financial services hub home to nearly three million people, helping North Carolina’s economy grow 3.7 per cent last year. Savannah, Ga., a two-hour drive south of Charleston, houses the third-largest American port after Los Angeles and New York and its metro area is now a manufacturing hub where Hyundai Motor Co. recently invested US$7.6-billion. Further inland, Nashville is scorching hot, fuelled by a diverse economy that includes health care management and higher education.
Word about this boom has gotten out. U-Haul tracks do-it-yourself movers who use its equipment and in 2024 South Carolina topped the U-Haul Growth Index for the first time. The next four states? Texas, North Carolina, Florida and Tennessee. New York, meanwhile, ranked 47th, which helps explain why the Southeast population has jumped 28 per cent since 2000 and the Mideast, the U.S. Census region that includes New York, has grown by about one-third of that.
For the new arrivals, it’s not just affordability or jobs. The Southeast has an energy to it, a vibe that’s intoxicating. To understand the appeal, and the boom, I drove 500 kilometres through the U.S. Southeast – from Charlotte, to Charleston, to Savannah – talking to small business owners, bankers, industrial chief executive officers and everyday people. It might as well have been another planet. Canadians have been in a defensive crouch the past eight months, while in the Southeast, everything is roses. Tariffs seem like a theoretical idea, and when it comes to the trade war, their advice might be best summarized this way: It’s just three more years. Wait it out.
This attitude puts U.S. President Donald Trump’s trade war in a new light. From afar, it seems like the country simply can’t withstand the political chaos. In just six months, Mr. Trump has pardoned January 6th rioters, accepted a gifted plane from Qatar, mused about firing the Federal Reserve chair, started a war with Iran and the list goes on. At some point, the economy’s got to crack. Right?
But so far that’s not the case. Growth has been softer this year, yet measures of consumer health, such as credit card spending, have remained healthy and inflation hasn’t skyrocketed. States close to the border might suffer from a trade war with Canada – Michigan and Ontario are interconnected when it comes to auto manufacturing, for instance – but all the growth in the Southeast, and in Texas, could offset the trauma. As painful as it is for Canadians to hear, until these markets suffer, the U.S. can keep acting like a bully, because the President knows he’s playing with a strong hand.
They emerge midday in the city’s unofficial uniform: packs of young men wearing Tar Heel blue shirts and khakis, sometimes with running shoes. In cooler months, they throw a Patagonia vest over top. “It’s a huge joke here,” says Justine Tobin, an investment banker who’s lived in Charlotte for 31 years. “The vest is like armour for these guys.”
The reason this outfit is ubiquitous: Charlotte has become a baby Wall Street that attracts 20-something and-30 something finance bros. Standing at the corner of Trade and Tryon streets at lunchtime in mid-June, they walk by under the city’s famous tree canopy in endless groups of three or four.
The city has long been home to Bank of America, one of the Big Four U.S. banks, but it never really registered relative to New York or Chicago. To recruit, Charlotte’s lenders had to promote quality of life. “We would target folks in New York who were married with small children,” explains Mark Vitner, a veteran economist who has worked for Wachovia and Wells Fargo & Co., and who now runs his own economic consulting business. There’s a common saying in Charlotte that summarizes this mentality: The mountains are two hours away, and the beach is three. And, of course, housing was always so much more affordable.
Ms. Tobin was one of the people who took that gamble. She’s very Wall Street on paper – a Columbia MBA who worked at Goldman Sachs and Salomon Brothers – but she grew up in Tulsa, Okla., and decided to try Charlotte out with her husband and her young daughter. Since moving down, the city has more than doubled in size, and a good chunk of that growth came from financial services. Along with BofA, Wells Fargo and Truist Financial Corp. have a big presence in the city, and these giants helped build an ecosystem for the likes of Barings Bank, Ally Financial Inc. and LendingTree Inc.
The COVID-19 pandemic also turned Charlotte into a magnet for young professionals of all stripes. Ted Jarmuz arrived in September, 2022, from Buffalo with his wife. Both of their jobs had gone fully remote. “We came for a month,” he says, “and within a week, we were sold.” Charlotte was the perfect hybrid: not too much of a culture shock, a mild winter and affordable homes. His street is now filled with families from Wyoming, Long Island, N.Y., and Baltimore, Md.
Because so many young people have moved here, there is a vibrancy in the city – but instead of hard-core partying late at night, Charlotte is known for its breweries such as Suffolk Punch and Triple C Brewing in the fast-gentrifying South End neighborhood, along the rail trail. Suffolk Punch, which opened in 2017, is located in an old brick building, and its interior is lined with plants, giving the same earthy energy as Oxomoco, the hip Mexican restaurant in Brooklyn, N.Y. Its neighbourhood, South End, has become so hot that rent for a one-bedroom apartment can now run US$2,000 a month.
Explaining the city’s appeal, a surprising number of people offer the same take: The airport is a sneaky advantage. Charlotte is a hub for American Airlines, so scores of flights connect through it. For people already in Charlotte, that means direct flights to places such as New York, San Francisco and Paris.
Another advantage: The state’s 2.25-per-cent corporate tax, which is supposed to fall to zero by 2030. It has lured a diverse mix of businesses. In May, Hamilton, Ont.-based AVL Manufacturing, which makes customized enclosures for power generators, announced it would spend US$56-million on its first U.S. production facility that will employ 325 people. The same month, Vestige, a tech company that makes hardware for fleets of commercial vehicles, said it was expanding in Charlotte.
A few hundred jobs added here and there may not seem like much, but Mr. Vitner, the economist, explains that over the past year, Charlotte has added more jobs than Atlanta, even though Atlanta’s population is more than double Charlotte’s size.
South Carolina used to be the land of textiles and tobacco, with a little bit of tourism. The first two petered out with globalization, but tourism has flourished, particularly in Charleston, the coastal city in the southeast corner. The historic architecture at the tip of the peninsula is stunning, and the metro area is surrounded by the Lowcountry, best described as marsh land that rivals Cape Cod for its natural beauty. Weddings are big business here.
But lately manufacturing has made the metro area so hot. “When Boeing moved here,” David Wren, a long-time business journalist in South Carolina says over Panera Bread sandwiches, “that put Charleston on the map.”
Historically, Boeing made planes in the Seattle area. But in 2009, the year after a 52-day strike, the plane maker announced it would establish its second final assembly site for the 787 in Charleston. (South Carolina is a right-to-work state, which means employees cannot be forced to join a union as a condition of employment.)
Just like in Charlotte, many remote workers discovered Charleston early in the COVID-19 pandemic and relocated to the city, bringing their business to the local economy and spurring development in the downtown core.
Since then, Charleston has quietly developed a reputation as a manufacturing hub. In 2015, Mercedes-Benz announced a major investment in the metro area with a new plant for its Sprinter vans, which are used for last-mile delivery, and around the same time Volvo Car piled on with plans to build a small city that manufactures the S60 sedan and its electric sport utility vehicle, the EX90.
The enormity of this campus is hard to conceptualize, but it sits on 1,600 acres, includes a corporate office, fields of solar panels that power the plant and a giant production facility that houses a body shop, a paint shop, a battery assembly division and final assembly. The campus even has its own exit off I-26: Volvo Car Drive.
Just like Charlotte, these investments are complemented by remote workers who discovered Charleston early in the COVID-19 pandemic, often bringing their big-city salaries with them. (South Carolina had extra appeal because the state largely reopened after the first round of COVID lockdowns.) These arrivals have given downtown a buzz, and development on the peninsula keeps moving north, often into historically Black neighbourhoods. The new Morrison Yard project is slated to bring a Barry’s Bootcamp – which is popular with young professionals – and a Jinya Ramen Bar.
Young families are also moving into newly-built suburbs, like Point Hope, which is being developed in the Lowcountry about 30 minutes from downtown. The homes have southern charm, with white railings on second floor balconies and big porches. The public secondary school, Philip Simmons High, has a football stadium with a high-end track, and right next to that, a baseball diamond with a manicured grass infield.
About two years ago, Mr. Preiditsch, the Canadian, sold a home in the neighbourhood to a young couple for about US$600,000. Today, the same place is worth around US$800,000, according to the Charleston Trident Association of Realtors. House prices have also soared in North Charleston, where industry is booming, albeit from a much lower base. In the area, single-family detached homes now cost an average of US$350,000, up from US$200,000 five years ago.
Marty Newsome, a server at Circa 1875, a Parisian bistro, said it best while delivering steak frites: “Savannah is killing it right now.”
Born and raised in the city, with a family who own a shrimp boat, Mr. Newsome has watched Savannah boom over the past 15 years. Like Charleston, the city has always been known for its beauty – it’s an urban planner’s dream with public squares every few blocks, most of which are lined with live oak trees and Spanish moss – but a good chunk of the economy used to be driven by the Union Camp paper mill. The jobs there have dwindled over the past 75 years.
Because of its history and its proximity to Hilton Head Island, Savannah kept a steady drumbeat of visitors. It’s also had an industrial base supported by Gulfstream, the private jet maker, since the 1960s.
But Savannah still struggled. Industrial expansion has helped turned that around, starting with the port. It’s the first major shipping hub on the East Coast coming out of the Panama Canal, and Georgia has invested in a rail network to and from it. Last year, the Savannah port handled 5.5 million shipping containers, 70 per cent of which were imports into the U.S. (The remaining 30 per cent were exports largely made up of agricultural goods such as forestry products, cotton and peanuts.) For comparison, Vancouver’s port handled 3.5 million containers last year, and Montreal’s port handled 1.4 million.
The Savannah waterfront is busy with people spending a Saturday afternoon by the river. The city is known for its beauty and outdoor public spaces, with lush public squares every few blocks.
The port’s CEO, Griff Lynch, grew up on Long Island, so he appreciates that most people are oblivious to the hum. Savannah? Really? “I have family in New York,” he explains. “They’re the same.” But the port – and its sister location in Brunswick, Ga., 90 minutes south – keeps growing, helping to attract more manufacturing investment, such as Hyundai’s US$7.6-billion plant dedicated to electric and hybrid vehicles. The campus will eventually produce models for Kia and Genesis as well, both owned by the same parent company.
What makes Savannah unique is its creative class. The city is home to SCAD, the Savannah College of Art and Design, which was founded in 1978 and has played a critical role gentrifying some rundown areas. SCAD tends to buy and restore once-beautiful buildings that have been neglected, then students, paying US$42,165 in tuition each year, move in and the surrounding blocks get a lift.
But this gentrification is also a double-edged sword. SCAD is widely credited for revitalizing the downtown historic area, yet as the school grows, it has pushed south into historically Black neighbourhoods. The cost of living is now soaring for locals – not just rent and home prices, but also property taxes. All while the minimum wage is still just US$7.25. “SCAD is truly a love/hate relationship here,” says KeyShawn Housey, a community organizer who grew up in Savannah.
The flip side: All the economic development has boosted the city’s tax base. Mr. Newsome, the server, feels the anxiety over affordability, but for now, he’d rather have Savannah boom than barely get by like so many Rust Belt cities.
Savannah is well known for the Savannah College of Art and Design (SCAD), which has played a critical role in both revitalizing the downtown historic area, and gentrifying some rundown areas, causing the cost of living to soar for locals.
A rational person has to wonder: Can the boom last? The global economy has been on tenterhooks since President Trump was elected for a second term. And Treasury Secretary Scott Bessent is already floating delays for trade deals that were supposed to get signed within 90 days.
With so much uncertainty, there are signs of a cooling in the Southeast. Volvo, which is majority-owned by a Chinese company, cut 5 per cent of its work force at its Charleston plant in May, affecting about 125 of its 2,500 employees, and in June, Automotive Energy Supply Corp., a Japanese battery manufacturer, paused development on a Charleston-area facility. But it’s hard to decipher what is driving these decisions. The tariff threat is real, particularly for auto manufacturers, yet EV demand in North America also hasn’t lived up to the hype yet.
If the trade war continues to bite, South Carolina is expected to feel it the most. The Palmetto State has the highest trade exposure on the East Coast, according to a June regional economic forecast from Toronto-Dominion Bank. But the bank still expects South Carolina to grow 2.1 per cent this year. In Ontario, another auto manufacturing hub, growth is expected to come in at 0.6 per cent.
How is this possible? Beyond the diversity of the Southeast economy and the region’s population growth, there are some drivers that fly under the radar, and they help the whole country.
The first is the size of U.S. economic stimulus. With a federal deficit of US$1.9-trillion this year, Washington is juicing growth – and has been for two decades. The budget bill that just made its way through Congress is expected to add at least US$3.3-trillion more to the federal debt over the next decade, in addition to the trillion-dollar annual deficits that were already projected.
The U.S. is also bolstered by its wealthiest families. The top 10 per cent of households now comprise 50 per cent of total consumer spending, according to data from Moody’s Ratings, the most since the data was first collected. So long as stock markets keep rising and house prices follow, the wealthy don’t have much reason to pause. And the budget is expected to cut their taxes.
There’s also another variable at play, and it’s the hardest one to put a finger on.
Across the Southeast, and really, in many parts of the U.S., there is a natural optimism. Scott Galloway is a former marketing CEO and New York University business professor who’s turned into a popular economics pundit. In a June interview with the Financial Times, he was asked about his recent move to London and how England compares with the U.S. “I generally find that in America people start from: How do we make money?” he said. “In the U.K., it’s: Should we do another meeting?”
In Canada, the first question might as well be: What are the risks? The country is defined by peace, order and good government, after all.
The U.S. economy also seems to be divorced, or perhaps even somewhat immune, from political chaos. That’s particularly true in the Southeast, owing to a mentality that dates back to the U.S. Revolutionary War. Christopher Gadsden, a Charleston-born brigadier general in the Continental Army, became famous for creating a flag with the slogan, “Don’t tread on me.” It was a message to the British, but that mentality persists when it comes to the White House. The Southeast just wants to go about its own business.
This hand-off mindset doesn’t mean Americans there aren’t sympathetic to Canadians right now. Lots of people say “I’m so sorry” – a tour guide in Charleston, a fellow diner in Savannah – but they also aren’t changing much in their day-to-day lives. Mr. Preiditsch offers this take, something he recalls from his days studying political science at Georgia State: “Americans vote with their pocketbooks.” In other words, until there’s financial pain, it’s unlikely all that much will change.
For Canadians, it’s hard not to get emotional about it all. All the uncertainty has financial consequences. But the U.S. economy is so big, and so diversified, and supported by so much stimulus spending, that it will take time for any pain to spread. The trade war is a long game, and winning it might just come down to being clinical.