Marketplace Morning Report: "The Tea on Tariffs"

Release Date: July 15, 2025

In this episode of the Marketplace Morning Report, hosted by David Brancaccio, the focus centers on the escalating impact of tariffs on the U.S. economy and small businesses. The discussion navigates through recent inflation data, expert economic insights, and real-world implications for entrepreneurs facing increased trade barriers.

1. Inflation Insights and the Role of Tariffs

[01:01] Sabri Beneshore opens the segment by highlighting the latest Consumer Price Index (CPI) report, indicating that inflation is accelerating. In June, overall prices rose by 0.3%, up from 0.1% in May. Core inflation, which excludes volatile food and energy prices, increased by 2.9% year-over-year, up from 2.6% the previous month.

[01:35] Sabri introduces Ernie Tedeschi, Director of Economics at the Budget Lab at Yale, to delve deeper into these numbers.

[02:07] Ernie Tedeschi attributes the rising core goods prices—excluding automobiles, which saw a 6.1% increase, the highest since November 2021—to the effects of tariffs. He explains, "When you dig into especially the commodity part of CPI... you're starting to see much more clear price increases than we have in the past" ([01:35] - [01:48]).

[02:20] Sabri inquires about the future trajectory of tariffs and their anticipated impact over the coming months.

[02:20] Ernie responds, emphasizing the gradual nature of tariffs' effects: "Tariffs phase in over time and you don't see the tariff cost increases until businesses run out of stock and order more" ([02:20]). He cautions that it may take one to two years for tariffs to be fully reflected in price data, urging patience before assessing their ultimate impact.

2. Tariffs as a Threat to Economic Growth

[03:04] Sabri poses a critical question regarding whether tariffs pose a threat to U.S. economic growth.

[03:15] Ernie expresses greater concern about the implications of tariffs on economic growth than on inflation itself. He elaborates, "Overall, tariffs increase prices, but goods prices are only a small portion of what we see in the overall economy... I think that this process will probably take a year or two before tariffs are fully incorporated into the price data" ([03:15] - [04:06]). Additionally, Ernie warns that sustained tariff impacts could have broader consequences, potentially affecting the labor market by increasing unemployment rates and hindering wage growth.

3. Small Business in the Crossfire: Eldon Street Tea Shop

The discussion transitions to the real-world effects of tariffs on small businesses, featuring Rachel Rosner, owner of Eldon Street Tea Shop in Reston, Virginia.

[05:09] Sabri introduces Rachel, who shares insights into how tariffs are impacting her tea business.

[05:13] Rachel Rosner explains the diverse origins of her teas, sourcing from countries like China, Japan, India, Taiwan, and Brazil, as well as collaborating with small American craft tea blenders.

[05:58] Rachel reveals the immediate challenge: "We are having to pay tariffs in China... about a 27% tariff" ([05:58]). This significant increase threatens her pricing strategy and overall business sustainability.

[06:19] Rachel discusses her proactive approach to mitigating tariff impacts by purchasing a wholesale tea company to bypass middlemen and reduce costs. However, she acknowledges that further tariff hikes beyond 30% would necessitate price increases or reevaluation of her product offerings.

[07:11] Rachel emphasizes her efforts to combat these challenges by collaborating with 50 other tea and coffee businesses to advocate for tariff reductions. She poignantly states, "Tea has never been tariffed. It has been taxed. And I have a sign at my shop that literally says the last time tea was taxed, there was a revolution" ([07:11] - [07:50]). This analogy underscores the potential severity of prolonged tariff impacts on small businesses.

4. Demographic Shifts and the Aging Workforce

Highlighting a broader economic perspective, the episode briefly touches upon Marketplace's afternoon show segment focusing on demographic changes, specifically the aging labor force in developed countries.

[07:57] Sabri introduces the story of Leo Epstein, owner of EPRA EPA Fabrics in Brick Lane, London, as part of the "Age of Work" series.

[08:30] Leo Epstein shares his personal narrative, discussing how his 69-year-old, family-run business has endured amidst rising rents and changing neighborhood dynamics. At 92 and a half years old, Leo reflects on the challenges and resilience required to sustain a multi-generational business. His grandson, actively involved in the business, symbolizes the hopeful continuity despite an aging workforce ([08:30] - [10:17]).

Conclusion

"The Tea on Tariffs" episode of Marketplace Morning Report effectively intertwines economic data with personal stories to illustrate the multifaceted impact of tariffs. From rising inflation metrics to the struggles of small business owners like Rachel Rosner, the episode underscores the pervasive influence of trade policies on both macroeconomic indicators and individual livelihoods. Additionally, the segment on demographic shifts serves as a reminder of the evolving economic landscape, highlighting the interconnectedness of global economic factors.

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