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puts us at the 10th of August. And in between now and then, American businesses and consumers have to figure out how they are going to handle the temporary and partial easing of the near-total trade embargo. between the United States and China that was announced this morning. That is thing number one of interest. Thing number two...
is what, if anything, today's news is going to mean, big picture, for the damage already done. That's what we've gotten Adam Posen on the phone to talk about. He's the president of the Peterson Institute. for International Economics. Adam, thanks for coming on. Good to be back with you, Kai. So, you woke up this morning, you saw the news, what did you think? A few things. First, we went from being in a failed economic policy to a D-plus or maybe C-minus economic policy, so that's progress.
Second, that we are still worse off than before Trump started the trade war with China. Tariffs are still going to be high. There's still going to be shortages temporarily. There's still going to be recessionary effects and higher inflation probably. But it's at least not a total embargo, which as Secretary Besant said, well, it made no sense.
And third, you know, the question is always, what was this all for? And the reduction in tariffs doesn't seem to achieve anything in conditioning it on changes in Chinese behavior. The reason we had you on, I don't know what, like a week, 10 days ago, was to talk about what the White House and Secretary Besant mean when they say rebalancing global trade and the global economy. Do you think?
Certainly, 145% tariffs and effective trade embargo wasn't going to do it. Do you think this gets us closer now, these levels of tariffs? I guess it gets us from completely unbalanced to something a little more reasonable, but no, it doesn't. I mean, they're continuing. To try to address, as I said when I spoke, a macro problem of U.S. not saving enough and China not spending enough by putting on tariffs and the size of the tariffs you have to put on to move that is totally destructive.
So it's not going to help. It's also strengthening U.S. currency and growth, which is a perfectly good thing, but that isn't going to help us reduce imports either. Is there a possibility that what happens if we settle now at 30%-ish tariffs on Chinese imports, which to be clear is still...
far higher than they were on the 20th of January. Is it possible that this manifests merely, and I'm using that in air quotes, in higher prices and does not go so far as to affect rising unemployment and a greater economic slowdown. It is possible. It is more likely that what we get is a slowdown short of a recession, so weaker growth and a slight rise in unemployment, but nothing disastrous. The point is that
Ultimately, if you want to reduce dependence on the rest of the world or particularly on China Kai, you have to prepare ahead. You have to figure out alternative sources. You have to stockpile. You have to... create domestic production of things that currently are incredibly expensive or impossible to get outside of China. And we haven't done any of that. We didn't do that under Biden. We haven't done that under Trump.
So this is still going to be a hit to real incomes. It's still going to leave a lot of small businesses and suppliers to big businesses without things. It's still going to increase prices. It's just not going to be as bad as it would have been going crazy. One more thing, Adam, and then I'll let you go. And that is the observation that even as the United States and China somewhat ameliorate the trade embargo that we had. Global trade goes on, and it goes on without us.
Absolutely. Colleges and the Peterson Institute have been working on this, as have many others, and China goes on with the rest of the world, Europe goes on with the rest of the world, the rest of the world goes on with the rest of the world. This is the one good thing that could come out of the UK US empty deal is a pathway to deepening trade with our national security allies like UK, Canada, Japan, Australia, Korea. If the Trump administration really did that,
That would be a way of getting on with globalization somewhat constructively, and that was something the Biden administration failed to do, how much they ever talked about for insuring. But then you have to look at it as a relationship, not extortion. Do you suppose then, sorry, just picking up on that last point, do you suppose we have two tiers of trading relationships? We have one tier with our strategic allies, and then there's everybody else and the people we don't like so much.
We could. That would be a reasonable second best, as long as you didn't label everything a national security excuse and mess up the economy, but that would be... a reasonable way. And again, the Biden people sort of talked about doing that with what they called IPEF or French Orient. They never actually carried through.
The Trump people haven't said they would do that, but if they did, again, that would be a more constructive way of rebalancing our security and our economics, which is actually worth doing. Adam Pozen at the Peterson Institute for International Economics. Adam, thanks a bunch. Talk to you soon. Thanks, Kai. Unless I am sorely mistaken, it is going to be the really happy music when we get there. But the market euphoria du jour does prompt the observation.
This was a relief rally because the self-inflicted economic pain is going to back off just a little bit. Details, numbers, you all know the drill. What's going to happen in the next 90 days, three short months, is kind of a natural experiment in behavioral economics. Because, as we have said a time or two, incentives do matter. Marketplace's Henry App has the consumer side of this tariff equation.
Here's the conundrum for consumers. Is it worth it to buy a lot of something now, assuming that it will be more expensive or harder to find in the near future? For Yao Jin, an associate professor of supply chain management at Miami University, that something is a certain kind of black vinegar.
The vinegar that I bought is ching kiang. It is a very traditional Chinese vinegar. It's imported. He uses it all the time. And Trump imposed tariffs on Chinese imports totaling 145%. So... I bought three gallons worth of these black minigres last week. Which, ironically, a week later, the tariffs got suspended. Yay! So maybe that purchase was a mistake, or maybe the price will go up again, and it'll have been worth it.
That uncertainty is not going away, says Joanne Hsu, who heads the University of Michigan's Consumer Sentiment Survey. I think that consumers are still going to feel like tariff policy is still volatile and they're not going to feel resolution. Because the latest tariff pause is supposed to last 90 days. And just a month ago, the last time the Trump administration put a 90-day pause on a different set of tariffs, Shoe's survey didn't show any increase in optimism. I think consumers...
really are continuing to wait for the other shoe to drop. Which could lead to a downturn in consumer spending. But so far, we haven't really seen that play out, says Ted Rossman at Bankrate. going out to Eid. A lot of retailers have posted surprisingly strong results lately. The big question has been will that last?
And will consumers who did stock up rethink those choices? Again, Yao Jin at Miami University. A lot of consumers might be thinking, maybe I should return some of the stuff that I hoarded. Because now I have another 90 days to remake the same decision. But he'll be holding on to his three gallons of black vinegar, he says, because it actually gets better as it ages.
So imagine for a you're an American company that imports some of the things Henry Epp was just telling us American consumers are thinking Maybe they're going to buy depending on what the next 90 days bring. That kind of uncertainty is nobody's recipe for a successful way to plan your business. Trying to figure out your cost of goods sold today versus what you thought that cost was going to be last week.
So we've done what a lot of businesses are doing today, I imagine, calling our customs brokers. Gretchen Blau is ours. She's at Logistics Plus in Erie, Pennsylvania. Well, so far we've had a lot of inquiries as to whether or not the tariffs are dropping on particular items. We've been seeing a lot of inquiries as to how fast things can be here. We've had people that are trying to stock up during this 90-day pause.
It's kind of hard to give anyone a definitive answer as to how it affects their products because the news reports are stating that the tariffs are dropping from 145% to 30%. However, that 145% encompasses two tariffs, the reciprocal tariff and the China-Hong Kong tariff. So we're not quite sure. how that's going to be distributed. There hasn't been an executive order posted, which means there's nothing in the Federal Register yet.
And last week there was an executive order issued regarding stacking tariffs, which means how all those tariffs line up and what applies to what articles. We're supposed to find that information out this Friday, and so that might affect a lot of what we're talking about with China here. So we have to wait and see. As far as the timeframe goes, some of these tariffs that have come out were issued. at the point of arrival, or...
There have been exclusions for items that were on the water. So we have to wait and see if there's going to be an exclusion issued for things that are on the water, meaning that the reduction won't come until a certain point or if everything has immediately dropped. So we're waiting for those details. I'd like to think it the light at the end of the tunnel We're not sure at all We're still dealing with all the other countries around the world.
those tariffs will shake out and It just depends on how things work out with other countries as well. Gretchen Blau. Erie, Pennsylvania. Coming up. These people are saying that they want to expose luxury's biggest secret. Caveat emptor on TikTok. But first, let's do the numbers. Yeah, here you go. Down Delostro's up $1,150. 794 and 4 tenths percent. 18,708. 184 points, 3 and 3 times. major currencies finished up So what are you supposed to do with all that gold?
or crashing. Many will have to ponder this as gold. Brent crude up 1.6%, probably because people are thinking lower tariffs, more trade, more fuel needed to make all of that stuff happen, right? Bond prices fell. Yield on the 10-year T-note up 4.47% on the 10-year. You're listening to Marketplace. The adage says, it isn't what you say, it's how you say it. And when you lead with power, poise, and performance, you're making an impact from the start.
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12 million customers managing their international money with Wise can't be wrong. Download the Wise app today or visit wise.com. Learn more by visiting wise.com slash US slash compare. T's and C's apply. This is Marketplace. I'm Kyle Rizdahl. Trade is, of course, the global economic lead story of late, but forget not the guts and gears of the American economy, by which I mean, in this instance,
The gigantic Republican tax package that various and sundry House committees are starting work on this week. It will extend parts of the 2017 Trump tax cuts and... Make trillions of dollars in cuts to other programs to get that done. Marketplace's Kimberly Adams set you up to follow the happenings this week in Watch. Lots of bills come up in Congress and go nowhere, but this GOP reconciliation bill is being specifically designed to pass without Democratic votes. But that takes a lot of steps.
Brendan Duke is with the Center on Budget and Policy Priorities. A few months ago, the House passed kind of their blueprint. Congress is in the process of deciding which specific policies are in and out. And the top priority in this bill... Tax cut. So in the reconciliation bill that they're talking about doing now, Trump has his goals of a large tax cut and extending the previous tax cuts from 2017. Jennifer Victor teaches political science at George Mason University.
And that costs a lot of money. And so the reconciliation bill has to figure out how they're going to sort of offset that. To the tune of $4 trillion, likely more. But in the last few days, we've started to hear just how Republicans want to do that. Max Genes is CEO of Policy Engine, a tech company whose software simulates the effect of economic policy. What came out on Friday night was I outlined that included extension of rate.
a standard deduction, alternative minimum tax, some of those really big pieces of the bill that came out in 2017. And we're getting more details on cuts to food assistance programs and Medicaid designed to offset the cost of those tax cuts. Bobby Kogan is with the Center for American Progress and says the Medicaid cuts in particular are already getting a lot of pushback. What we see is a bill that would kick over 8 million people off their health insurance.
by instituting the largest Medicaid cuts in all of history. But this is still legislation in progress, and lobbyists, advocacy groups, and voters will have a lot to say before a final version of the bill. In Washington, I'm Kimberly Adams for Marketplace. We do commodity prices on this program every now and then. Oil mostly. Gold sometimes. Soybeans almost never.
Until today, soybean futures on the Chicago Board of Trade today up a percent and three quarters on that news of a partial thaw in the trade embargo with the number one customer for American Farm Commodity. Now, with the caveat that 90 days does not a total reprieve make, Marketplace's Savannah Peters has more on what that part of American agriculture might like to see should a longer-term arrangement come to pass.
North Dakota soybean farmer Josh Gackle made some time for me from the tractor this morning. Driving through the field, yes, as we speak. Gackle is also chair of the American Soybean Association, and even though he's out planting in the wind in 90 degree heat, he's in a better mood than the last time we spoke, about six weeks ago.
We're making progress and getting the crop in the ground, so it feels good. That's because Gackle woke up to news that China is buying again. That's the biggest international market for U.S. soybeans. So, yeah, a lot to be done, but grateful that the two countries are talking. I mean, these farmers, they're the ultimate optimist.
Jim Sutter is CEO of the U.S. Soybean Export Council. He says this trade war has been tough on U.S. commodity farmers' nerves, but it has yet to make a serious impact on many of their bottom lines. since the steepest tariffs began at the tail end of the export season for U.S. soybeans and grains. The most important thing is that by the time we start to harvest our crop,
We need to have some sort of a deal in place with China. A deal that addresses the volatility producers have been dealing with, says agricultural economist Amy Hagerman at Oklahoma State University. You're looking for stability in that relationship. You're looking for favorable terms of trade. Hagerman says that means lower tariffs on U.S. goods over the long term and possibly a commitment by China to purchase more crops.
That's a top priority for farmer Josh Gackle in North Dakota. So the commitment from Chinese buyers that they will continue to look to the U.S. when it comes to making those purchases. rather than Brazil and other South American suppliers, who filled the gap during Trump's last trade war with China. Gackle is cautiously hopeful that by the time it goes to market, his crop will be worth the investment he's putting into it.
You know that 90 days would be in August. When the soybeans he's planting now are about ready to be harvested. I'm Savannah Peters for Marketplace. Whatever the long-term fate of the Sino-American trading relationship turns out to be, fact is that for the moment, damage has already been done. Case in point, data out of Beijing at the end of April showing both exports and manufacturing over there in general fell. It was the biggest drop since the pandemic.
And that slowdown's got some Chinese manufacturers trying something new, a more personal approach, if you will, using TikTok to sell directly to consumers overseas. Sideway Chant had the story in the MIT Technology Review the other day. Thanks for coming on. Thank you for having me. Describe these videos for me, would you? Right to dial one up, what would I see?
So in the past few weeks, there has been this wave of TikTok videos featuring Chinese manufacturers. A lot of times, just a guy in broken English. sitting at a desk or in a warehouse pointing to a lot of luxury products made by them at their factory. These people are saying that they want to expose luxury's biggest secret.
and reveal that they are actually the manufacturers and artisans behind world-famous, prestigious luxury brands like Hermes, Louis Vuitton, Prada, Gucci, and a lot of consumer brands like Lululemon and Victoria's Secret. So this is just cutting out the middleman, right? They're just going straight to consumer now. The question, of course, is why?
That's right. They're calling on American TikTok viewers to go directly to them to buy these bags. They feel like Western brands have been taking all the markup, all the premium while they're doing the hard work. And this like invisibility of manufacturing is kind of by design, right? Like consumers only get to see the prestige. of like these luxury products without seeing who made them. And with the Trump era tariff, I think that has prompted a sense of like anger and discontent within these.
Chinese manufacturers, especially with Vice President JD Vance calling Chinese manufacturers peasants. That has gone viral on Chinese social media. And what these factory owners are making is the point that even with the tariff, it is still going to be drastically cheaper than when you're buying from the brand directly because
It is the brand that is creating this premium and markup. There is a widespread claim, which is a pair of Lululemon yoga pants only costs $4. And that's surprising, right? And even with all the markup. It's still going to be very, very affordable. It's classic B2C instead of B2B, but I'll tell you what, I am intrigued by the idea of a factory on the other side of the world as a content creation backdrop, right?
Yes, yes. I actually have been an Ava follower of factory content on TikTok as a genre. Wait, sorry. So that's a thing you do on TikTok? You just scroll through factory videos? Yeah, and I think this experience is not alone. There is even a meme content genre. There's a guy called Tony that I personally love. I'm sorry, Tony, the Chinese factory guy on TikTok? Is that what we're talking about?
Yes, Tony, the lightbox guy. Tony actually speaks really good English among them. He can do a really good Trump impression. He got really, really viral. There is Donghua Jinglong, which is this industrial glycine factory that went viral last year because they're just so seriously... promoting their niche product uh in like machine translated english and it's a fascinating thing to see like the western tiktok users
didn't get weirded out by that. I totally need to retrain my algorithm. I need to start looking for some of those videos. It does occur to me, though, that with the volume of trade between China and the United States There's a scale thing, right? These folks are nibbling at the margins, and it's not like it's going to actually affect the larger trade relationship.
Right. I honestly do not think this TikTok trend we're seeing is an actual serious attempt for them to directly sell to U.S. customers. But I do think this is revealed that there is this disconnect. And people have this desire for the whole manufacturing industry to be more transparent. So, yeah, I think this is more of a venting operation for people to...
express their feeling about the tariff. Which is, of course, what the internet is for. Taiwei Chun. She's at the MIT Technology Review. Thank you so much for your time. I appreciate it. Thank you for having me. This final note on the way out today in which I once again remind you that President Trump's tariffs are taxes overwhelmingly paid by American consumers. It collected $16.3 billion in customs duties in April. That is a monthly record. 90 days, August 10th. We will keep you.
Our daily production team includes Andy Corbin, Nicholas Guillaume, Maria Hollenhorst, Iru Ekbenobi, Sarah Leeson, Sean McHenry, and Sophia Terenzio. I'm Kyle Rizdal. See you tomorrow, everybody. This is 8 p.m. We live in a world where the news is at our fingertips, where we're one click or swipe away from the latest headlines. But how often do we stop swiping and scrolling and just look? It's the difference between knowing what's in the headlines and understanding how it got there.
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