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From car repairs to Christmas gifts, here’s how a trade war with China hits Charlotte

How the Trump tariff war is already affecting Charlotte’s economy

Tariff battle creates winners and losers in the Charlotte area.
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Tariff battle creates winners and losers in the Charlotte area.

Homes could be more expensive to build. Christmas decorations might cost more this year. And you might face a larger bill to get your car fixed.

Those are among the ways Charlotte-area business owners say consumers could be impacted by an escalating trade dispute between the U.S. and China.

That dispute intensified recently when President Donald Trump raised tariffs on $200 billion of Chinese imports to as much as 25%. In response, China announced plans to increase tariffs to as high as 25% on about $60 billion worth of U.S. goods starting in June.

That same day, the Trump administration announced plans to place 25% tariffs on an additional approximately $300 billion worth of Chinese imports.

The maneuvers fuel what has been a roughly yearlong feud between the two countries, whose trade war has rippled across industries in Charlotte and elsewhere.

Here is a look at how Charlotte could be impacted by the growing conflict.

Home construction

The higher tariffs on Chinese imports includes many materials used in construction, such as slate, marble, granite and sandstone.

That could mean higher costs to build homes, said Bart Hopper, president of Hopper Communities, a Charlotte-based builder of townhomes.

“Those are critical ingredients to a house,” said Hopper. While he couldn’t estimate how much costs could rise, he said, “I know one thing. It won’t go down.”

Hopper said the question is whether the market would be able to absorb the higher costs. The homes he builds sell for $350,000 to $500,00 in places such as South End and Wesley Heights, and for $500,000 or more in Myers Park.

“Home prices are already pretty high,” he said.

Home affordability nationwide will be hurt by the new tariffs on Chinese goods, the National Association of Home Builders said.

The higher tariffs affect $10 billion of materials used by the home building industry, according to the trade group.

Christmas decorations

At Paper Skyscraper, a gift shop on East Boulevard, employee Ron Wootten is bracing for higher prices on some Christmas items the store plans to sell this winter.

Wootten, who buys the products the shop sells, said Chinese items that could be affected by the latest tariffs include ornaments and home decor, such as miniature Christmas trees. The shop has already received some Christmas items from China that weren’t impacted by the tariffs, but others that the store will receive this year could be affected, Wootten said.

“It’s just going to make the China products less attractive than they were,” he said.

The federal government’s list of items impacted by the tariffs includes lighting sets used for Christmas trees.

In a column, the National Retail Federation said that the new U.S. tariffs could force American companies to cut costs elsewhere in their business to stay afloat. Tariffs can also lead to lower wages, fewer employees and higher prices for consumers, the group said.

The ongoing trade friction between the U.S. and China has led some of Paper Skyscraper’s vendors who supply products to purchase items from other countries, such as Vietnam and Thailand that are not subject to the higher tariffs, Wootten said.

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Paper Skyscraper owners Sybil Godwin and her husband, Bill Godwin. Tariffs are forcing some of Paper Skyscraper’s vendors to shift toward U.S. goods, said Bill Godwin. Jeff Siner jsiner@charlotteobserver.com

But that has led Paper Skyscraper to experience delays for some products, such as picnic baskets and insulated wine carriers, as vendors try to find new sources, he said.

The tariffs are also forcing some of Paper Skyscraper’s vendors to shift toward U.S. goods, said Bill Godwin, co-owner of the store.

That switch is good for product makers in the Carolinas and elsewhere in the U.S., he said, because it could mean more locally made items carried by the shop.

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The soap jasmine & honey made in Raleigh is among the items sold at Paper Skyscraper. Jeff Siner jsiner@charlotteobserver.com

Car parts

The automobile industry is also bracing for higher tariffs on parts from China. The list of affected items ranges from gaskets and washers to tires and bumpers.

The tariffs could cause small repair shops around Charlotte to increase their prices, perhaps as much as 12%, Charlotte automobile dealer Felix Sabates said. Those businesses tend to use a lot of parts made in China, he said.

“It’s gonna hurt the little guys,” Sabates said.

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U.S. tariffs on Chinese products could cause small repair shops around Charlotte to increase their prices, perhaps as much as 12%, Charlotte automobile dealer Felix Sabates says. Those businesses tend to use a lot of parts made in China, he says. Jeff Siner jsiner@charlotteobserver.com

Sabates, who sells Fords, Mercedes-Benz and other vehicles that don’t use Chinese parts, said his business won’t be affected. But Charlotte has hundreds of tire and repair shops that will be, he said.

“The small guys, the independent shops, those guys will get hammered,” Sabates said. He predicted that some shops could try to raise prices by 25 percent and blame the tariffs for the increase.

“You’re going have a lot of illegitimate shops that are going to take advantage of this,” he said.

NC farmers

North Carolina farmers are expected to feel the effects of the tariff increases that China said it plans to impose on the roughly $60 billion of U.S. goods beginning June 1.

In a recent letter to Trump, the president of the American Farm Bureau Federation said the trade war is hurting U.S. farmers who had been benefiting from Chinese demand for their products. Last year, U.S. agricultural exports to China declined $10 billion, a roughly 50% loss, President Zippy Duvall wrote.

“This is a drastic reversal for what had been a growing market,” he wrote.

North Carolina farmers were already hurting from higher retaliatory Chinese tariffs imposed last year, said Larry Wooten, president of the N.C. Farm Bureau. Those tariffs affected U.S. food and agricultural products, including tobacco and soybeans.

In 2017, the state exported $162 million in tobacco to China, a figure that fell to $4 million last year — a 98% decline — in part from tariffs and weather, Wooten said. Amid the falling Chinese demand, North Carolina farmers expect to plant the smallest tobacco crop since before World War II, he said.

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Union County farmer Drew Medlin, shown here in 2018, said the ongoing U.S. trade war with China has depressed U.S. soybean prices, hurting his business. John D. Simmons jsimmons@charlotteobserver.com

In the Charlotte region, farmer Drew Medlin is just hoping for an end to the trade dispute.

The slump in Chinese demand for U.S. soybeans has been a drag on soybean prices, said Medlin, who grows the crop on his Union County farm. Last year, soybeans were selling for about $9.50 a bushel. Now, the price is $8, he said.

Medlin said he continues to look for ways to cut costs at the farm and is holding off buying equipment or expanding. He said he is aware of at least three soybean farmers in Union County who have retired or quit recently because of the falling prices.

“The margins are so tight and there’s so much risk, they just decided to cash out,” he said.

“This uncertainty, I would say, is what hurts us the most right now,” he said. “This has been going on now for close to a year, and we’re just ready for it to end.”

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