The economic reverberations of war
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What is the main topic discussed in this episode?
The economic reverberations of war. From Marketplace, I'm Sabri Beneshour, in for David Brancaccio. The war with Iran continues to disrupt oil production and shipping channels in the Middle East. It's also raising concerns about global inflation. International standard Brent crude is up 6% this morning to more than $82 a barrel. A week ago, it was around $70. Airlines and travelers are still struggling with closed air routes and airports. 11,000 flights have been canceled, affecting one and a half million passengers. Marketplace's Nova Sappho has the latest.
How is the war with Iran affecting global oil prices?
Crude oil prices are rising over concerns that a key waterway for tankers, the Strait of Hormuz, located along Iran's south, will remain effectively off-limits. About 150 ships are stranded. Insurers have canceled war risk coverage for tankers. Shipping rates are up, and container ships, not just tankers, are caught in the backup. Consumers may already be feeling the effects. Average gas prices in the U.S. have risen 10 cents in a day, according to AAA. Rising energy prices could hurt airlines too, which are already struggling with disruptions along Mideast routes. Overall, analysts say the inflationary impact from the military conflict may be temporary and minimal if it is over quickly. But a prolonged war, a month or longer, could cause energy prices to skyrocket.
I'm Novosafo for Marketplace. A week and a half after the Supreme Court struck down many of President Trump's tariffs, the question of refunds for all the businesses that paid them is still hanging in the air. The Trump administration wanted to slow down the refund process. A federal court yesterday said no. On top of that, businesses are facing a whole new round of tariffs to disentangle. So we reconnected with Rachel Rosner to see how her business is doing.
What impact does the conflict have on airline operations?
She's owner and founder of Eldon Street Tea Shop in Reston, Virginia. Rachel, welcome back. Hi, thanks for having me back. Is it not kind of a math problem trying to navigate like which tariffs went away and then are replaced by which other tariffs at this point so far? We try to keep up with the percentage. We do have a couple of industry wholesale companies and vendors that are closely watching every time these tariffs change, which is helpful. But also they are, you know, kind of using it as an advantage as well, saying, oh, you better get your prices locked in before it changes. And that's not really great either. It creates a scarcity. So it's just kind of more of the same stress, more of the same fear and more of the same problem.
A lot of companies are suing to get refunds. Are you? with legal fees and the time and the commitment to it, we have to weigh out those pros and cons. And we are still considering whether that's an option for us or not. I assume the government's not going to just automatically refund you without you having to work for it. No, we're definitely going to have to fight for it if we do. And as the president said, it could take several months to years to get that money back. And I think a lot of consumers also believe that they have rights to that money. But as a small business owner, having to pay for these tariffs up front with money that we don't necessarily have and have had to take loans out for so that consumers can continue to purchase those products, it really constrains the ability to move forward for small businesses to get that money that they need.
Do you think that prices would come down now or in the future? Or are things too kind of crazy to know? I don't think that prices are going to come down anytime soon. Because until we recuperate the cost of what we paid with the tariffs on the products that we purchased or didn't purchase, some businesses had to leave their stock at the port. Until we recoup those costs, then we can't bring down our prices. And not only that, just the general price of everything has gone up. And unfortunately, this has a trickle-down effect to my business. And I do think that if we push harder, that we would definitely lose customers if we go any higher.
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