Chapter 1: What is the main topic discussed in this episode?
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Great certainty has been brought back to the economy of the United States and actually the economy of the world.
Has it, though, really?
Chapter 2: What impact does the Supreme Court ruling have on tariffs?
From American public media, this is Marketplace. In Los Angeles, I'm Kyle Risdahl. It is Friday today, the 20th of February. Good as always to have you along, everybody. Six to three was the tally in the Supreme Court of the United States today, as you have no doubt heard, striking down President Trump's tariff palooza of April last.
The International Emergency Economic Powers Act was the statute in question, but it is important to understand here that that tariff-free we are not, which is among the things I'm going to talk about with Martha Gimbel right now. She's the executive director of the Budget Lab at Yale. Martha, it's good to have you back on the program.
Thank you for having me.
All right. So let us test my hypothesis or the president's hypothesis, I suppose. Has certainty been restored?
I certainly feel less certain about tariffs than I felt this morning. Just to give you an idea of what my team who looks at this has been up to today, going into this morning, tariffs were almost 17%. Once the Supreme Court ruled, they went down to 9%. That was at 10 a.m. And then the president gave his press conference today. Yeah, exactly.
And then the president gave a press conference where he said that he was imposing 10% tariffs under a different legal authority, but that would be temporary, but then they would replace it with other things that were to come. And then that should take it back up to around 15%.
So there's been a lot of Sturm und Drang today, but it looks like we're sort of back where we are, but we're still figuring it out.
So let's recap briefly, right? IEPA tariffs are gone, but there are, and this is the nomenclature, and I apologize to listeners, but there are Section 232 tariffs, 301 tariffs, now 122 tariffs from various trade adjustment acts of years gone by. Now what happens? Let's say we stay at 15%. Macroeconomically, what do you suppose happens?
So, you know, we would expect the impacts to be similar to what we've been talking about since we started with this whole Mishigas, right? That you're going to see upward pressure on prices, you know, that it's going to be about $1,600 for an average household. You're going to see slower economic growth, a slight rise in the unemployment rate.
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Chapter 3: How do businesses adapt to avoid tariffs on Chinese goods?
a little bit cautious about how things are going to go and making any plans until we have the details necessary to do so.
Wall Street today. I don't want to say traders didn't really care about the tariff ruling, but they kind of didn't. We'll have the details when we do the numbers. Global trade is a complicated beast indeed, one that the president, as we are all only too well aware, takes a special interest in.
And on that topic, we learned yesterday the trade deficit barely budged despite President Trump's now mostly ruled illegal tariffs. Remember, his theory was and is that higher import taxes would get companies to make things here and get consumers to buy those things that were made here. What the tariffs have done, in point of fact, is mostly wean American consumers off Chinese goods.
Imports from that country are down about 30 percent. Or are they? Marketplace's Kristen Schwab explains transshipping.
In the most basic sense, transshipping is like commercial air travel, says Pavan Joshi, chief strategy officer at the supply chain platform E2Open.
If we have a direct flight, we'll take that. But if we don't have a direct flight...
Or if we want to save some money, we connect through an airport. This practice of transshipping, goods stopping for a layover before they come to the U.S., is almost as old as global trade itself. But Ibahi Ioha, a professor of business administration at Harvard, says there's been an uptick in transshipping with tariffs.
That creates an incentive to pretend that goods made in China were really made somewhere else. Pretending is very much illegal, but companies get away with it because customs fraud cases are complex to prove. Ioha says there's also a legal way to use transshipping to avoid tariffs.
I might import a finished good from a different country, bundle it with something else that I'm producing, and then sell them together. A manufacturer might ship components from China and assemble them in Vietnam before importing the product to the U.S.
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Chapter 4: What are the potential economic outcomes of maintaining tariffs?
Gorgeous service.
There you go. Let's see. What time is it? So if you go by this afternoon for a beer or whatever, what's the vibe going to be? What are people going to be saying?
Oh, boy, that's a good question. Probably not much. It's like, OK, now what is what we've been saying all along, you know, from I mean, I go all the way back to when President Carter put the sanctions on Russia and the embargoes and And things like that. And I remember my dad complaining.
And, you know, as farmers, we're used to having our commodities be the middle of these trade wars because that's what the other countries want and need, quite frankly. So it's just really evolving the whole world trade and where especially soybeans sit because of the emergence of South America and what they can do.
Well, April, we'll talk to you, I guess, probably a couple of months. We'll see how things shake out. All right? Now go shovel your driveway or whatever you got to do.
Well, hopefully better, right?
All right. Talk to you soon.
All right.
Coming up. So far, I've gotten nothing. It's been crickets.
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Chapter 5: What are the implications of the tariff refunds for businesses?
He's got a track record. He's been making speeches and he's been on the board of governors.
Yeah. So here's here's five words or fewer. This won't be easy. And I think he's somebody who's talked a lot about reforming the Federal Reserve over the course of his career. Yes, at the Fed, but outside of it, I think he's probably gunning to do that when he gets in. But as you've talked about, as we've talked about, a Fed chair is one member of this larger committee. And I think that.
What's going to be the steepest learning curve for him going into that job?
Should he be confirmed is learning how to manage that committee and you know Who knows who he'll be able to pull onto his side to take them where he thinks they should go But I think everyone needs a reminder despite what the president says the Fed chair has all of this power It really is a managerial position and he needs to get folks on board with him and his ideas.
I
The always grammatically correct David Gurra, five words or fewer. Rachel Siegel, the last question goes to you. It's about the growth in this economy. Come on, man. I've known you for too long. Gross domestic product came out today, fourth quarter of last year, slowed drastically 1.4%. The shutdown took some of that off. But for the year, 2.2%. Not so bad given the chaos, right, Rachel?
You got like a half a minute.
OK, a little under expectations, but not terrible. And I think it's a reflection that all of these things that we're talking about matter, right? They add up. The tariffs add up. The shutdowns add up. Consumer spending adds up. And eventually we get a snapshot of what that all looks like.
And that helps tell us, you know, how the economy is faring with all the uncertainty that it's shouldering at the same time.
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Chapter 6: How are consumers affected by changes in tariffs?
So we will probably have our eye on those.
Double basses. Who knew? Wesley Rule. He and his wife Lauren. Knoxville Fine Violins is their store. Knoxville, Tennessee. This final note on the way out today, in which I hate to rain on today's illegal tariff parade, but since April mentioned it, and Wesley Rule did too, Martha Gimbel talked about it, I need to make sure you all don't miss this.
Prices, the overall price level, just because some tariffs went away, they're not going to go down a whole lot. And if they do, it's going to take a long, long time. That is just the way price levels work. They go up, they don't really go down. Our theme music was composed by B.J. Liederman. Marketplace's executive producer is Nancy Fargali. Joanne Griffith is the chief content officer.
Neil Scarborough is the vice president and general manager. I'm Kyle Risdell. Have yourselves a great weekend, everybody. We will see you back here on Monday, all right? This is APM.