Marketplace Morning Report: What History Shows Us About Tariffs and the Economy

Release Date: April 10, 2025
Host: David Brancaccio
Reporter: Savannah Peters

Market Volatility Amid Tariff News

David Brancaccio opens the episode with a discussion on recent stock market fluctuations influenced by tariff news.

• [00:01] David Brancaccio: Reports that stock prices experienced significant volatility following a historic jump by Wall Street, with the Dow initially rising nearly 3,000 points (7.9%) before receding by 720 points (2%) in early trading. The S&P and Nasdaq also saw declines of over 2% and 2.6%, respectively.

Tariffs and Their Economic Impact

David Brancaccio engages with Diane Swonk, Chief Economist at KPMG, to delve into the ramifications of recent tariff adjustments.

• [00:35] Diane Swonk: Advises caution against headlines suggesting the tariff issue has been resolved due to the president's U-turn. She clarifies, “The new tariff rate as of today is now higher than it was on April 2nd. It is actually above 30% effective tariff rate” ([00:42]). Swonk emphasizes that the substantial tariffs on China, combined with a 10% across-the-board tariff on other countries, have elevated the U.S. effective tariff rate to a record high.

• [01:07] David Brancaccio: Asks Swonk about the historical perspective on tariffs and their economic effects.

• [01:18] Diane Swonk: States, “Tariffs of this kind of magnitude always do more damage than good” ([01:18]). She references the 2018-2019 trade war, noting that while certain industries were protected, the broader economy suffered from higher costs for consumers and businesses, leading to job losses that outweighed any gains.

Business Perspectives: Navigating Uncertainty

Insights from business leaders highlight the real-world challenges posed by fluctuating tariffs.

• Andrew Koenig, CEO of Citi Furniture: Discusses the uncertainty faced by manufacturers, stating, “A lot of the manufacturers that I talk to, they don't know what to do because there's no certainty” ([02:06]). He likens the current situation to the unpredictability experienced during the COVID-19 pandemic, emphasizing the need for stability and predictability in government policies.

• Dominic Palmieri, Carnival Manager: Shares his approach to managing imports amidst tariff changes, mentioning, “It's all about planning. I'm only as good as the planning that I want to execute in 30, 60, 90 days down the line” ([02:49]). Palmieri indicates that while current freight costs are manageable, the uncertainty around future tariffs necessitates meticulous short-term planning.

Economic Indicators: Inflation and Bond Markets

The episode touches on broader economic trends impacting the market and consumer behavior.

• David Brancaccio: Highlights several key points:
  • Consumer Inflation: The annual rate of consumer inflation decreased from 2.8% to 2.4% in March, with notably lower gas prices.
  • Bond Market: Reports that the 10-year interest rate fell to 4.29%, indicating a more favorable bond market.
  • Childcare Costs: Introduces a segment on the rising cost of childcare compared to public university expenses, referencing findings from the Economic Policy Institute.

Childcare Costs and Public Policy: A New Model in New Mexico

Reporter Savannah Peters explores how New Mexico's expanded childcare subsidies have transformed families' economic stability and quality of life.

• [04:19] Savannah Peters: Narrates the story of Vanessa Vicuna from Clovis, New Mexico, highlighting the challenges faced before the expansion of childcare assistance.

  • [04:36] Vanessa Vicuna: Explains, “So it was just like, okay, I'm just working to pay daycare, which doesn't make sense to me” ([04:36]). Due to income limitations, Vicuna and her husband couldn't qualify for sufficient childcare assistance, forcing her to reduce her working hours and step back from her career.

• [05:01] Vanessa Vicuna: Describes the positive changes post-subsidy, stating, “We have enrolled them in every sport that we could” ([05:32]), and highlights the ability to afford quality care without financial strain.

• [05:49] Hailey Hines, Cradle to Career Policy Institute: Details the broader impact of the subsidy expansion, noting improvements in housing and transportation for families thanks to reduced childcare costs.

• [06:00] Elise Gould, Economic Policy Institute: Comments on the economic benefits, suggesting that the state could see significant returns on its investment by enabling more parents to remain in the workforce.

• [06:19] Hailey Hines: Summarizes the economic advantages, “That's more tax dollars” ([06:19]).

• [06:21] David Brancaccio: Adds, “That's a larger economy” ([06:21]).

• [06:34] Meg Peralta Silva: Shares her personal experience, stating that the subsidy allows her to maintain stable employment while ensuring her children receive quality daycare without cost.

• [06:40] Savannah Peters: Concludes with the positive choices families can make, emphasizing quality care over mere affordability.

Conclusion

David Brancaccio wraps up the episode by connecting economic policies to personal and national financial well-being.

• [06:51] David Brancaccio: Emphasizes the importance of making informed choices that benefit both families and the broader economy, “We can make a choice that's good for our family, but also that isn't just about, like, the numbers” ([06:40]).

This episode of Marketplace Morning Report provides a comprehensive analysis of the current tariff landscape, its historical context, and tangible impacts on businesses and families. Through expert insights and personal stories, it underscores the complex interplay between government policies and everyday economic realities.