Combine the tomato sauce and water in a small saucepan over medium heat. Stir to combine.
Add the chili powder, cumin, garlic powder, onion powder, smoked paprika, sugar, and white vinegar. Stir well.
Bring to a gentle simmer and cook for 5 minutes, stirring occasionally, until the sauce deepens in color and the spices bloom.
Taste and season with salt and black pepper as needed.
Remove from heat. Serve warm or let cool completely before transferring to a jar.
Notes
The sauce thickens slightly as it cools — add a splash of water to loosen if needed. For a spicier version, add a pinch of cayenne or a few dashes of hot sauce. Store in an airtight jar in the fridge for up to 2 weeks.