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You might want to do your Christmas shopping early this year. Recent tariffs announced by President Trump on consumer goods from China are set to take effect in phases starting Sunday and continuing through mid-December. The latest rounds of tariffs could increase costs on products San Antonians buy every day and could even impact local jobs.
It’s anticipated that prices will increase on basics like clothing and shoes, as well as a broad of range of items, including toys, machinery, and electronics. Estimates show the price of cell phones could rise an average of $70, laptop computers by $120, and video game consoles by $56. These increases will be felt both at San Antonio’s smaller local businesses and larger retailers.
“The bottom line is that stores import a vast majority of items they sell from China,” said George Kelemen, president and CEO of the Texas Retail Association, which represents over 300,000 stores throughout Texas, including local retailers like H-E-B. “We agree that China hasn’t been a good actor and changes need to be made, but we’ve expressed concerns with the administration’s approach and corresponding costs.”
Tariffs are essentially taxes that the U.S. government imposes on goods and services from other countries and which are paid by companies in the U.S. that import these goods and services. Because of this increased cost, American companies are often forced to charge their customers more, lay off employees, or even close shop.
Since the beginning of 2018, President Trump has imposed and threatened tariffs against multiple countries, including Mexico, Canada, the E.U., and India – all with a range of impacts on San Antonio businesses. Ongoing trade disputes combined with failure to ratify the the U.S.-Mexico-Canada Agreement (USMCA) – a renegotiated version of the NAFTA trade agreement – could negatively impact San Antonio jobs. Retail, manufacturing, and agriculture sectors – prime industries for San Antonio workers – would be hit the hardest.
“USMCA is a lifeblood for our area,” said Rey Chavez, president and CEO of the San Antonio Manufacturers Association. He said the deal could impact the over 51,000 manufacturing jobs in the San Antonio area.
Sarah Sanchez, executive vice president of global development for the San Antonio Economic Development Foundation (SAEDF), said that over 63,000 jobs in the San Antonio area are directly supported by free trade. “The business community is very concerned about tariffs and how they impact their ability to sell their products overseas and increase prices for inputs,” she said.
There are some indications that 2018 tariffs enacted to protect U.S. producers of steel, aluminum, washing machines, and solar panels have benefited these producers, with some companies reporting they have added jobs and increased profits. However, it’s unclear whether these companies will be able to sustain profits, especially as some users of their products are experiencing negative consequences. Tariffs on steel, aluminum, and other raw materials and intermediate components have raised costs across the U.S. on everything from new construction to cars to farm equipment.
Some local businesses are already seeing this impact. Brantley Hightower, founder and lead architect at the San Antonio-based small business HiWorks, commented, “The jump in steel prices is forcing us to redesign projects to reduce the amount of steel used in the structure or eliminate it altogether.”
This is a trend that is being felt throughout the country. Economists estimate the recent steel tariffs could help create about 8,700 jobs in the U.S., but this comes at a drastic cost to steel users – each job created in the U.S. steel industry will effectively cost U.S. steel users about $650,000 because domestic steel is more expensive than imported steel.
China has responded to the latest threat of tariffs by suspending all purchases of agricultural imports from the U.S. – a blow potentially worth $9.2 billion to American farmers. Before this move, China was the largest importer of U.S. soybeans and a major importer of U.S. cotton and leather.
China has also threatened tariffs on an additional $75 billion in U.S. goods, including cars and crude oil. Some trade experts have speculated that China could retaliate further by reducing their exports of “rare earth” minerals – metals like scandium and yttrium – that are essential to the operation of several high-tech and defense products needed by San Antonio’s military and tech sectors.
Over 600 American businesses and trade associations, including Costco, Target, and Walmart, have urged President Trump to resolve the trade disputes, saying, “…additional tariffs will have a significant, negative and long-term impact on American businesses, farmers, families and the U.S. economy.” Closer to home, Sanchez urged San Antonians to call their representatives to “express support for free trade and USMCA.”