Trump, China amp up tariff skirmish, meaning Texans will pay more for toys, rugs and more

Updated at 8:40 a.m. on Tuesday: Revised to include China's decision to retaliate with tariffs on $60 billion in U.S. goods.

WASHINGTON — President Donald Trump on Monday finalized tariffs on a staggering $200 billion in goods imported from China, marking the largest escalation to date in an ever-growing trade war between the world's two largest economies.

Texas businesses and consumers are primed to feel pain from the president's move, perhaps even more than they were when Trump launched trade skirmishes with China and other countries earlier this year.

No longer are the tariffs covering just complex electronics or metal inputs or other items that don't typically qualify as consumer goods. The affected products are ones that average Americans buy and use: ring binders, air conditioners, furniture, luggage, picture frames, toys, rugs and more.

That means consumers will feel the pinch more directly and more quickly — and that some business owners will soon confront dire dilemmas.

"Adding a 10 percent duty to the price of a rug ... would be devastating, making these otherwise affordable rugs a luxury," Amir Loloi, president of Loloi Rugs in Dallas, wrote to the Trump administration last month. "Our sales in this category would disappear."

But Trump has been undaunted in his unconventional pursuit of better trade deals, despite persistent warnings from many businesses and policymakers.

The new levies, which will take effect next week, had been a long-predicted advance in his protectionist trade agenda. The duties will be set at 10 percent, though they will rise to 25 percent in January. And it may not end there, either.

"If China takes retaliatory action against our farmers or other industries, we will immediately pursue phase three, which is tariffs on approximately $267 billion of additional imports," Trump said in a statement issued by the White House.

China's response

China responded by saying it would immediately retaliate with levies on $60 billion in U.S. goods, including key Texas products like liquefied natural gas.

Beijing can no longer match Trump dollar-for-dollar in tariffs, thanks to its sizable trade surplus with the U.S. But the payback would still be substantial, adding to the several billion dollars in Texas exports that are already covered by tariffs imposed in retaliation to Trump's tactics.

"In order to safeguard our legitimate rights and interests and the global free trade order, China will have to take countermeasures," China's Ministry of Commerce said in a statement, according to the Washington Post. "We deeply regret this."

While Texas and its trade-focused economy have been on the front lines of Trump's trade war from the very start, the latest moves engage a swath of goods, businesses and industries far wider than any of the president's earlier trade actions.

That's just how Trump wants it.

"Tariffs have put the U.S. in a very strong bargaining position, with Billions of Dollars, and Jobs, flowing into our Country - and yet cost increases have thus far been almost unnoticeable," Trump wrote on Twitter ahead of the announcement.

Trump staple

Tariffs have become a staple of the Trump presidency, even though levies on goods imported to the U.S. are taxes paid by American businesses and consumers.

The president has imposed tariffs on washing machines, solar panels and metals imported from locales across the globe. He had already slapped levies on tens of billions of dollars in Chinese goods. He's threatened to put tariffs on imported cars and automobile parts.

Those moves have already started to have an impact.

Businesses in Texas and beyond have reported material hits to their bottom lines. Prices on certain goods, such as washing machines, grills and other steel-heavy items, have started to creep up. And while the economy is still humming, economists say the negative effects are all too real.

Here's how S&P Global Ratings titled a recent report: "It's hard to see any winners in a U.S.-China trade war."

But the duties have also elbowed in on other trade negotiations, whether it's with the European Union or over the North American Free Trade Agreement.

Trump has relished that dynamic, making the case that his tough approach on trade is the only way to stop other countries from ripping off the U.S. and to stick up for American workers who've seen their jobs disappear amid foreign competition.

With China, in particular, the president has used the tariffs to punish Beijing for alleged intellectual property violations and other unfair trade practices.

"These practices plainly constitute a grave threat to the long-term health and prosperity of the United States economy," he said.

Some businesses for tariffs

Some businesses, whether in Texas or anywhere else, have cheered on the president.

Robert Brueggemeyer, owner of Kitchen Cabinets in Grand Prairie, in September urged the Trump administration to go forward with tariffs on cabinets, explaining that Chinese competitors have resulted in a 40 percent loss of sales and jobs over the last four years.

He said the manufacturing "playing field is simply not level."

"Our business can compete, but only by competing fairly," he wrote. "This is not the case today."

The ledger in Texas and beyond nevertheless runs overwhelmingly against Trump's tariffs, even as many businesses — ranging from mom-and-pop shops to heavyweights like Dell Technologies — stress that they think Trump is right to call out China's practices.

Take NBG Home, an Austin-based company that owns a variety of home decor brands.

Scott Slater, the company's CEO, told the Trump administration last month that he supports the goal of "eliminating unreasonable and discriminatory burdens and restrictions on U.S. commerce imposed by China." He even added that he understands the general logic behind the tariffs.

But he said Trump's tariffs on everything from furniture to chandeliers to corkboards would just end up punishing American consumers.

"Individuals may no longer be able to afford high-quality home decor goods for use in the home," he said.

The Trump administration has heeded some of those concerns.

Trump reduced the tariffs to 10 percent, at least initially, after hearing pushback from business leaders. The administration removed about 300 products, including smart watches, from the list. There is also still time for U.S. and Chinese negotiators to reach some kind of truce.

China supply line

There's only so much damage control, though, that can be done with tariffs of this size.

Part of the problem is that American companies have long factored China into their supply chains — sometimes investing huge sums of money into creating that arrangement — as a way to offer more competitive price points to consumers.

Ralph Bradley is chief executive of Jammy Inc., a Fort Worth auto parts importer.

He told the Trump administration last month that his company, which has about $12 million in annual revenue, has spent over 30 years building up its manufacturing process, including by launching a joint venture with a Chinese partner.

He said these latest tariffs would force him to choose between passing along the costs or facing "disastrous consequences on our profitability and long-term viability."

In other cases, the tariffs have simply come as a shock. Just ask Jill Baxter, owner of Minding My P's and Q's Quilt Shop in Denton. She expressed disbelief Monday at being caught up in a trade war, explaining that "nobody would think" her store's cotton fabrics would rise to that level.

She's still determining the exact impact, given that some of her fabrics come from China while others come from other places overseas. But she left no doubt about the stakes.

"This business is our retirement," she said. "Everything we have is invested in this business."