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Image: Phillip Lim

The Trump administration has raised tariffs again on $200 billion worth of Chinese goods, increasing the existing 10 percent rate to a whopping 25 percent. The latest development – which will directly impact thousands of goods, from consumer products to auto parts, chemicals, and telecom equipment – sees Donald Trump make good on his threat to escalate the bi-national trade war further after he accused Chinese negotiators of backtracking on previous concessions they had made.

Some of the most widely-purchased products that Americans buy from China, including clothes, shoes, toys, and electronics such as the iPhone, had not previously been hit with tariffs, the additional $325 billion in tariffs that went into effect on Friday bring those very items into the crosshairs of the U.S.’s fight against China and its abuse of domestic intellectual property.

Just as with the preceding rounds, the impending tariffs are intended to punish China for deploying “strong-arm tactics in its drive to become a global technology power,” as noted by the Associated Press. “These include pressuring American companies to share technology to gain access to the Chinese market, forcing U.S. firms to license their technology in China on unfavorable terms and even hacking into U.S. companies’ computers to steal trade secrets.”

According to the BBC, “Economists have said a 25 percent tariff will be much harder for businesses to absorb than 10 percent, which means they are more likely to pass on some of the cost to consumers.” As such, “Investors will want details on how merchants plan to absorb 25 percent tariffs on more than $40 billion worth of goods that are imported from China and directly purchased by U.S. consumers,” the WSJ reports, particularly since retailers “have only a few options: they can absorb the added costs themselves; spread them across their vendors; or pass them on to customers.”

The publication, citing industry analysts, notes that there is a chance that “retailers [will] raise prices in an effort to protect their margins.” Although consumer spending is relatively steady due to a healthy labor market and rising wages, “companies run the risk of stifling revenue if customers pull back on spending.”

Prior to Friday’s newly-implemented tariffs, the Trump administration has tried to shield the most common consumer-facing goods from the growing war, although Trump has been threatening the addition of products, such as handbags, to the list since summer 2018.

More than merely standing to hurt consumers’ wallets, the tariffs are expected to result in “serious damage” to multinational firms that have boosted the value of their activities by relying on supply chains in China, industry lobbying groups have argued. Many U.S.-based companies have opted to “focus on marketing, design, and innovation, while outsourcing stages of the physical production process,” according to the Peterson Institute for International Economics. As such, these companies – including fashion industry entities, such as Phillip Lim, Alexander Wang, Calvin Klein, Coach, and Rag & Bone, among others – depend on imports to stay globally competitive.

On Monday, China said it will slap tariffs on more than 5,000 U.S. products in retaliation.