Steel and aluminum and so much more

Summary

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

In this enlightening episode of the Marketplace Morning Report, host Sabri Benishore delves deep into the turbulent waters of international trade, focusing on recent developments in U.S. tariffs on steel and aluminum, the ensuing global repercussions, and their broader implications for the economy. Additionally, the episode explores the burgeoning solar power industry and its resilience in the face of political challenges. Here's a comprehensive summary of the key discussions, insights, and conclusions from the episode.

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1. U.S. Imposes New Tariffs on Steel, Aluminum, and Derived Products

Speaker: Sabri Benishore

The episode kicks off with Sabri Benishore outlining the significant escalation in U.S. trade policies under President Donald Trump's administration. The U.S. has introduced a 25% tariff on steel and increased the aluminum tariff from 10% to 25%. This move isn't limited to raw materials; for the first time, import taxes are being levied on a broad array of products derived from these metals. Items such as elevator parts, beer cans, gym equipment, metal furniture, and even seemingly peripheral items like nuts, bolts, and aluminum baseball bats are now subject to these heightened tariffs.

Notable Quote:

"These tariffs are coming amid concerns trade policy could cause a recession." – Sabri Benishore [01:25]

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2. Global Backlash: European Union's Retaliatory Measures

Speaker: Nova Safo

Sabri introduces Nova Safo, who expounds on the international fallout from the U.S. tariffs. The European Union has retaliated by imposing tariffs on $28 billion worth of American goods, escalating tensions between major economic powerhouses. While President Trump had previously set exemptions benefiting EU countries and Asian allies like Japan, these exemptions have now been rescinded, leaving industries in Europe to grapple with the new tariffs.

Notable Quote:

"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." – Nova Safo [01:50]

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3. Impact Analysis: Construction, Manufacturing, and Automakers Hit Hard

Speaker: Nova Safo

An analysis from the Boston Consulting Group reveals that the new tariffs are poised to severely impact the construction and manufacturing industries, with automakers bearing the brunt. The sudden increase in costs for essential materials like steel and aluminum is expected to tighten profit margins and complicate planning and operations for businesses across these sectors.

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4. Cross-Border Negotiations: Canada's Strategic Response

Speaker: Sabri Benishore

Shifting focus to Canada, Sabri discusses Ontario's Premier's decision to suspend a 25% surcharge on electricity exports to the United States. This strategic move comes after negotiations with U.S. Commerce Secretary Howard Lutnick and an agreement to meet in Washington. In a reciprocal gesture, President Trump has retracted his threat to double tariffs on Canadian goods, which were slated to commence recently.

Notable Quotes:

"These, these are really not just numbers. These have real consequences for businesses trying to make a profit and survive." – Sabri Benishore [02:42]

"It's up 60% over the past month. Meanwhile, this some positive economic news on inflation." – Sabri Benishore [02:42]

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5. Market Uncertainty and Inflation Dynamics

Speaker: Susan Schmidt, Portfolio Manager at Exchange Capital Resources

Sabri interviews Susan Schmidt to unpack the recent Consumer Price Index (CPI) data and its implications. The CPI for February showed that inflation in the U.S. slowed to 2.8%, down from 3% in January, which is a positive indicator for investors.

Notable Quotes:

"It is a positive for investors, to be sure... February data shows that it is decreasing. It's actually lower than the January levels, lower than estimates." – Susan Schmidt [03:55]

However, Susan cautions that while the CPI data offers a temporary reprieve, the looming tariffs pose a more significant threat. The increased tariffs are expected to drive up prices across various sectors, reintroducing inflationary pressures that could destabilize market confidence.

"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." – Susan Schmidt [04:38]

Furthermore, the volatility in the markets is highlighted by the VIX index, which has surged by 60% over the past month, signaling heightened uncertainty and nervousness among investors.

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6. Understanding Market Corrections

Speaker: Susan Schmidt

Sabri seeks clarification on the recent movements in the stock market, particularly the S&P 500 nearing correction territory.

"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." – Susan Schmidt [05:16]

Susan explains that the current high volatility stems from uncertainty around tariffs and a perceived shift in President Trump's market-friendly stance compared to his first term. This environment makes investors anxious about accurately valuing companies and forecasting profitability, leading to downward pressure on stock prices.

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7. Department of Education Workforce Cuts

Speaker: Sabri Benishore

In a brief segment, Sabri reports that the Department of Education is reducing its workforce by almost half. Secretary of Education Linda McMahon attributes this move to enhancing efficiency and accountability. This decision aligns with President Trump's broader agenda, which includes the potential elimination of the agency altogether.

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8. The Resilient Rise of Solar Power

Speaker: Dana Farber Scientist and Rob Gramlich

Transitioning to the energy sector, the episode highlights the surging dominance of solar power in electricity generation. According to the Solar Energy Industries Association, in 2024, two-thirds of the new energy capacity added in the U.S. originated from solar sources—doubling the percentage from five years prior.

Notable Quotes:

"Solar is among the cheapest power sources to develop." – Dana Farber Scientist [07:25]

Michael O'Boyle of Energy Innovation attributes this growth to government incentives and a virtuous cycle where decreasing costs lead to increased adoption, which in turn drives further cost reductions.

Despite political headwinds—President Trump has threatened to end solar incentives—industry experts like Rob Gramlich, president of Grid Strategies, remain optimistic. He argues that the economic fundamentals of solar are too compelling for utilities and consumers to ignore, irrespective of governmental policies.

"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. The costs are just too compelling." – Dana Farber Scientist [07:43]

Moreover, political support for clean energy persists, with 21 House Republicans signing a letter advocating for the continuation of clean energy tax credits, emphasizing their role in achieving U.S. energy dominance.

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9. Consumer Confidence and Personal Finance

Speaker: Janelie Espinal

In a closing segment, Janelie Espinal discusses the sharp decline in consumer confidence—the deepest since 2021. This dip reflects widespread anxiety over financial stability. Espinal underscores the importance of personal finance education in navigating these uncertain times, promoting her podcast Financially Inclined, which offers practical money management advice.

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Concluding Insights

This episode of the Marketplace Morning Report paints a comprehensive picture of the current economic landscape marked by aggressive trade policies, market volatility, and shifting energy dynamics. The imposition of high tariffs on steel, aluminum, and their derivatives has ignited a chain reaction affecting global trade relationships, domestic industries, and investor confidence. While positive signs like declining inflation rates offer temporary relief, the overarching uncertainty driven by persistent tariffs continues to cast a shadow over economic prospects.

Simultaneously, the solar power industry emerges as a beacon of resilience and growth, demonstrating the profound impact of market forces and technological advancements in overcoming political adversities. This dual narrative of economic challenges and sustainable growth highlights the intricate balance policymakers, businesses, and consumers must navigate in striving for stability and progress.

For listeners seeking to stay informed and navigate these complexities, the Marketplace Morning Report provides invaluable insights and expert analyses, ensuring they are well-equipped to understand and respond to ongoing economic shifts.

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Notable Timestamps and Quotes:

• [01:25]: Sabri Benishore introduces the new tariffs and their broad application.
• [01:50]: Nova Safo explains the removal of exemptions benefiting EU and Asian allies.
• [03:55]: Susan Schmidt discusses the positive CPI data and its initial impact.
• [04:38]: Susan Schmidt emphasizes the overshadowing effect of impending tariffs on CPI data.
• [05:16]: Susan Schmidt elaborates on market corrections and investor anxiety.
• [07:25]: Dana Farber Scientist highlights the cost-effectiveness of solar power.
• [07:43]: Dana Farber Scientist quotes Rob Gramlich on the inevitability of solar adoption despite political challenges.

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Stay Informed:

For more detailed analyses and updates on the evolving economic scenarios, subscribe to the Marketplace Morning Report and its suite of informative podcasts and newsletters. Stay ahead of the curve with expert insights delivered directly to your inbox.

Transcript

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[Public Investing Representative]

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[Sabri Benishore]

And so much more from Marketplace I'm Sabri Benishore in for David Brunkh. 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. Marketplaces 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, including automakers. I'm Nova Safa for Marketplace over in Canada.

[Sabri Benishore]

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, 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 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.

[Dana Farber Scientist]

Good morning.

[Sabri Benishore]

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

[Susan Schmidt]

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 Benishore]

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 this positive CPI number enough to make up for the uncertainty we're seeing around tariffs?

[Susan Schmidt]

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 end, 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 Benishore]

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

[Susan Schmidt]

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 anticipate the appropriate level of profitability.

[Sabri Benishore]

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

[Susan Schmidt]

Thank you.

[Sabri Benishore]

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. 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. Marketplace's Kaylee Wells has more on that.

[Dana Farber Scientist]

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 Benishore]

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

[Public Investing Representative]

Make it even cheaper.

[Dana Farber Scientist]

President Trump has threatened to end solar incentives, but but there's no scenario where solar isn't growing pretty significantly. 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. The costs are just too compelling. It's too cheap, too prevalent and too available for utilities to not want it.

[Public Investing Representative]

And consumers to not choose it.

[Dana Farber Scientist]

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 Wills for Marketplace, and in.

[Sabri Benishore]

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

[Janelie 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 Janelie 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 in 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 podcast.