How long will Trump’s tariffs last?

Summary

Marketplace Morning Report: How Long Will Trump’s Tariffs Last? Release Date: April 7, 2025

In this episode of the Marketplace Morning Report, host David Brancaccio delves into the ongoing economic turbulence sparked by President Trump's implementation of significant tariffs aimed at revitalizing U.S. manufacturing. The discussion navigates through the immediate market reactions, the sustainability of the tariffs, and their broader implications on both consumers and retirees. Additionally, the episode touches on rising consumer debt and the challenges faced by older Americans in maintaining financial stability.

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1. Market Downturn Triggered by Trump’s Tariffs

David Brancaccio opens the episode by highlighting the persistent bearish sentiment in the stock market, exacerbated by President Trump's tariff policies. "A weekend pause did not change the down mood on the stock market given President Trump's tariff shock in the name of boosting US Manufacturing," he notes (00:01). The S&P 500 futures plummeted by 2.4%, signaling potential entry into a bear market as declines surpass the critical 20% threshold.

Mariko Oi from the BBC World Service provides a regional perspective, describing the Asian markets' response as "absolute carnage or even a financial bloodbath" (00:36). Major indices in Japan and Hong Kong experienced significant drops of 7.8% and 13% respectively, compounded by a recent public holiday that left markets struggling to catch up.

2. The Longevity and Impact of Tariffs

The core of the episode centers on the uncertainty surrounding the duration of Trump’s tariffs. Nova Safo from Marketplace raises the critical question: "Are the new tariffs permanent?" (01:24). The administration's lack of clarity has left markets rattled, with Commerce Secretary Howard Lutnick emphasizing the tariffs as a "national security issue" and rejecting the notion that they are a tool to address the budget deficit (01:38, 01:47).

President Trump, speaking from Air Force One, has maintained a steadfast stance, showing impatience in negotiating tariff reductions despite outreach from approximately 50 countries (01:58). His unwavering commitment to "equalized trade" in goods underscores the administration's priority over immediate economic appeasement.

3. U.S. Consumers and the Credit Crunch

Shifting focus to consumer finances, Ted Rossman from Bankrate paints a grim picture of rising credit card debt and delinquency rates (02:26). With balances surging by over 50% since 2021, more than 10% of credit card bills are overdue by over 90 days, indicating that many Americans are resorting to credit cards merely to cover essentials like groceries and gas (02:38).

On a more positive note, Mitchell Hartman highlights that overall debt-to-income ratios remain manageable, with Kurt Long from America's Credit Unions asserting that most consumers can keep up with payments despite interest rates exceeding 20%. However, there is underlying concern that worsening unemployment could trigger a spike in delinquencies, particularly in the auto loan sector where default rates have surpassed those during the financial crisis (02:44, 03:12).

4. The Rising Tide of Retirement Debt

An in-depth segment explores the troubling trend of increasing debt among retirees. Chris Farrell, Marketplace's senior economics contributor, introduces the series "Buy Now, Pay Later," which examines the shift towards older Americans carrying significant debt into retirement (03:37).

Minhling Zong from the Urban Institute provides historical context, noting the rise from 58% of older adults over 50 carrying debt in 1989 to 67.8% in 2020 (04:02). While Howard Lutnick acknowledges that debt isn't inherently negative—citing loans for homes, cars, and education—Odette Williamson from the National Consumer Law Center warns that debt exacerbates financial risks for retirees, especially those with modest means (04:16, 04:52).

Teresa Ghiladucci of the New School of Social Research identifies three major factors driving this trend:

1. Debt-Creating Institutions: Easier access to home equity loans and consumer credit has outpaced wealth accumulation, particularly for the bottom 90% whose home equity has seen minimal growth over four decades.
2. Lack of Retirement Savings: Nearly half of private-sector workers, and about two-thirds of lower-wage workers, lack access to retirement savings plans, forcing reliance on debt.
3. Stagnant Wages vs. Rising Costs: Wages have stagnated for many, especially among Black, Latino, and women workers, while living expenses have consistently increased (05:08, 06:27).

Mitchell Hartman emphasizes the disparity in debt resilience, pointing out that while debt levels are rising across the board, the ability to manage this debt varies based on available resources (06:27). Howard Lutnick concludes that the combination of debt and low savings is plunging more older adults into financial precarity, with many relying on credit cards and loans to cover basic living expenses (06:34).

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Conclusion

David Brancaccio wraps up the episode by underscoring the profound impact of Trump's tariff policies on global markets and domestic economic stability. The discussions reveal a complex interplay between governmental policies, consumer behavior, and financial health, highlighting significant challenges for both the broader economy and individual financial security, especially among retirees.

For more insights and in-depth analysis, listeners are encouraged to explore Marketplace’s ongoing coverage on these pressing economic issues.

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Notable Quotes:

• David Brancaccio: "A weekend pause did not change the down mood on the stock market given President Trump's tariff shock in the name of boosting US Manufacturing." (00:01)
• Mariko Oi: "All we've been seeing all day is sea of red arrows pointing downwards." (00:36)
• Howard Lutnick: "Remember, this is a national security issue." (01:38)
• Ted Rossman: "Delinquency rates have been rising since 2022, and more than 10% of credit card bills are more than 90 days late." (02:26)
• Teresa Ghilladucci: "Debt is also the other side of the lack of retirement savings coin." (05:08)

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This summary was crafted using the transcript and information provided for the episode "How long will Trump’s tariffs last?" from Marketplace Morning Report, hosted by David Brancaccio.

Transcript

[David Brancaccio]

A weekend pause did not change the down mood on the stock market given President Trump's tariff shock in the name of boosting US Manufacturing. I'm David Brancaccio in Los Angeles. Futures contracts for The S&P 500 stock index are down another 2.4% this morning. And we'll be watching to see if that key index gets labeled the bear market when trading officially begins in about two and a half hours. Bear is down 20%. Stocks in Asia are a mess today. Japan's Nikkei index down 7.8%. Hong Kong down 13%. Here's the BBC's Mariko Oi.

[Mariko Oi]

It's been described by some analysts as absolute carnage or even a financial bloodbath. All we've been seeing all day is sea of red arrows pointing downwards. Now the stock markets in mainland China, Hong Kong and Taiwan, they were actually closed for a public holiday on Friday. So they're playing a bit of a catch up. And as a result, we're seeing even sharper losses in those markets as well.

[David Brancaccio]

Europe, London and Germany's key indexes are down about 4%. President Trump told reporters last night he doesn't want stocks to go down. But that quote, sometimes you have to take medicine to fix something. A key question is how long 10% across the board tariffs and country specific ones as high as 49% will last. The big jumps kick in midweek. Here's Marketplace's NovaSafo.

[Nova Safo]

The big question right now facing the Trump administration. Are the new tariffs permanent? Considering the global market meltdown, Trump's advisors have not been able to clear things up. Commerce Secretary Howard Lutnick was on CBS's Face the Nation on Sunday.

[Howard Lutnick]

Remember, this is a national security issue.

[David Brancaccio]

I got it.

[Howard Lutnick]

Is the 10% trouble address our budget deficit. You know, the laws of America are the laws of America.

[Nova Safo]

Meanwhile, Treasury Secretary Scott Bessen said some 50 countries have reached out to negotiate. But the president, speaking to reporters on Air Force One, appeared in no hurry to strike deals.

[Howard Lutnick]

I said we're not going to have deficits with your country. We're not going to do that because to me a deficit is a loss.

[Nova Safo]

Trump said he wants at minimum equalized trade, presumably in goods alone. The president also seemed unfazed by the global market reaction so far. I'm Novasafa for Marketplace.

[David Brancaccio]

Check in now on U.S. consumers and Credit.

[Ted Rossman]

Here's the glass half empty scenario brought to you by ted [e-mail] Credit card.

[Mitchell Hartman]

Balances are at record highs up more than 50% from 2021.

[Ted Rossman]

Delinquency rates have been rising since 2022, and more than 10% of credit card bills are more than 90 days late.

[Mitchell Hartman]

We're seeing more people using cards just to get by for groceries and gas.

[Ted Rossman]

Okay, now for the glass. Slightly more full overall levels of debt to income, it looks pretty good. Kurt Long at America's Credit Unions says most consumers can still afford to keep up even with interest rates topping 20%. But he says that could change if the labor market really starts to deteriorate. Delinquencies tend to rise in lockstep with unemployment and Ted Rossman's biggest worry, auto loans.

[Mitchell Hartman]

Delinquencies there are worse than they were during the financial crisis.

[Ted Rossman]

People really try to pay that bill first because if you don't, they repossess. I'm Mitchell Hartman for Marketplace.

[David Brancaccio]

And still owing a lot of money is a different kettle of worms during retirement. Our new series called Buy Now, Pay later focuses on this decades long shift. Marketplace's senior economics contributor Chris Farrell reports.

[Howard Lutnick]

Older Americans are increasingly carrying debt into retirement, and the amount of debt is also on the rise. Minhling Zong is a senior research associate at the Urban Institute.

[Mariko Oi]

In 1989, about 58% of older adults over the age of 50 carry debt in retirement, and in 2020 that percentage has jumped to 6 78%.

[Howard Lutnick]

Owing money isn't necessarily bad. Even upper income households say earning $260,000 or more take out loans to buy homes, cars and appliances. Young adults borrow to pay for their education and to start a family. That said, the standard personal finance recommendation is to eliminate debt around retirement. Everyday life at older ages is financially riskier with debt, especially for people of modest means. Yet fewer near retirees and retirees are debt free. Odette Williamson is senior attorney with the National Consumer Law Center.

[Mitchell Hartman]

It has to do with cutback in some safety net provisions. It has to do with increase in expenses, most recently due to inflation. And it has to do with the fact that older adults are aging with just fewer resources.

[Howard Lutnick]

The combination of debt and low savings among older adults is pushing more households into the ranks of the financially precarious. Three major factors are driving the trend. We found that the debt creating institutions overwhelmed our wealth creating institutions. Teresa Ghilladucci is a professor of economics at the New School of Social Research. Ghiladucci says the value of home equity for the bottom 90%, measured by wealth, has barely increased over the past 40 years. Lenders made it easier to borrow from home equity, lowered down payment requirements and similar innovations. People also borrow to pay for the basics of modern life. People were able to also get car loans and other kinds of durable consumer purchases on loans rather than cash. Debt is also the other side of the lack of retirement savings coin. Nearly half of private sector workers and some two thirds of lower wage workers don't have access to a retirement savings plan at work. Finally, wages rose slowly for most workers in recent decades, especially for black, Latino and women. Yet the costs of everyday living went up.

[Mitchell Hartman]

Odette Williamson, I'm seeing the debt increase for everyone, but it's a matter of whether you have the resources to deal with the debt.

[Howard Lutnick]

Nearly half of older adults surveyed by AARP who are carrying a balance use credit cards to cover basic living expenses. Toss in home equity loans, medical debts, student loans, auto loans and mortgages, and the accumulation of debt signals that too many older adults are living on a financial precipice. I'm Chris Farrell for Marketplace.

[David Brancaccio]

Our Buy Now, Pay later coverage is in partnership with Next Avenue, a nonprofit news platform for older adults produced by Twin Cities PBS in Los Angeles. I'm David Brancaccio. It's the Marketplace Morning Report from APM American Public Media.

[Janeli Espinal]

If there's one thing we know about social media, it's that misinformation is everywhere, especially when it comes to personal finance. Financially Inclined from Marketplace is a podcast you can trust to help you get serious about your money so you can build a life you've always dreamed of. I'm the host, Janeli Espinal, and each week I ask experts experts important money questions like how to negotiate job offers, how to choose a college that you can afford, and how to talk about money with friends and family. Listen to Financially Inclined wherever you get your podcasts.