The U.S. and China reach 90-day tariff truce

Summary

Marketplace Morning Report: May 12, 2025

Episode: The U.S. and China Reach 90-Day Tariff Truce
Host: Sabri Benishore
Release Date: May 12, 2025

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1. U.S.-China Tariff Truce and Its Implications

Overview:
The episode opens with a significant development in international trade as the United States and China agree to a 90-day truce on tariffs. This temporary measure aims to provide both nations with the necessary time to negotiate a more enduring trade agreement.

Key Discussions:

• Reduction of Tariffs:
  Sabri Benishore introduces the topic by highlighting the reduction in tariffs:

  "[The US's] 145% taxes on Chinese imports would come down to 30%. China's 125% taxes on US goods would come down to 10%" (00:59).

• Expert Insight with Julia Coronado:
  Julia Coronado, founder of Macro Policy Perspectives and a professor at UT Austin, provides an in-depth analysis:

  • Impact on Trade and Economy:

    "It still means that we will see higher tariffs... the combination does mean that we're still going to see tariffs on all imported goods and that will result in some combination of higher consumer prices and lower profits for the companies selling those goods." (01:43)
    Coronado emphasizes that while the truce alleviates some pressures, tariffs remain elevated compared to pre-escalation levels, potentially leading to higher consumer prices and lower corporate profits.

  • Future Uncertainty:

    "This is still a 90 day truce in this trade negotiation... These are also temporary, tentative agreements and lots of details still need to be worked out." (03:07)
    She underscores the uncertainty surrounding the truce's longevity and the need for detailed negotiations to achieve a permanent resolution.

• Economic Indicators:
  The discussion shifts to the upcoming Consumer Price Index (CPI) data:

  "We think it's going to be two, three, four months before we see the full impact of these new higher tariffs on consumer prices." (02:22)
  Coronado anticipates that the CPI data for April will begin to reflect the effects of the tariff adjustments, particularly in sectors like furniture.

Conclusions:
The temporary tariff reduction between the U.S. and China provides short-term relief but does not eliminate the underlying trade tensions. The economic ramifications, including potential consumer price increases and business profitability challenges, persist. The outcome of the next 90 days remains pivotal in shaping the future of U.S.-China trade relations.

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2. Student Loan Debt: A Growing Burden for Older Americans

Overview:
The episode shifts focus to the burgeoning issue of student loan debt among older adults, challenging the common perception that student debt is solely a burden for the young.

Key Discussions:

• Rising Debt Among Seniors:
  Chris Farrell, Marketplace’s senior economics contributor, presents alarming statistics:

  "The ranks of student loan borrowers 62 years and over rose by 59% to 2.7 million in the six years ending in 2023." (05:18)
  He highlights that nearly one-third of older borrowers were in default as of 2019, a rate double that of their younger counterparts.

• Expert Insights with Kartik Manikam and Mingling Zhong:

  • Diverse Borrowing Patterns:

    "A majority of older borrowers went to college later in life. Most borrowed to pay for their own education." (05:44)
    They discuss how many older borrowers pursued education later due to various life circumstances, yet failed to see a return on investment.

  • Financial Hardships:

    "A third of them make less than $25,000 a year. 30% of them say that they can't pay all of their monthly bills as is." (06:54)
    The panel emphasizes the disproportionate financial strain on older adults with student debt, often exacerbated by insufficient income and rising living costs.

• Policy and Legal Implications:
  Abby Shafroth from the National Consumer Law Center sheds light on legal challenges:

  "The Trump administration has resumed collections on defaulted student loans for the first time in five years... the government can garnish their Social Security checks." (07:16)
  This reinstatement of collections poses a severe threat to the financial stability of older borrowers reliant on Social Security.

  Additionally, Kartik Manikam points out:

  "Congress didn't index this... protection was meant to... ensure that the government wasn't pushing older or disabled adults... into poverty." (07:56)
  He criticizes the outdated legislation that fails to adjust protection thresholds in line with inflation, rendering the measures ineffective today.

• Cumulative Financial Burdens:
  Farrell notes that student loan debt often coincides with other financial obligations:

  "Student loan debts among older adults rarely stand alone... credit card balances, medical debts and consumer loans." (08:20)
  This accumulation of debts intensifies the financial challenges faced by older individuals.

Conclusions:
Student loan debt represents a significant and growing financial burden for older Americans, often intersecting with other economic hardships. The policy framework governing debt collection lacks necessary updates, exacerbating the vulnerability of this demographic. Addressing these issues requires comprehensive policy reforms to alleviate the financial strain on older borrowers and prevent further economic instability.

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Final Notes

The episode effectively highlights critical economic issues impacting both international trade and domestic financial stability. From the tentative steps towards easing U.S.-China trade tensions to the pressing challenges of student loan debt among seniors, Marketplace Morning Report delivers nuanced insights into how these developments shape the broader economic landscape.

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This summary is based on the Marketplace Morning Report episode released on May 12, 2025. For the full discussion, listeners are encouraged to tune into the original podcast.

Transcript

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[Sabri Benishore]

And thank you us China tariffs are Coming down for now, from Marketplace, I'm Sabri Benishore in for David Brancaccio. The US and China have agreed to a 90 day tariff truce while they figure out a more permanent trade deal. The US's 145% taxes on Chinese imports would come down to 30%. China's 125% taxes on US goods would come down to 10%. Julia Coronado is founder of Macro Policy Perspectives and a professor at UT Austin. Hi Julia, good morning. So 145% tariffs would have basically all but ended trade with China. Unraveled business models sent inflation soaring. What do 30% tariffs do?

[Julia Coronado]

It still means that we will see higher tariffs. This is higher than was in place before and we still have 10% tariffs on every other country. So the combination does mean that we're still going to see tariffs on all imported goods and that will result in some combination of higher consumer prices and lower profits for the companies selling those goods. So we're still looking at a trade shock, just not a catastrophic trade shock.

[Sabri Benishore]

The Consumer Price index is coming out later this week. Do you think we will see prices rise and how much more do you think they'll go with the current tariff setup?

[Julia Coronado]

Yeah, so this will be data for April and we think that we'll start to see early indications of tariff pass through. The tariffs were just being implemented through the month of April, so it still isn't going to be the full effect. We think it's going to be two, three, four months before we see the full impact of these new higher tariffs on consumer prices. But we'll see maybe some early indications in things like furniture in the April data.

[Sabri Benishore]

Now you know this whole period of tariffs on tariffs off, tariffs higher, tariffs lower, the unpredictability of it all. Had a lot of business putting off investment plans. Do you think that this period of uncertainty is like resolving? Is it over?

[Julia Coronado]

It's definitely not over. There are multiple elements of policy uncertainty. It's definitely good news and the markets are taking it as good news that we get some reduction in the maximalist approach. But this is still a 90 day truce in this trade negotiation. What happens at the end of the 90 days is still up in the air and so it's sort of an ongoing process with China and every other country that we're negotiating with. These are also temporary, tentative agreements and lots of details still need to be worked out.

[Sabri Benishore]

Julia Coronado, founder and President of Macro Policy Perspectives. Thank you so much.

[Julia Coronado]

My pleasure.

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[Sabri Benishore]

Student loan debt is not just a young people problem. It is a burden that can follow some borrowers into their older years. Marketplace's senior economics contributor Chris Farrell has the latest installment of our series, Buy Now, Pay Later.

[Chris Farrell]

The ranks of student loan borrowers 62 years and over rose by 59% to 2.7 million in the six years ending in 2023. Nearly one in three of older borrowers were in default in 2019. Older borrowers are twice as likely to have a loan in default than their younger peers. That's according to data collected by the Consumer Financial Protection Bureau.

[Kartik Manikam]

And the assumption is that student debt is like an issue for younger people, but it's increasingly become an issue for older people. Usually we think of student loans as younger people's burdens, but it also weigh.

[Chris Farrell]

Heavily on older adults that's economist Kartik Manikam of the New School for Social Research and Mingling Zhong of the Urban Institute, respectively. A majority of older borrowers went to college later in life. Most borrowed to pay for their own education. These graduates didn't get a return on their investment or life intervened. Abby Shafroth is director of the Student Loan Borrower Assistant Project at the National Consumer Law Center.

[Kartik Manikam]

Lots of people with student loan debt are not college graduates. They're people who might have started school and then something happened. And what we see is that the people who are older adults who still have student loan debt are actually in a financially worse place than those who never attended college at all.

[Chris Farrell]

That's a depressing result. The debt held by older borrowers is mostly federal student loans. Nearly 6 in 10 enter repayment 15 years ago or more.

[Kartik Manikam]

Abby Shafaroth, among borrowers who are 55 or older and who still have their own student loans, a third of them make less than $25,000 a year. 30% of them say that they can't pay all of their monthly bills as is. So they certainly can't afford these student loan payments when they're struggling to pay for their medication, for their heat, their rent.

[Chris Farrell]

The financial hardship is worsening for many. The Trump administration has resumed collections on defaulted student loans for the first time in five years. If older borrowers don't start repaying their loans, the government can garnish their Social Security checks. Yes, you heard me right. Legislation passed in 1996 allows the government to garnish Social Security payments for outstanding student loan debts. The government must leave Social Security beneficiaries with at least $750 a month in benefits. The figure at the time represented about 110% of the federal poverty.

[Kartik Manikam]

The protection was meant to ensure that the government wasn't pushing older or disabled adults who rely on Social Security into poverty just to just to collect on, you know, a loan debt. A big problem is that Congress didn't index this, this protection to inflation. So, you know, $750 a month in the late 90s is very different from $750 a month now.

[Chris Farrell]

Student loan debts among older adults rarely stand alone. Older adults may also be carrying credit card balances, medical debts and consumer loans. I'm Chris Ferrell for Marketplace.

[Sabri Benishore]

Our Buy Now, Pay later project is in partnership with Next Avenue, a nonprofit news platform for older adults produced by Twin Cities PBS in New York. I'm Sabri Benishore with the Marketplace Morning.

[Chris Farrell]

Report.

[Sabri Benishore]

From APM American Public Media.

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