This is what a global trade war looks like

Summary

Marketplace Morning Report: "This is What a Global Trade War Looks Like"

Release Date: April 9, 2025
Host: David Brancaccio
Produced by: Marketplace
Duration: Approximately 7 minutes

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Introduction to the Global Trade War

[00:01] David Brancaccio: David Brancaccio opens the episode by setting the stage for the escalating global trade tensions. He highlights the significant tariff impositions between major economies:

• China's Response: Following President Trump's decision to elevate import taxes on Chinese goods to 104%, China retaliates by imposing an 84% tariff on U.S. goods.

• European Union's Countermeasures: The EU has introduced a 25% tariff on a targeted list of U.S. imports, specifically targeting sectors like U.S. motorcycles, poultry, and fruit.

Brancaccio emphasizes the widespread market reverberations of these moves, noting the potential for a recession if tariffs persist. He points out the immediate impact on crude oil prices, which have fallen over 6%, reaching a low of just under $56 per barrel—the lowest since the second year of the pandemic.

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Market Reactions and Bond Market Turbulence

[00:01 - 03:15] Segment Overview: The episode delves into the broader economic implications of the trade war, with a particular focus on the bond market and interest rates.

[01:02] Jeremy Swan: Jeremy Swan, Managing Partner at Cohn Resnick, provides insights into the bond market's instability:

• Market Volatility: Swan discusses the unexpected downward trend in the bond market, traditionally seen as a "safe haven" during turbulent times. He attributes this to increased uncertainty regarding potential recession risks both in the U.S. and globally.

• Client Advisories: Swan explains that his firm is advising clients to adopt a "risk on" mode, emphasizing a "wait and see" approach. Companies are developing contingency plans (Plan A, Plan B) to navigate the uncertain economic landscape, focusing on adjustments in operating models and supply chains.

• Psychological Impact: When addressing personal concerns, such as those from younger generations, Swan advises avoiding daily market fluctuations and maintaining a long-term perspective despite short-term pain.

Notable Quotes:

• Jeremy Swan at [01:21]:
  “The potential for recession risk in the US and globally, the challenges ahead are weakening the support that has been out there.”

• Jeremy Swan at [01:47]:
  “Everyone is now in a risk on mode and really taking a wait and see approach.”

• Jeremy Swan at [02:41]:
  “Markets will reach some sort of equilibrium as we gain more certainty and there will be a recovery.”

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U.S. Tax Authority's Controversial Data Sharing with ICE

[03:14 - 05:10] Segment Overview: Shifting focus, Brancaccio reports on the contentious collaboration between the IRS and Immigration and Customs Enforcement (ICE).

[03:53] Novo Safo:
Novo Safo outlines the developments:

• Leadership Changes: Melanie Kraus, the interim leader of the IRS installed six weeks prior, is reportedly stepping down amidst backlash.

• Data Sharing Agreement: A new agreement permits ICE to access up to 7 million immigrants' names and addresses from IRS data, a realm previously restricted to criminal investigations.

• Criticism and Concerns: Critics argue this breach of taxpayer confidentiality could lead to false positives and wrongful deportations. The NYU Tax Law Center warns that such measures may deter taxpayers from filing, undermining the foundational trust in the IRS.

Notable Quotes:

• Todd Lyons (Acting ICE Director) at [03:53]:
  “This agreement would be employed, strictly, for the major criminal cases.”

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Artificial Intelligence and the Future of Jobs

[05:10 - 06:49] Segment Overview: The discussion transitions to the rising influence of artificial intelligence (AI) in the workplace, featuring insights from Shopify CEO Toby Litke and experts from Marketplace.

[05:10] Stephanie Hughes: Stephanie Hughes introduces the topic by citing Shopify CEO Toby Litke's memo, which mandates that before hiring new human employees, teams must demonstrate why AI cannot perform the required tasks.

[05:33 - 06:17] Conversation with Ethan Molich:

• Ethan Molich (Wharton Professor):

  • AI Capabilities: Molich notes that AI excels at the "three Rs"—reading, writing, and research—making it adept at tasks like marketing and providing second opinions.

  • Employee Adaptation: He suggests that workers should engage with AI tools for a few hours weekly to explore how AI can augment their roles, balancing innovation with personal accountability.

• Stephanie Hughes:

  • Job Vulnerability: Citing Harvard labor economist David Deming, Hughes highlights that roles involving payroll, billing, and administrative support are particularly susceptible to AI automation.

  • Long-term Outlook: Deming warns that AI technology is rapidly advancing and will continue to evolve, implying that workers should proactively prepare for ongoing changes in their job functions.

Notable Quotes:

• Ethan Molich at [05:40]:
  “AI is pretty good at the three Rs, reading, writing, research. And that means it's also good at marketing and some light legal stuff.”

• David Deming (as referenced by Stephanie Hughes) at [06:31]:
  “It's probably not going to end with these roles; AI is coming for parts of almost everybody's job.”

• Stephanie Hughes at [06:36]:
  “As good as AI may be now, this is the worst this technology will ever be. It's just going to keep getting better. So it's best to be prepared.”

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Closing Remarks and Additional Updates

[06:49 - 07:00] Wrap-Up: David Brancaccio concludes the segment by reiterating the key points discussed. He provides a brief update on the stock markets:

• Interest Rates: The 10-year interest rate has decreased slightly to 4.36%.

• Stock Market Performance:

  • Dow Jones: Up by 120 points (3.10%)
  • S&P 500: Up by 7.10%
  • NASDAQ: Up by 1.5%

Additionally, Brancaccio mentions President Trump's recent recommendation to investors to consider investing now, amidst emerging news about potential IRS overreach into personal income data for immigration enforcement.

[07:00] Promotion: The episode concludes with a promotional segment for "Financially Inclined," another Marketplace podcast aimed at demystifying personal finance topics.

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Key Takeaways

1. Escalating Trade Tensions: The U.S., China, and EU are engaged in tit-for-tat tariff escalations, risking global economic stability and potentially triggering a recession.

2. Market Volatility: Traditional safe havens like bonds are experiencing unexpected downturns due to heightened uncertainty, prompting businesses to adopt cautious, contingency-based strategies.

3. IRS and ICE Collaboration Concerns: The proposed data-sharing agreement between the IRS and ICE raises significant privacy and civil liberties issues, threatening taxpayer trust and potentially leading to wrongful deportations.

4. AI's Growing Role in the Workforce: AI is increasingly capable of performing tasks across various sectors, necessitating that employees adapt by integrating AI tools into their workflows and preparing for continual technological advancements.

5. Economic Indicators: Despite trade war tensions, stock markets are showing resilience with notable gains in major indices, although interest rates remain elevated.

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Conclusion

This episode of the Marketplace Morning Report provides a comprehensive overview of the current global trade war, its multifaceted impact on international markets, and the broader economic implications. Through expert insights and detailed analysis, listeners gain a nuanced understanding of the challenges and strategies businesses and individuals must navigate in these uncertain times. Additionally, the episode touches on pressing issues such as government overreach and the transformative role of AI in the modern workforce, underscoring the interconnectedness of global economic and technological developments.

Transcript

[David Brancaccio]

On the day high U.S. tariffs went into effect. China puts an 84% trade penalty on U.S. goods. And just now, Europe puts 25% tariffs on a smaller targeted list of U.S. imports. I'm David Brancaccio in Los Angeles. This is what a global trade war looks like. There's news that China, undeterred by President Trump raising import tax on China to 104%, will raise its tariff on U.S. goods by another 84%. And just now the European Union responded to U.S. steel and aluminum tariffs specifically with some specific import duties on US Motorcycles, poultry and fruit. Markets far and wide are digesting this. If tariffs result in recession, we'll use less oil. And the price of crude is down more than 6% now, just under $56, the lowest since the second pandemic year. The main market story today so far, bonds are sharply down. Jeremy Swan is managing partner at Cohn Resnick, a corporate risk advisory fir. Good morning.

[Jeremy Swan]

Good morning, Jeremy.

[David Brancaccio]

Something that hasn't been flat overnight is the bond market. There was a spike in the benchmark 10 year interest rate as Treasuries fell sharply. I thought these bonds were a safe haven during turbulent times. But there's something else at work here, I think.

[Jeremy Swan]

I think there absolutely is. I think it's heavily driven by the uncertainty that's out there in the markets. You look at the potential for recession risk in the US recession risk globally, the challenges that are out there ahead of us. If we continue down this path as relates to tariffs, it's just really weakening a lot of that support that has been out there.

[David Brancaccio]

What are you telling clients during these turbulent times? It's been quite a week and a half here.

[Jeremy Swan]

I would say everyone is now in a risk on mode and really taking a wait and see approach. So we're talking to our clients, really helping them understand what is the potential impact on your business, looking at various scenarios, coming up with their contingency plans, contingency plan A, contingency plan B, to really think through what should you be doing as we look ahead to really understand what the impact is going to be and what shifts need to change in your operating models, supply chains, et cetera. And a lot of these companies are now in hunker down mode to really sort through this and at least wait until we see some level of certainty in terms of what the impact is going to be.

[David Brancaccio]

Last question, that's your clients. What about when your nieces and nephews call, concerned about all this? You tell them to look away, don't look moment to moment that's exactly it.

[Jeremy Swan]

Where you can don't look at the markets. This is going to take some time to settle through, particularly the younger generation responding to those questions. We've been through all sorts of market turmoil before. The markets will reach some sort of equivalent equilibrium as we gain more certainty and there will be a recovery. This is going to be there's definitely short term pain and I think it's too early to tell what the longer term effects are going to be.

[David Brancaccio]

Wise words from Jeremy Swan. He's managing partner at Cohn Resnick Advisory. Thank you so much.

[Jeremy Swan]

Thank you.

[David Brancaccio]

The 10 year interest rate is off its highs of the morning, but still up at 4.36%. Stocks are up. The Dow opened up. It's now up 120 points. 3. 10%. The S&P up 7. 10%. The NASDAQ up 1.5%. President Trump's recommendation this morning to investors on social media is that now is a good time to buy. It's emerged the Trump administration is preparing to use America's income tax returns to fine people in the US Illegally. There are indications that IRS leadership see this as crossing a line that should not be crossed with reports the acting head of the tax agency is planning to step down. Here's Novo Safo.

[Novo Safo]

The IRS's latest interim leader, Melanie Kraus, was installed just six weeks ago. Multiple reports that she is leaving the agency have come out a day after the new data sharing agreement. It allows Immigration and Customs Enforcement to submit to the IRS the names and addresses of immigrants for crosschecking taxpayer information, with some exceptions for criminal investigations, has previously been off limits. Acting ICE Director Todd Lyons told reporters that the agreement would be employed, quote, strictly for the major criminal cases. The Washington Post says the agency may seek to locate up to 7 million immigrants using IRS data. The NYU Tax Law center in a blog post raised concerns that the plan could lead to false positives and wrongful deportations. Critics also said long standing laws that protect the confidentiality of taxpayer information are intended to encourage taxpayers to file. And the new data sharing agreement could do the opposite. I'm Nova Safo for Marketplace.

[David Brancaccio]

Thought partner, researcher, critic, tutor. Those are some of the jobs that artificial intelligence should be doing at E Commerce platform. Shopify this. According to CEO Toby Litke, he published a memo this saying before hiring new humans at the company, teams need to show why AI can't do the work. Instead, here's Marketplace's Stephanie Hughes.

[Stephanie Hughes]

You could say AI is pretty good at the three Rs, reading, writing, research. And that means it's also good at.

[Ethan Molich]

Marketing some light legal stuff. They work really well as a second opinion, as a second set of eyes on something.

[Stephanie Hughes]

Wharton Professor Ethan Molich is author of the book Living and working with AI. He says experimenting with AI for five to 10 hours helps workers figure out what it can help them do, and that lots of companies are providing AI tools to their employees and encouraging or sometimes requiring that they use them.

[Ethan Molich]

But the question is, I've learned this for my company. Do I give this to the company? How do I get credit for that? And if I do end up letting the AI do my work, what happens to me and my friends then?

[Stephanie Hughes]

There are some jobs that could be at risk. Harvard labor economist David Deming says he's heard anecdotally that firms are slower to hire certain kinds of workers. Think people who do payroll, billing, administrative support. And it probably doesn't end there.

[David Brancaccio]

I don't think it's coming for everybody's job, but it's coming for parts of almost everybody's job.

[Stephanie Hughes]

Also, Deming points out, as good as AI may be now, this is the worst this technology will ever be. It's just going to keep getting better. So it's best to be prepared. I'm Stephanie Hughes from Marketplace, and in.

[David Brancaccio]

Los Angeles, I'm David Brancaccio. This is the Marketplace Morning Report.

[Novo Safo]

From.

[David Brancaccio]

APM American Public Media.

[Janelli 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. Hi, I'm the host, Janelli Espinal, and each week I ask 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.