Michael Minsberg is looking at his business prospects as the Trump administration ups the ante in the trade war with China, and it doesn’t look pretty.

“We got hammered in round one, and we’re about to get hammered again,” said Minsberg, president of Creative Lighting in St. Paul.

Minsberg has spent the past year working with vendors and some of his biggest customers to share the cost of what he calls round one of tariffs on Chinese imports. This time, with the tariff rising from 10% to 25%, customers will feel it.

“We’re going to have to pass everything on because the numbers are so shockingly big,” said Minsberg, whose grandparents started the company 93 years ago. “We can’t absorb it. Nobody can.”

Minnesotans face price hikes across a wide spectrum of typical purchases, such as clothing, furniture, electronics and medical devices, within a month or two without a truce in President Donald Trump’s trade war with China. State business leaders and economists warn that risks to consumers’ pocketbooks are higher than they have been since the president placed his first protective tariffs on imported steel and aluminum in March 2018.

Americans have already seen prices creep up more than inflation on appliances, furniture, bedding, flooring and auto parts covered by the existing tariffs on $200 billion in Chinese imports, according to a report by Goldman Sachs. Fast, widespread and more noticeable jumps will come if Trump moves ahead with plans to place a tax on virtually every Chinese product or part imported to the U.S., University of Minnesota trade specialist Tim Kehoe said.

“China may suffer more than us because it will sell less in the U.S.,” Kehoe explained. “But they don’t pay the tariffs. We do. Americans will pay more, especially for goods like they sell at Target and Best Buy.”

Christianna Nelson and John Keenan, of Mahtomedi, were married just two weeks ago and don’t quite know what to think.

“Personally I have no idea what’s going on or how it’ll affect us,” Nelson said. “If my steak goes up to $20 instead of $10 or if gas goes up to $3.50 [a gallon] we’ll notice it.”

Keenan, who stopped by the Fleet Farm in Oakdale with his wife on Thursday to get a fishing license, said the recession of 2008 hit hard. He’s on stronger financial footing now, and hopes the couple can weather any forthcoming price hikes.

“I’m doing better than I was two to four years ago,” he said. “As for tariffs, any kind of protectionism isn’t a good thing. You’re picking winners and losers, if you want a free market.”

The U.S. market is getting less free. On May 10, the U.S. raised tariffs on the current $200 billion worth of Chinese imports to 25% from 10%. On Monday, the Chinese retaliated with tariffs on $60 billion worth of U.S. imports, including agricultural products critical to the Minnesota economy. The White House responded with plans to tax another $325 billion in Chinese imports, although it did not specify a date or a rate.

These moves sharply raised financial stakes for consumers and small businesses that lack the money or storage to build up inventories ahead of cost increases. Minnesota imported roughly $12.4 billion in Chinese parts and products in 2018, more than from any other country.

Trump’s stance gets strong backing from Minnesota’s three Republicans in Congress, who see an escalating trade war as necessary to combat China’s unfair trade practices and intellectual property theft too long tolerated by previous administrations. “For years, China has not been held accountable for perpetrating unfair trade practices,” U.S. Rep. Tom Emmer told the Star Tribune last week.

But members of the Minnesota Business Partnership, which represents CEOs from some of the state’s biggest, best-capitalized corporations, believe the financial consequences of the president’s latest moves could be dire for their companies, as well as a “broad swathe of people and businesses,” said executive director Charlie Weaver.

“We share the same goal as the president — to level the playing field with China for Americans, but these tactics are causing extensive collateral damage to Minnesota companies,” Weaver said. “This is not a New York real estate deal like the president is used to where you bluster and bluff.”

For companies such as snowmobile- and all-terrain vehicle-maker Polaris Industries, a crash would be ruinous. The company uses some Chinese parts in its products. Company officials have said that the tariffs now being applied and planned could take away about a third of Polaris Industries’ net income.

In annual reports Target Corp. carries a standard warning that may soon come to pass:

“A large portion of our merchandise is sourced, directly or indirectly, from outside the U.S., with China as our single largest source, so any major changes in tax or trade policy, such as the imposition of additional tariffs or duties on imported products, could require us to take certain actions, such as raising prices on products we sell.”

Business leaders and economists worry that both sides are dug in so deeply with the latest tit-for-tat tariffs that their ability to reach a compromise while saving face politically is uncertain. If that can’t happen, Weaver, like Kehoe, sees widespread consumer price hikes within months.

In recent days, the economic damage of the trade war has extended to Minnesotans with stock market investments. The Dow Jones industrial average sank more than 600 points Monday on news that China had retaliated to the increase in U.S. tariffs. The Dow Jones loss was recouped by week’s end. But market swings of several hundred points are likely to continue if the trade war cannot be settled.

Those who watch trade policy closely disagree on the long-term risk to the markets and the economy.

University of Minnesota trade specialist Robert Kudrle believes taxing all Chinese imports to the U.S. invites retaliation and uncertainty that could resonate through the world economy.

“It’s uncharted territory,” Kudrle said. “The president was right to make trade with China an issue. But he was wrong in every way he went about it.”

Jim Paulsen, chief investment strategist of the Leuthold Group, said the trade war may signal a new era of conflict between countries that can no longer afford to fight militarily.

“We may see more of this in future years because going to a military option is off the table,” Paulsen said. Paulsen sees little risk to the underlying economy or the markets because overall growth is strong, savings are up, debt is down and there is no stress on banks. A trade war raises costs to everyone, Paulsen said. But the actual costs are negligible compared to the cost of misperceptions.

“The risk of this is not fundamental economics,” he said. “The risk is if it creates panic. Let’s say the Dow drops 2,500 points and business freezes up. If you stop investing, the world economy free falls.”