Trade volumes shrink on tariff worries

Summary

Marketplace Morning Report: Trade Volumes Shrink on Tariff Worries
Marketplace, Hosted by David Brancaccio
Release Date: April 28, 2025

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Introduction

In the April 28, 2025 episode of Marketplace Morning Report, host Sarah Rogers delves into the ongoing repercussions of the US-China trade war, highlighting significant shifts in global trade dynamics. The report also touches upon various other economic and business news, providing listeners with a comprehensive overview of the day's critical developments.

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US-China Trade War: Escalating Tariffs and Shrinking Trade Volumes

Economic Confidence Amidst Tensions
China remains steadfast in its economic outlook, maintaining confidence in achieving its target of approximately 5% growth for the year despite the intensifying trade war with the United States. This resilience is juxtaposed with the tangible effects of heightened tariffs on bilateral trade.

Impact on Trade Volumes and Consumer Prices
Mariko Oi from the BBC World Service, reporting from Singapore, provides a detailed analysis of the trade war's impact. She notes a 30% decrease in import volumes at the Port of Los Angeles compared to the previous week, attributing this decline to the 145% tariffs imposed by Washington specifically on Chinese goods. In retaliation, China has levied 125% tariffs on American imports, further straining the economic relationship.

“In terms of the real world impact... the volume of imports are down 30% compared to last week because while Washington has paused many of the tariffs on other global economies, for China, there's that 145% tariffs.”
— Mariko Oi [00:49]

Sector-Specific Consequences: The E-Commerce Giants
The tariffs have disproportionately affected certain sectors, notably the e-commerce giants Shein and Temu, which have gained immense popularity among American consumers, particularly the younger demographic. Mariko highlights substantial price hikes:

“Shein has just confirmed the price increase of about 30 to 50% on most products. But, you know, some items going up by about 380%.”
— Mariko Oi [01:31]

This surge means items previously priced around $1 are now being sold for $6, significantly impacting consumer purchasing behavior and affordability.

Shifting Dynamics and Potential Easing of Tensions
Despite the rigid stance from Beijing, there are emerging signs of pressure within the American business sector to mitigate the tariffs' adverse effects. Mariko points out that major retailers like Walmart have approached the US government to express concerns over the tariffs' sustainability.

“Walmart and other retail giants actually went to speak to Mr. Trump explaining how significant these tariffs could be. And now there's a report that Walmart have already told those Chinese suppliers to start shipments.”
— Mariko Oi [02:07]

These developments suggest that while official rhetoric remains confrontational, behind-the-scenes negotiations may be paving the way for a possible de-escalation of the trade tensions.

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Other Economic Highlights

Cybersecurity Concerns in South Korea

South Korea's largest cell phone provider is grappling with a major data breach, necessitating the replacement of 23 million SIM cards. Customers are experiencing delays, with only 5% of replacements currently processed.

Market Movements: Deliveroo's Surge

British food delivery company Deliveroo has seen its shares surge by over 16%, reaching a three-year high following a $3.6 billion buyout offer from American rival DoorDash.

Global Military Expenditure

A report from the Stockholm International Peace Research Institute reveals that world military expenditure reached $2.72 trillion last year, marking a 9.4% increase from the previous year.

Transportation Sector: Airline Revenue and Consumer Behavior

Surge in Airline Revenue with Rising Surcharges
Global airline revenue is projected to exceed $1 trillion this year for the first time. The International Air Transport Association forecasts that $145 billion of this revenue will stem from additional charges for seat selection and baggage fees. Despite a decrease in average ticket prices, these surcharges are not resonating positively with consumers.

“It feels like a trick because it's like you buy the ticket, you think it's going to be less expensive than you have to pay like $200 extra dollars to just bring your bag with you.”
— Lauren Alexander [04:37]

Industry Insights on Extra Fees
Aviation consultant Jay Sorensen explains that the surge in low-cost carriers has compelled traditional airlines to introduce additional fees to remain competitive.

“The passage of time, the low cost carriers were providing very significant competition. Traditional airlines felt they had to do something to meet that competition.”
— Jay Sorensen [05:00]

Peter Elbers, CEO of India's largest airline Indigo, emphasizes the importance of transparent pricing structures:

“I think what for us is important is to make sure that the customer has a realistic price proposition where we offer the ticket and then it's optional, whether you want to further expand it with specific seats or specific food options.”
— Peter Elbers [05:24]

Consumer Adaptation and Market Opportunities
The rise in hidden fees has spurred related markets, such as luggage brands like Antler, to innovate products that meet specific airline baggage requirements. Kirsty Glenn of Antler observes a significant uptick in online searches for under-seat bags.

“We've seen huge spikes in consumer searches online. On our website, for example, looking for under seat bags, there is a huge market for bags that perfectly fit these, what we call them baggage sizes.”
— Kirsty Glenn [05:45]

Additionally, travel influencer Chelsea Dickinson notes the role of social media in shaping consumer behavior regarding baggage:

“Social media has really propelled this idea of needing a bag that fits the baggage allowance requirements... that has become a core part of the content that I create and post on social media.”
— Chelsea Dickinson [06:11]

Experts anticipate that airlines will continue to monitor customer reactions closely to determine whether to maintain surcharges or integrate onboard benefits to differentiate themselves in a competitive market.

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Conclusion

The episode of Marketplace Morning Report offers a nuanced examination of the enduring US-China trade war and its ripple effects across global markets. From soaring tariffs impacting everyday consumer goods to strategic shifts within the airline industry, the report underscores the interconnectedness of international trade policies and domestic economic landscapes. Listeners are left with a comprehensive understanding of the current economic climate and the factors shaping business and consumer behavior worldwide.

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This summary synthesizes key discussions and insights from the April 28, 2025 episode of Marketplace Morning Report, ensuring clarity and context for those who have not tuned in.

Transcript

[Sarah Rogers]

A Chinese clothing giant has raised prices by up to 377%, but only for the U.S. as the trade war continues. Live from the U.K. this is the Marketplace Morning Report from the BBC World Service. I'm Sarah Rogers. Good morning. China says it's fully confident it will achieve its target of about 5% economic growth this year despite an escalating trade war with the US and we're now starting to see the impact of those trade tariffs. Imports from China, China to the US Are down and prices for some American shoppers are up. The BBC's Mariko Oi joins us from Singapore. Hi, Mariko.

[Mariko Oi]

Hi, Sarah.

[Sarah Rogers]

So we're seeing those tariffs play out now, aren't we, on imports to the US From China? Can you just run us through those numbers?

[Mariko Oi]

Yeah, sure, Sarah. But before that, I think I have to make a full confession that I've talked too much about the trade war, that I'm losing my voice. So apologies in advance, but yeah, in terms of the real world impact. So, for example, the Port of Los Angeles, that's where imports from Asia usually arrive. And this week the volume of imports are down 30% compared to last week because while Washington has paused many of the tariffs on other global economies, for China, there's that 145% tariffs. And of course, China also retaliated with its own 125% tariffs on American imports.

[Sarah Rogers]

And are there particular areas, Mariko, that this is hitting more than others?

[Mariko Oi]

You know, things like in Ashin and Temu, those huge Chinese E commerce giants that became very, very popular among American consumers, especially for younger generations. So, you know, we're talking about things like toys, clothes, homeware stuff. And Shein has just confirmed the price increase of about 30 to 50% on most products. But, you know, some items going up by about 380%. I mean, you know, we're still talking about something that used to be worth about $1 now being sold for $6.

[Sarah Rogers]

Now we're hearing about those price rises and seeing the impact. Is there even more pressure, I think?

[Mariko Oi]

Yeah, definitely. But at the same time, it's interesting that the language from Washington has somewhat softened slightly. But when it comes to Beijing, their attitude has not changed at all. Just today, we heard from a top economic official from China saying that China is on the right side of history when it comes to this brutal trade war. And of course, Beijing has previously said that they will fight till the end. But I think that's partly why we're starting to hear from American businesses pressuring the American government because I think they all thought that maybe China would just, you know, cave and that's why the pressure is now kind of on the White House side. Walmart and other retail giants actually went to speak to Mr. Trump explaining how significant these tariffs could be. And now there's a report that Walmart have already told those Chinese suppliers to start shipments. And now this is only based on one report. So we're starting to get these stories that might suggest that maybe there's some kind of a climb down at least behind the scenes.

[Sarah Rogers]

Marie Koi, I'm glad your voice held out so you could bring us that update. Thanks for joining us on Marketplace.

[Mariko Oi]

Thanks, Sarah.

[Sarah Rogers]

Okay, let's see the numbers. South Korea's biggest cell phone provider has started replacing 23 million SIM cards after a major data hack earlier this month. Customers are lining up at SK Telecom stores as the company says it can currently replace only 5% of them. And shares in British food delivery company Deliveroo hit a three year high. Shooting up more than 16% is after a $3.6 billion buyout offer from US peer DoorDash. World military expenditure reached $2.72 trillion last year. That's according to a report from leading conflict think tank, the Stockholm International Peace Research Institute. That's an increase of 9.4% from the year before. Let's look at transport now. And total global airline revenue is expected to top US$1 trillion for the first first time this year. And the International Air Transport association predicts 145 billion of that money will be made from charging customers to pick their seats and from baggage fees. Now the average ticket price is expected to fall. But as the BBC Sam Grouet reports, surcharges aren't really landing with customers.

[Sam Gruway]

Standing outside Toronto. Billy Bishop Airport I meet Lauren Alexander, who's 24 and has flown over for the weekend from Boston carrying only a backpack to avoid baggage fees.

[Lauren Alexander]

I think it's ridiculous. Way too much money. Yeah, it feels like a trick because it's like you buy the ticket, you think it's going to be less expensive than you have to pay like $200 extra dollars to just bring your bag with you.

[Sam Gruway]

So there was a time when seat selection, meals and checked bags came standard. Now it's a business worth billions. As aviation consultant Jay Sorensen explains, over.

[Jay Sorensen]

The passage of time, the low cost carriers were providing very significant competition. Traditional airlines felt they had to do something to meet that competition.

[Sam Gruway]

Jay says these extra fees make an estimated $145 billion for the industry annually. Peter Elbers is the CEO of India's biggest airline, Indigo, which charges fees for things like seat choice and food.

[Peter Elbers]

I think what for us is important is to make sure that the customer has a realistic price proposition where we offer the ticket and then it's optional, whether you want to further expand it with specific seats or specific food options.

[Sam Gruway]

But beyond airlines, bag rules are something luggage brands like Antler have been capitalizing on, too. Kirsty Glenn is the firm's managing director.

[Mariko Oi]

You know, we've seen huge spikes in consumer searches online. On our website, for example, looking for under seat bags, there is a huge.

[Chelsea Dickinson]

Market for bags that perfectly fit these, what we call them baggage sizes, you know.

[Sam Gruway]

Travel journalist Chelsea Dickinson makes videos about air travel on TikTok. The app says posts about the hashtag luggage have increased in volume by 135% this year.

[Chelsea Dickinson]

Social media has really propelled this idea of needing a bag that fits the baggage allowance requirements. And I say this as somebody who has directly experienced this because that has become a core part of the content that I create and post on social media.

[Sam Gruway]

Experts and customers will be watching closely to see whether airlines continue to charge or whether they start to include the costs of onboard benefits to try and differentiate themselves from the competition. I'm the BBC Sam Gruway for Marketplace.

[Sarah Rogers]

That's it from the Marketplace Morning Reports. I'm Sarah Rogers.

[Janelie 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. I'm the host, Janelie 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 podcast.