The Business Impact of Trump's Tariffs

Summary

Podcast Summary:

Down to Business English – The Business Impact of Trump's Tariffs
Hosts: Skip Montreux & Des Morgan
Date: July 5, 2019

---

Episode Overview

This episode focuses on the economic and business ramifications of U.S. President Donald Trump’s trade tariffs, with a particular emphasis on the trade war with China, as well as tariffs affecting the EU, Canada, and Mexico. Hosts Skip and Des explore the basics of tariffs, the rationale behind their use, the consequences for businesses and consumers, and examples from major industries. The episode is tailored for ESL/EFL listeners, including explanations of key business vocabulary and relevant examples.

---

Key Discussion Points & Insights

1. What Are Tariffs?

[03:17 – 04:00]

• Definition: "A tariff is a tax or levy that is paid on a particular product or class of products imported into a country." – Skip Montreux (03:17)
• Who pays? The importer, not the exporter. The cost is typically passed on to the consumer.
• Purpose: Mainly to protect domestic industries unable to compete with foreign producers.

Example:
Malaysia imposes a 60–105% tariff on foreign cars to protect local automaker Proton (03:54).

2. Trump’s View & Common Misconceptions

[04:43 – 05:55]

• Presidential misunderstanding: Trump’s tweets often claim that China pays the tariffs directly to the U.S. Treasury, but in reality, U.S. importers pay them, and costs are handed down to American consumers.
• Quote: "It doesn't sound like President Trump understands this very important concept of how tariffs work." – Skip Montreux (04:43)
• Quote: "[Trump] thinks the Chinese pay the tariffs directly to the US Treasury?" – Des Morgan (05:18)

3. Goods Affected and Scale

[06:03 – 06:45]

• Tariffs now impact a vast range of products ("everything from toilet paper to shoes to tobacco"), making everyday life more expensive for U.S. consumers.
• The U.S. has imposed a 25% tariff on $250 billion of Chinese goods and is threatening further action (06:19).

4. Retaliation & Global Trade Dynamics

[07:05 – 07:49]

• China’s Response:
  • Imposed its own tariffs on targeted U.S. goods such as Harley Davidson motorcycles and U.S. soybeans.
  • "Harley Davidson made in Pennsylvania, Wisconsin, and Kansas is a prime example." – Skip Montreux (07:16)
  • Soybean exports to China dropped by nearly 15% (07:37).
• EU Response:
  • Tariffs on U.S. motorcycles, among other goods.
  • Harley Davidson shifted some production to China for international markets (09:23).

5. Business Impact: Harley Davidson Case Study

[08:48 – 10:20]

• Due to steel/aluminum tariffs, the cost of making a motorcycle rose by $2,200.
• To mitigate EU tariffs, Harley moved part of its production to China, impacting American jobs and profitability.
• Quote: "Harley Davidson is still making motorcycles in the US for US consumers. The bikes they build in China are only for international markets." – Skip Montreux (09:58)

6. NAFTA/USMCA, Canada, and Mexico

[10:24 – 12:33]

• Steel and aluminum tariffs previously affected both Canada and Mexico.
• Post-USMCA (NAFTA 2.0), many tariffs were lifted, but Trump threatened new tariffs on Mexican goods over immigration issues.
  • Proposal: incremental 5% tariff per month up to 25% (11:26).
• Potential repercussions for agriculture and manufacturing due to deep North American market integration.
• Quote: "If Trump goes through with those tariffs on Mexico, it will really be like he is shooting himself in the foot." – Skip Montreux (12:33)

7. Fundamental Takeaway: No Winners in Trade Wars

[12:56 – 13:04]

• Quote: "Is it fair to say that in a trade war, no one actually wins, contrary to what President Trump has said? I think that is the bottom line." – Des Morgan & Skip Montreux (13:00–13:04)

---

Notable Quotes & Memorable Moments

• On complex global impact:
  "The topic of international trade is very intricate, with changes in one sector often having unexpected effects in other sectors." – Skip Montreux (14:00)
• On Harley Davidson:
  "What? Wait a minute. Are you telling me that Harley Davidson, the iconic American motorcycle brand, is moving their manufacturing to China?" – Des Morgan (09:44)
• On trade policy consequences:
  “It will really be like he is shooting himself in the foot.” – Skip Montreux (12:33)
• On Trump’s quick reversals:
  "...tariffs against Mexico are indefinitely suspended because they have come to an agreement..." – Skip Montreux (18:21)

---

Vocabulary & Language Section

[13:40 – 17:21]

• Intricate: Complicated or detailed (e.g., intricate lanterns, intricate trade dynamics).
• Fundamental: Central, basic (e.g., "Trump had a fundamental misunderstanding of tariffs").
• To take something lying down: To passively accept something without objection.
• Narrow minded: Having a limited perspective; broad minded: being open and accepting.
• Millennial: Someone born after the mid-1980s; often associated with trends/stereotypes ("avocado on toast").

---

Chronological Timestamps for Key Segments

| Segment | Topic | Timestamp | |---------|-------|-----------| | 1 | What is a tariff? | 03:17 – 04:00 | | 2 | Who pays tariffs? | 03:25 – 03:37 | | 3 | Malaysia car tariffs | 03:54 – 04:17 | | 4 | Trump’s misunderstanding | 04:43 – 05:29 | | 5 | Range of affected goods | 06:03 – 06:19 | | 6 | China’s retaliation | 07:05 – 07:49 | | 7 | Harley Davidson case study | 08:48 – 10:13 | | 8 | Canadian/Mexican tariffs | 10:24 – 12:33 | | 9 | No one wins trade wars | 13:00 – 13:04 | | 10 | Vocabulary explanations | 13:40 – 17:21 |

---

Tone and Style

Throughout the episode, the hosts use clear language, humor, and relatable examples (like “avocado on toast” or “maple syrup and ice hockey sticks”) to break down complex business concepts for English language learners. The tone is informative yet conversational, with both hosts frequently engaging in banter while ensuring comprehension for their target audience.

---

Summary

This episode thoroughly examines the logic and impact behind Trump's tariffs, providing a critical look at economic realities versus political rhetoric. The hosts demystify trade terms, use vivid real-world examples, and highlight how global supply chains, domestic markets, and everyday consumers are affected. Essential vocabulary explanations at the end reinforce listeners’ business English skills, making the episode both practical and accessible for ESL/EFL professionals.

Transcript

[Narrator]

From Tokyo, Japan and Abu Dhabi, uae, this is down to business English Business news to improve your business English with your hosts, Skip Montreux and Des Morgan.

[Skip Montreux]

Hey Des, good to be recording with you again.

[Des Morgan]

It sure is. Good to be sitting down with you too. How are things? All the usual.

[Skip Montreux]

Nothing too special going on at the moment. Although I did attend a wind orchestra concert recently. The Itabashi Community Wind Orchestra was performing their 33rd annual public concert. That was pretty enjoyable.

[Des Morgan]

I just had a week off for Eid Al Fattah.

[Skip Montreux]

Oh, I think I have heard of that celebration. Isn't it to celebrate the end of the month of Ramadan?

[Des Morgan]

That's correct. It's usually a three day celebration spent with family and friends. There was a big firework display. I guess it's Islamic equivalent of Christmas for Christians, the holiest holiday of the year.

[Skip Montreux]

Sounds like a good time is had by all that it is.

[Des Morgan]

Do you want to hear some different Ramadan traditions from around the world? Sure.

[Skip Montreux]

That sounds interesting.

[Des Morgan]

In Indonesia, it's a custom to purify yourself the day before Ramadan begins. So everyone in the country pours water all over themselves, hopefully from a holy spring. Although if they can't get to one, then any water is okay.

[Skip Montreux]

Lots of religions have ceremonies surrounding water baptism for Christians, being cremated and then your ashes spread in the Ganges for Hindus.

[Des Morgan]

In Egypt, they welcome Ramadan by lighting intricate lanterns. And then children walk around the streets with the lanterns and people give them sweets.

[Skip Montreux]

Hmm. Kind of like Halloween.

[Des Morgan]

I guess. So here is one last one. In many countries, including the uae, a cannon is fired to indicate that it's time for iftar, the evening meal that breaks the fast. Here the cannon is outside the Grand Mosque.

[Skip Montreux]

I have seen pictures of that mosque. The workmanship is amazing.

[Des Morgan]

It sure is. It's been called the modern day Taj Mahal.

[Skip Montreux]

You didn't go anywhere during your break, did you destroy.

[Des Morgan]

Well, I was thinking about going to the uk, but then I discovered that Trump was going to be there, so I changed my mind.

[Skip Montreux]

Really? You didn't go because President Trump was visiting there?

[Des Morgan]

Nah, I didn't go because the tickets were really expensive. But Trump being there was a contributing factor. We haven't done a story on Trump for quite some time, have we?

[Skip Montreux]

We have managed to avoid it, but today I. I think we really need to talk about Donald Trump and his trade tariffs.

[Des Morgan]

Alright then let's bite the bullet and do it. Let's get D2B down to business with tariffs. What are they? How do they function and why does President Trump think they are such a good idea. Just so that everyone is on the same page, Skip, can you tell us what exactly is a tariff?

[Skip Montreux]

A tariff is a tax or levy that is paid on a particular product or class of products imported into a country.

[Des Morgan]

I see. And who pays that tariff?

[Skip Montreux]

It is paid by the importer, not the exporter.

[Des Morgan]

So the company that brings the product into a country must pay the tariff?

[Skip Montreux]

That's right.

[Des Morgan]

And are tariffs common in the global market?

[Skip Montreux]

Well, you know, many countries use tariffs on some items, mostly to protect home producers of that product who can't manufacture the product at a competitive price with the import.

[Des Morgan]

Okay, can you give us an example?

[Skip Montreux]

Malaysia is a good example. Malaysia has one carmaker, Proton, which to be honest, is not the same quality as other cars. For example, Toyota. So in order to protect Proton, Malaysia applies a tariff of between 60 and 105% on all imported cars.

[Des Morgan]

Wow. So I could pay more than double the price on a Toyota if I lived in Malaysia.

[Skip Montreux]

If you bought a 4x4 with an engine over 2500cc's then that is the tariff that would apply to that class of automobile.

[Des Morgan]

So the tariff is paid by the importer, and then they pass the cost onto the consumer, is that correct?

[Skip Montreux]

In most cases, yes. The consumer is the one to suffer. However, it doesn't sound like President Trump understands this very important concept of how tariffs work.

[Des Morgan]

Okay, what does he think?

[Skip Montreux]

Well, listen to this tweet that he wrote earlier this year. Tariffs are now being paid to the United States by China of 25% on 250 billion doll billion dollars worth of goods and products. These massive payments go directly into the treasury of the US okay, so he

[Des Morgan]

thinks the Chinese pay the tariffs directly to the US Treasury?

[Skip Montreux]

Either that or he's trying to deceive those in the American public who don't know how tariffs work.

[Des Morgan]

But the reality is American import companies are paying them and most likely passing the cost onto the consumer.

[Skip Montreux]

That would be correct.

[Des Morgan]

So these tariffs seem to be based on a fundamental misunderstanding on Trump's part. What exactly is he thinking?

[Skip Montreux]

Well, he claims that the Chinese government has not been playing fair for many years, and so the application of tariffs is justified.

[Des Morgan]

And what specific goods are affected by these tariffs?

[Skip Montreux]

Oh, there is a huge range of items, everything from toilet paper to shoes to tobacco.

[Des Morgan]

So if I was living in the US Sitting on the toilet, wearing new shoes and smoking, my life would have become more expensive.

[Skip Montreux]

Well, that is an image that I really don't want to have in my mind. But Basically, what you just said is true. Currently, the US has placed a 25% tariff on $250 billion of goods coming out of China. And they are threatening to put tariffs on another $365 billion if China doesn't agree to new trading terms.

[Des Morgan]

So is it true what Trump says? Has China not been playing fairly?

[Skip Montreux]

Yes and no. China does manipulate its currency to make their exports cheaper, but Japan was guilty of that for years as well. So this is not something that the US has never had to deal with before.

[Des Morgan]

Well, all's fair in love and trade wars. How is China reacting to the tariffs?

[Skip Montreux]

Of course they are not taking them lying down.

[Des Morgan]

They hit back with tariffs of their own.

[Skip Montreux]

They did. And China's application of tariffs has been very tactical. Harley Davidson made in Pennsylvania, Wisconsin and Kansas is a prime example. They have also added a 25% tariff on soybeans.

[Des Morgan]

Ouch. That must have been a major blow to US farmers.

[Skip Montreux]

Absolutely. In May, US soybean exports to China were down just under 15% from the same month last year. A very dramatic drop indeed.

[Des Morgan]

American farmers must be pretty angry with Trump for starting this trade war. Shouldn't he be worried about losing their support in the next presidential election?

[Skip Montreux]

I'm sure it is a concern, but he is mitigating the situation by taking the money from the tariffs and giving subsidies to those farmers who are losing money. He's hoping he can keep them happy for the time being.

[Des Morgan]

Well, I guess we will find out in the election next year.

[Skip Montreux]

I suppose so.

[Des Morgan]

So, besides China, which other countries have been the targets of Trump's tariffs?

[Skip Montreux]

The EU has been another target. Trump added tariffs to imports of food and wine, airplanes and steel. In retaliation, the EU added tariffs to American made goods. Guess which company was one of the hardest hit?

[Des Morgan]

Hey, I know the answer to that one. Harley Davidson. I'm guessing that Trump doesn't ride a Harley.

[Skip Montreux]

I don't think they would let him at the moment. Now, Harley Davidson is a very interesting case study. In this case, war. Due to the steel and aluminum tariffs, the cost of manufacturing a motorcycle increased by $2,200. But instead of passing that on to their customers, the company decided to eat the loss.

[Des Morgan]

Really? That's a huge hit on their profit

[Skip Montreux]

margin, which did not sit well with shareholders. Harley Davidson's stock took a nosedive when they announced that.

[Des Morgan]

Yeah, I can imagine.

[Skip Montreux]

Then when the EU retaliated by placing tariffs on US Motorcycles, Harley Davidson said they were shifting production to China by manufacturing motorcycles in China and exporting them to the E.U. from there, Harley Davidson could avoid the E.U. tariff on U.S. built motorcycles.

[Des Morgan]

What? Wait a minute. Are you telling me that Harley Davidson, the iconic American motorcycle brand, is moving their manufacturing to China?

[Skip Montreux]

Some of it, yes.

[Des Morgan]

Well, the Donald can't be very happy about that.

[Skip Montreux]

He wasn't, but, you know, it's kind of his own fault. And keep in mind, Harley Davidson is still making motorcycles in the US For US Consumers. The bikes they build in China are only for international markets.

[Des Morgan]

It makes perfect sense from Harley Davidson's perspective, but it must be costing American jobs in the long run.

[Skip Montreux]

And then there were the tariffs on Canadian steel and aluminum.

[Des Morgan]

Canadian steel and aluminium? I thought you were going to say maple syrup and ice hockey sticks.

[Skip Montreux]

Oh, you are so narrow minded, Daz. There is a lot more to Canada than that.

[Des Morgan]

Yeah, just joking. Actually, we discussed those tariffs back in D2B131 in April of 2018. In fact, those tariffs weren't just on Canada. They were on steel and aluminium coming from Mexico too.

[Skip Montreux]

Well, since then, the U.S. canada and Mexico have negotiated the USMCA or NAFTA 2.0. And Trump lifted most of those tariffs.

[Des Morgan]

That must be a sigh of relief for many businesses across North America.

[Skip Montreux]

You would think so. But in the last few weeks, Trump has once again been targeting Mexico.

[Des Morgan]

Okay, what's the story there?

[Skip Montreux]

Well, this time it is not directly related to trade. Rather, it is over the immigration crisis happening along the US Mexican border.

[Des Morgan]

What's Trump threatening?

[Skip Montreux]

He announced a plan to add a 5% tariff on all Mexican goods entering the US unless the Mexican government started to do more to stop illegal immigration into the United States. And this is where it gets really extreme. Trump was threatening to raise that tariff an additional 5% each month until it reached 25%.

[Des Morgan]

Wow. A lot of goods cross that U.S. mexican border. That will really hit the States that border Mexico. Avocado on toast is about to get a lot more expensive. But I don't think Trump ever really attracted the millennial vote anyway.

[Skip Montreux]

Well, there is also the additional effect that if migrants do stop crossing the border, then many farms in the US Will be paying a lot more to have their crops picked. So to use your analogy, des avocados from Mexico will be 25% more expensive, and avocados grown in the US will be more expensive because labor costs will have risen considerably.

[Des Morgan]

So this is really a lose lose situation.

[Skip Montreux]

And that is just in the agriculture sector. NAFTA has been such a success over the last 30 years that the U.S. mexico and Canada are super integrated in terms of manufacturing supply chains. If Trump goes through with those tariffs on Mexico, it will really be like he is shooting himself in the foot.

[Des Morgan]

Is it fair to say that in a trade war, no one actually wins,

[Skip Montreux]

contrary to what President Trump has said? I think that is the bottom line.

[Des Morgan]

Okay, so now it's a good time for us to get D2V down to vocabulary,

[Narrator]

Down to business. English audio scripts are a great learning tool. Be sure to visit the D2B website and download your free audio script of today's podcast. Downtobusinessenglish.com that's www.downtobusinessenglish.com.

[Des Morgan]

I will get things rolling today with the adjective intricate, which means very complicated or detailed. In the story I commented that a Ramadan tradition in Egypt is to light very intricate lanterns. By this I mean that the design on these lanterns has a lot of detail.

[Skip Montreux]

The topic of international trade is very intricate, with changes in one sector often having unexpected effects in other sectors.

[Des Morgan]

Can you give us an example of that?

[Skip Montreux]

There is a very large BMW factory in South Carolina that is being hit in several ways by the intricacies of these recent trade disputes.

[Des Morgan]

Sure, imported raw materials have gone up. Plus if they export their cars to China or the eu, they will be hit with retaliatory tariffs. A very complicated situation, no doubt.

[Skip Montreux]

It certainly isn't as simple as the President seems to think. I would now like to talk about another adjective, fundamental. When you describe something as being fundamental, you are saying that it is central to understanding a certain concept or idea. In the story, Des commented that Trump had a fundamental misunderstanding of tariffs. In other words, he does not understand the basic concept behind them.

[Des Morgan]

If we were talking about the results of the Brexit referendum in 2016, we could say that the fundamental problem was that most people in the UK were didn't think very clearly about what they were voting for and why.

[Skip Montreux]

And now look at the mess they are in.

[Des Morgan]

Oh, don't get me started.

[Skip Montreux]

Sorry. Let's move on.

[Des Morgan]

Next is the multi part verb to take something lying down, which means to not object or to not put up a fight over something you disagree with.

[Skip Montreux]

I used it in the negative in the story though.

[Des Morgan]

You did. You said China was not taking Trump's tariffs lying down, but was retaliating with tariffs of its own. In other words, they were objecting to those tariffs and fighting back.

[Skip Montreux]

Did you read the story about Facebook trying to get Mark Zuckerberg to stand down as a leader?

[Des Morgan]

I did see that, yes.

[Skip Montreux]

Well, he didn't take it lying down, but fought back and is still chairman of Facebook. Moving on, let's talk about the two part adjective narrow minded, which means to see something in a very limited way.

[Des Morgan]

You accused me of being narrow minded when I made a joke about Canada.

[Skip Montreux]

Never joke about maple syrup, Daz.

[Des Morgan]

Sorry. The opposite of narrow minded is broad minded, which means to see a situation widely and be accepting of other people's opinions. Living in today's multicultural world, it's very important to be broad minded and accept that other people might see things differently.

[Skip Montreux]

Good point.

[Des Morgan]

Our final word for today is the noun millennial, which refers to the age group born after the mid-1980s that entered the workplace in the mid to late 2000s. The previous generation were Generation X and before that were the baby boomers.

[Skip Montreux]

In the story, Des joked about avocado on toast as this is supposed to be the Millennial's favorite food.

[Des Morgan]

Yeah, well there are a lot of stereotypes about millennials always being on social media, shopping online while driving a Prius,

[Skip Montreux]

but like any stereotype, I'm sure there's a bit of truth in there somewhere.

[Narrator]

Would you like to support down to Business English? Be sure to visit the D2B page in iTunes and subscribe to this show. While you are there, why don't you leave a rating and a comment? This will help D2B reach more people wanting to improve their business English skills. Down to Business English Business News to improve your business English.

[Des Morgan]

Well, thanks for that report on the tariffs and how Trump is using them in his trade wars around the world.

[Skip Montreux]

My pleasure Des. But you know, it is such a fast moving story.

[Des Morgan]

It sure is.

[Skip Montreux]

Just while we were discussing vocabulary, there was yet another tweet from the Donald.

[Des Morgan]

Oh, and what did he say?

[Skip Montreux]

Well, he is all of a sudden declaring that tariffs against Mexico are indefinitely suspended because they have come to an agreement on how Mexico will help with the immigration crisis, he declared.

[Des Morgan]

That man is sounding more and more like a king every day.

[Skip Montreux]

It is a little worrisome. In any case, it looks like the Mexican tariffs are a no go for now.

[Des Morgan]

Well, that is good news. I wonder if he will change his mind in a few hours though.

[Skip Montreux]

Who knows? But do you know what will always be Tara free?

[Des Morgan]

No, what's that?

[Skip Montreux]

A D2B membership, of course. Just before we go today, I would like to once again encourage listeners to sign up for a D2B membership tariff free. If you find listening to down to Business English useful in your English studies, I highly recommend becoming a member.

[Des Morgan]

Each membership includes members only, podcasts and access to our entire audio script library of 162 episodes and counting. And when a new episode is released, we send you the audio script to that show right to your inbox within minutes.

[Skip Montreux]

And on top of all that, your membership helps us produce more D2B content.

[Des Morgan]

That's right, the more members we have, the more shows and other English learning products we can produce.

[Skip Montreux]

Just visit the down to Business english [e-mail] click on the members link at the top of the page and choose the plan that best fits your budget.

[Des Morgan]

That's down to businessenglish.com thanks for listening everyone.

[Skip Montreux]

See you next time.

[Des Morgan]

Bye bye.

[Narrator]

Have a comment or question about today's show? Don't be shy. Visit the D2B website or the Facebook page and post any comments or questions there. Skip Des or Samantha will be sure to leave a Reply Want to get even more down to Business English? Sign up for the D2B Newsletter and receive updates on some of the stories covered on down to business English. That's www.downtobusinessenglish.com down to business English Business News to improve your business English.