(gentle music)
- Lighting, 15% increases.
Flooring, 10 to 25% if
the tariffs go forward.
This glass door is going up 10%.
- [Jason] George Abi
Habib's remodeling business
in San Diego is bracing
for the new abnormal.
25% tariffs being composed by the US
on 200 billion dollars in Chinese goods,
up from 10% last year.
Many materials used in home building
and remodeling are included.
- We build a lot of things like granite.
Those are gonna be sourced from China.
- [Jason] Small business
owners like Abi Habib
are worried that potential clients,
due to the tariffs on Chinese goods
will balk at soon-to-come
higher price quotes.
- It takes a long time for customers
to adjust to the new
reality of what things cost.
And in the meantime, we
have very large overhead
and about 50 staff that we need
to ensure have continual work.
- [Jason] His concerns are two-fold,
that many homeowners will
put off major improvements,
like getting a new kitchen,
and that, to attract potential clients,
he'll need to reduce his profit margin.
- You're in a position
where you could be losing
20 or 30% of your net profits
at the end of the year.
- You're eating some of
the cost, in other words.
- Definitely, if we can't pass
on all of it to the customer,
we end up eating it ourselves.
The alternatives for these
are much, much more expensive
when they're made in the States.
- [Jason] Abi Habib
says his clients prefer
higher-end products,
manufactured in America.
- Supplier says.
- [Jason] But even from these suppliers,
he's receiving ominous emails.
- They thank us for our business,
and they say that our industry
is under unprecedented
pressure due to tariffs,
and we've waited as long as we can
for possible price increases
due to these tariffs.
So this is an American cabinet line,
but this built on engineered wood,
part of the Chinese supply chain.
- [Jason] To give us a better idea
of what the new China tariffs
will mean for customers,
Abi Habib takes us to a work site.
- This is the 75000 dollar kitchen.
So yeah, as you can see,
this was a complete gut job.
- [Jason] Abi Habib
says because of the new
increased tariffs, he'll need to charge
for a renovation like this
one, 6000 dollars more
than he did a year ago.
- 6000 dollars on a 75000 dollar kitchen
is a very big increase.
- Is it a deal-breaker?
- It is definitely a deal-breaker.
- One of the impacts of the tariff
is not simply the price increase,
but also the delay in investment,
and the delay in investment
will come from consumers,
for example, delaying a home remodel.
- [Jason] Renee Bowen, a professor
of international trade policy
at the University of California San Diego,
says the tariffs could be
damaging to the US economy.
- It's a big deal, it's going
to affect US consumers a lot.
- Now you've been
studying tariffs and trade
for decades now, right?
- Correct.
- Have you seen anything quite like this?
- Never seen anything like this.
I've been having to rewrite
my classes essentially.
The United States would like to think
that China will be more
hurt by the US tariffs
than the US will be hurt
by the Chinese tariffs,
but that's to be determined.
- I think it's gonna
turn out extremely well.
We're in a very strong position.
- [Jason] The Trump administration
is also taking steps to
impose fresh 25% tariffs
on nearly 300 billion dollars
in Chinese goods that
aren't currently taxed.
- I think this is a risk
we should and can take
without damaging our economy
in any appreciable way.
- [Jason] The Trump administration
hopes that ultimately a deal with China
will be reached that
benefits US producers.
- There may be more made in America
as a result of the tariffs.
Consumers now are forced to purchase
from domestic producers, who
have higher prices naturally,
while producers are
enjoying this welfare gain,
consumers are losing.
- [Jason] This tile and
flooring store in San Diego
primarily serves customers
who've got tighter budgets.
- This is our wood-looking
luxury vinyl plank,
which is one of the most
popular items nowadays.
- [Jason] And where's it from?
- This product is actually
a Chinese product.
Even with the tariff
increases on these products
and anything out of China,
they're still gonna be
less expensive than an
American-made product.
- Even with the 25% tariffs?
- That's correct.
- The trade war is bad news for everyone,
but particularly the middle class
and lower-income Americans.
- Lower-income Americans.
- Lower-income Americans benefit
from the very cheap products
that are coming from China.
- So let's head down
over to the warehouse.
- [Jason] Veronica Terriquez says
about 90% of the products her
company sells come from China.
- So if you take a look here, you will see
made in China here, made in China.
- [Jason] Terriquez says she's nervous.
- I, as a manager, have to worry about,
for instance, my staff's
jobs, our company.
- [Jason] When the first round of tariffs
on Chinese goods hit last fall,
she says sales dropped off
pretty much immediately.
- We're talking about 33%.
- So a third less sales.
- Exactly right.
- Well, and you're confident
that it's because of the tariffs.
- Uh, yes, the store was
just very, very busy,
and it came to a screeching halt.
- As soon as the tariffs hit.
- As soon as the tariffs hit.
- [Jason] And the new increase round
is expected to hit soon.
- Goods that are already in transit
will not be subject to the tariffs.
- [Jason] But goods being
loaded on ships in China
now will have to pay the
tariff when they arrive.
- So, we will see a small delay
in the impact of these
tariffs, about two weeks.
- But the tariffs are
literally on their way.
- Correct, the tariffs are
literally on their way.
(gentle piano music)
