As trade tensions between the U.S. and China escalate, CBS News MoneyWatch correspondent Kelly O'Grady breaks down how it could impact the cost of living for Americans.

Donald Trump has signed an order to impose tariffs imports into the U.S. from countries including China, Mexico and Canada.

Global Tariffs

The United States has implemented new tariffs on imported wood products, including a 10% tariff on softwood lumber and a 25% levy on upholstered wooden furniture. These measures are expected to affect the cost of home building and furnishing, particularly for those relying on more affordable imports from countries such as China and India. While some companies may absorb part of the increased costs, consumers could still see higher prices.

The trade tensions escalated after China imposed export restrictions on rare earth minerals, prompting the US president to threaten additional tariffs of up to 130% on certain goods. This has led to market volatility and concerns about a prolonged trade conflict reminiscent of previous years. The situation underscores the significant impact of US-China relations on global markets and the American cost of living.

How the U.S.-China trade war could impact cost of living for Americans

Great tensions are ramping up as President Trump's latest round of tariffs are now in effect. Now, these duties are targeting wood products. Imported softwood lumber now faces a 10% tariff, while upholstered wooden furniture was slapped with a levy of 25%. CBS News Money Watch correspondent Kelly O'Grady joins us now with the latest on all of this. Kelly, good morning, great to see you. I'm always surprised by how expensive furniture is, so I keep that in mind as I ask you, how will these tariffs impact our viewers? Well, as you would suspect, right, it could mean higher tariffs. Now, the lumber one, if you have home builders, right, a lot of new constructions, building homes, we don't have enough supply in this country of first, you know, sort of those starter homes to begin with. And then if you're thinking about furnishing, especially for folks that are looking for some of those cheaper options from India and China, this tariff added could mean higher prices. What I will note, though, is these tariff rates, they aren't too high, and we have seen a lot of companies in other industries absorb some of that so that you and I don't get a huge increase. Okay, so we'll keep an eye on that. I also want to ask you about China specifically, because as we've been looking at, you know, a peace agreement, the big headline on Friday was this message that the president sent out about an additional 100% tariff, and then he seemed to kind of walk that back. Markets didn't seem encouraged by what they saw. What's happening there? So I want to sort of first sort of lay out, it was actually China that reignited this trade war because they initially put export restrictions on rare earth minerals, and that's really important for everything from your phone to your car to AI chips. And so the president responded with that 100% threat. The reason why you saw markets react so viscerally is one, 130% tariff, because that's on top of the existing 30%. That's going to be really hard for businesses to eat. So that could mean higher prices for you and me. That could see the feds say, wait, we need to wait and see on these interest rate cuts. The other thing is I think you have a little bit of PTSD because investors are going, wait, is it 2018 again? Are we going to see a two year plus trade war like we saw during the first Trump administration with China? Just sort of this back and forth tit for tat. Now markets, they were back up yesterday. They sort of seemed a little bit of calmed by the fact that the president said, don't worry about China, but it really does underscore that relationship is so critical. Oh, to be on Wall Street these days. I'm sure it's smooth sailing the whole time. Kelly, great to have you here on this. Thank you.

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How the U.S.-China trade war could impact cost of living for Americans

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