Steel and aluminum and so much more

Summary

Marketplace Morning Report: "Steel and Aluminum and So Much More" – March 12, 2025

In this comprehensive episode of the Marketplace Morning Report, host Sabri Ben Asure delves into the intricate dynamics of international trade tariffs, economic indicators, shifts in the renewable energy sector, and the evolving landscape of the U.S. Department of Education. Through insightful discussions and expert analyses, the episode provides listeners with a nuanced understanding of the current economic climate and its multifaceted impacts.

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1. U.S. Imposes 25% Tariffs on Steel, Aluminum, and Derivatives

Sabri Ben Asure opens the episode by highlighting President Donald Trump's aggressive stance on trade policies, specifically the imposition of a 25% tariff on steel and an increase of aluminum tariffs from 10% to 25%. These tariffs extend beyond raw materials to encompass a wide array of products derived from steel and aluminum, including elevator parts, beer cans, gym equipment, and metal furniture.

Nova Safo, a Marketplace correspondent, provides an in-depth analysis of the ramifications:

"The US is imposing 25% tariffs on steel and increasing aluminum tariffs from 10 to 25%. It's also for the first time imposing import taxes on a whole host of products derived from those metals... The European Union responded with retaliatory tariffs on $28 billion worth of American goods."
[00:58]

The implementation of these tariffs marks a significant escalation from President Trump's initial actions during his first term, which included several exemptions benefiting the EU and Asian allies like Japan. With these exemptions now lifted, the economic strain is expected to deepen, particularly impacting the construction and manufacturing sectors. The Boston Consulting Group forecasts that industries such as automakers will bear the brunt of these increased costs.

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2. U.S.-Canada Trade Tensions Ease Temporarily

The episode transitions to the ongoing trade friction between the U.S. and Canada. Ontario's Premier announces the suspension of a 25% surcharge on electricity exports to the United States. This decision follows discussions with U.S. Commerce Secretary Howard Lutnick and a forthcoming meeting in Washington.

Sabri Ben Asure underscores the real-world implications of these tariff maneuvers:

"These numbers, 25% tariff, 50% tariff, 10% on again, off again. These are really not just numbers. These have real consequences for businesses trying to make a profit and survive."
[01:49]

In response, President Trump retracts his threat to double the tariffs on Canadian goods, a move aimed at alleviating immediate tensions. However, the fluctuating tariff rates continue to create uncertainty, complicating strategic planning for businesses across North America.

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3. Market Volatility and Inflation Insights

Economic indicators present a mixed picture amid the trade uncertainties. The VIX index, a barometer of market uncertainty, has surged by 60% over the past month. Concurrently, positive news emerges as the Consumer Price Index (CPI) reports a slowdown in inflation, dropping to 2.8% in February from 3% in January.

Sabri Ben Asure engages in a discussion with Susan Schmidt, Portfolio Manager at Exchange Capital Resources, to dissect these developments:

Sabri Ben Asure: "Inflation came in lower in February than many people expected. That's got to be a relief. What's your takeaway?"
[03:03]
Susan Schmidt: "It is a positive for investors, to be sure... February data shows that it is decreasing. Investors are going to take this as a positive and know that prices are coming down."
[03:03]

However, Schmidt cautions that the optimistic CPI figures might be overshadowed by the looming impact of tariffs:

Susan Schmidt: "Unfortunately not. The CPI data will hold investors attention for this morning... we know that we have tariffs looming... They are going to impact prices and cause prices to increase."
[03:47]

The S&P 500 teetered on the brink of a correction the previous day, nearly dipping into territories that signal significant market downturns. Schmidt explains the precarious situation:

Susan Schmidt: "Anytime the S&P or any index falls more than 10%, it's said to have a correction. That's bad because it is an abrupt change in direction for the market and a loss of value."
[04:24]

The confluence of reduced inflation and entrenched tariffs creates a delicate balance, leaving investors navigating a landscape fraught with volatility and uncertainty.

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4. Department of Education Faces Massive Workforce Cuts

Shifting focus to domestic policy, the episode reports a substantial downsizing within the U.S. Department of Education. President Trump, advocating for smaller government, has ordered a nearly 50% reduction in the department's workforce. Secretary of Education Linda McMahon cites efficiency and accountability as the primary reasons for these cuts:

[05:11]

President Trump has gone further, expressing intentions to eliminate the Department of Education entirely, signaling a significant restructuring of federal involvement in education.

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5. Solar Power Dominates U.S. Energy Expansion

Despite political headwinds, the renewable energy sector, particularly solar power, showcases resilient growth. In 2024, solar energy accounted for two-thirds of all new energy sources added in the U.S., doubling its market share from five years prior. Kaylee Wells, Marketplace correspondent, explores this phenomenon with experts.

Michael O'Boyle from Energy Innovation attributes the surge to a combination of government incentives and a self-reinforcing cycle of cost reductions:

"Goods get cheaper, utilities and consumers buy more of it. Then manufacturers can scale up manufacturing and make it even cheaper."
[06:44]

While President Trump has threatened to dismantle solar incentives, Rob Gramlich, President of Grid Strategies, emphasizes the sector's inherent advantages:

"The costs are just too compelling. It's too cheap, too prevalent and too available for utilities to not want it and consumers to not choose it."
[07:15]

Amid these challenges, support for solar remains robust among certain political factions. Twenty-one House Republicans have signed a letter advocating for the preservation of clean energy tax credits, underscoring bipartisan recognition of solar's role in achieving energy dominance.

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6. Decline in Consumer Confidence

Concluding the episode, Janelia Espinal from the Financially Inclined podcast highlights a significant drop in consumer confidence—the sharpest since 2021. This decline reflects widespread economic anxiety, influencing personal financial behaviors and perceptions.

Espinal promotes her podcast as a resource for listeners to navigate these uncertain times, offering practical advice on personal finance topics such as negotiating job offers, managing money, and handling student loans.

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Conclusion

The March 12, 2025 episode of Marketplace Morning Report offers a deep dive into the interplay between trade policies, market dynamics, and sector-specific developments. From the ramifications of tariffs on global trade and domestic industries to the steadfast growth of solar energy amidst political opposition, the episode encapsulates the multifaceted challenges and opportunities shaping the U.S. economy. Additionally, insights into consumer sentiment and governmental restructuring provide a holistic view of the current economic landscape, equipping listeners with the knowledge to understand and navigate these complex times.

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For more detailed analyses and up-to-date economic news, subscribe to the Marketplace Morning Report and stay informed.

Transcript

[TurboTax Advertiser]

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[Sabri Ben Asure]

Steel and aluminum and so much more From Marketplace, I'm Sabri Ben Asure, in for David Brancaccio. Elevator parts, beer cans, gym equipment, metal furniture. These are just a few of the hundreds of goods now subject to President Donald Trump's 25% tariffs, not just on steel and aluminum, but on a lot of things that are made from those metals. The tariffs are coming amid concerns trade policy could cause a recession. Marketplace's Nova Safo has more.

[Nova Safo]

The US is imposing 25% tariffs on steel and increasing aluminum tariffs from 10 to 25%. It's also for the first time imposing import taxes on a whole host of products derived from those metals, such as parts for air conditioners, aircraft and kitchen appliances, even nuts and bolts and aluminum baseball bats. The European Union responded with retaliatory tariffs on $28 billion worth of American goods. President Trump first imposed steel and aluminum tariffs during his first term, but set a number of exemptions which benefited EU countries and allies in Asia such as Japan. Those exemptions are now removed. Analysis from the Boston Consulting Group finds the new tariffs are likely to hit construction and manufacturing industries the hardest and including automakers. I'm Nova Safa for Marketplace.

[Sabri Ben Asure]

Over in Canada, Ontario's premier has said he is suspending a 25% surcharge on electricity exports into the United States after speaking with U.S. commerce Secretary Howard Lutnick and agreeing to meet with him in Washington this week. In return, President Trump backed down on a threat to double the tariffs on Canada that went into effect today. These numbers, 25% tariff, 50% tariff, 10% on again, off again. These are really not just numbers. These have real consequences for businesses trying to make a profit and survive. Think about home builders or manufacturers. It makes planning extra hard for them. And that's showing up in other numbers in the economy. The VIX index, for example, that's a measure of market uncertainty. It's up 60% over the past month. Meanwhile this morning, some positive economic news on inflation. The consumer price index out last hour showed inflation in the US slowed to 2.8% in February. That's down from 3% in January. Let's talk about it all with Susan Schmidt. She's portfolio manager at Exchange Capital Resources. Hi, Susan.

[TurboTax Advertiser]

Good morning.

[Sabri Ben Asure]

Inflation came in lower in February than many people expected. That's got to be a relief. What's your takeaway?

[TurboTax Advertiser]

It is a positive for investors, to be sure. They were very concerned that January data showed that inflation was actually increasing month over month. Now we're back on the right track. February data shows that it is decreasing. It's actually lower than the January levels, lower than estimates. Investors are going to take this as a positive and know that prices are coming down. That's what investors want to see because that shows that the economy is back towards regulating itself to a normal growth level.

[Sabri Ben Asure]

Of course, on the other hand, we now have a ton of tariffs in place that are expected to raise prices in various sectors. Is the this positive CPI number enough to make up for the uncertainty we're seeing around tariffs?

[TurboTax Advertiser]

Unfortunately not. The CPI data will hold investors attention for this morning. It is very nice to see this, but it's really irrelevant in the bigger picture because we know that we have tariffs looming. We know that those tariffs are going to impact prices and cause prices to increase. That's what investors are going to be focused on and that's where investors are really concerned because there's so much uncertainty around the amount of those increases and what that will do to profitability.

[Sabri Ben Asure]

The s and P500 yesterday, it almost went into correction territory. Remind us what that means and why that's bad.

[TurboTax Advertiser]

Anytime the S and P or any index falls more than 10%, it's said to have a correction. That's bad because it is an abrupt change in direction for the market and a loss of value. We're seeing high volatility in the market right now, and that's because of the uncertainty around tariffs and investors realization that President Trump isn't going to be as market friendly as he was in his first term. That's causing pressure on stock prices. It's causing the indices to go down overall. And that's causing investors to continue to be nervous because they can't figure out what the company should be valued at if they can't anticipate the appropriate level of profitability.

[Sabri Ben Asure]

Susan Schmidt, portfolio manager at Exchange Capital Resources. Thank you so much.

[TurboTax Advertiser]

Thank you.

[Sabri Ben Asure]

The Department of Education is cutting almost half of its workforce. Secretary of Education Linda McMahon said it was to improve efficiency and accountability. President Trump said he wants to eliminate the agency entirely.

[TurboTax Advertiser]

Foreign.

[Sabri Ben Asure]

If you want to be savvy about the economy, the Marketplace newsletter is just what you need. Every Friday, you'll get explainers and analysis that make sense of everything from the moving markets to grocery prices. No jargon, no hype, just smart takes delivered to your inbox. Sign up [e-mail] subscribe Solar power is winning the electricity generation race. In 2024, 2/3 of new energy that came online in the US came from the sun. That is double the percentage solar claimed five years ago. This is all according to new analysis from the trade group Solar Energy Industries Association Marketplaces. Kaylee Wells has more on that.

[Kaylee Wells]

Solar is among the cheapest power sources to develop. Michael O'Boyle with the Think tank Energy Innovation says that's partly thanks to government incentives, but it's also benefiting from a virtuous cycle.

[Sabri Ben Asure]

Goods get cheaper, utilities and consumers buy more of it. Then manufacturers can scale up manufacturing and make it even cheaper.

[Kaylee Wells]

President Trump has threatened to end solar.

[Sabri Ben Asure]

Incentives, but there's no scenario where solar isn't growing pretty significantly.

[Kaylee Wells]

Rob Gramlich is president of the power consulting firm Grid Strategies. He says President Trump can set up roadblocks that will slow solar's growth. But utilities and homeowners decide whether to install a new power plant or rooftop solar.

[Sabri Ben Asure]

The costs are just too compelling. It's too cheap, too prevalent and too available for utilities to not want it and consumers to not choose it.

[Kaylee Wells]

This week, 21 House Republicans signed a letter asking to keep clean energy tax credits because they're needed to help the US Become energy dominant. I'm Kayleigh Wells for Marketplace, and in.

[Sabri Ben Asure]

New York, I'm Sabri Benishore with the Marketplace Morning Report from APM American Public Media.

[Janelia Espinal]

Consumer confidence had its sharpest monthly decline since 2021, which means we're all in our feels about money. And while uncertainty is the only constant these days, it's also a great reason to get serious about understanding personal finance. I'm Janelia Espinal, host of Financially Inclined, a podcast from Marketplace that makes learning about money simple. Learn about practical skills like negotiating job offers, dealing with money and friendship and love, entrepreneurship and student loans. Get serious about your money and build a life you've always dreamed of. Listen to Financially Inclined wherever you get your podcasts.