Marketplace Morning Report – Episode Summary

Episode Title: Who pays for tariffs?
Date: September 15, 2025
Host: Sabri Benishour (in for David Brancaccio)
Podcast: Marketplace Morning Report

Brief Overview

This episode of the Marketplace Morning Report delves into the renewed US-China trade negotiations, the persistent issue of tariffs, and how these measures are impacting both US consumers and foreign exporters, particularly in areas like imported electronics, apparel, and alcohol. Alongside an update on consumer spending, the episode explores who ultimately shoulders the cost of tariffs in the shifting global economic landscape.

Key Discussion Points & Insights

1. US-China Trade Talks Intensify (01:00–02:09)

• The US and Chinese delegations, headed by Treasury Secretary Scott Besant and US Trade Representative Jameson Greer, are engaged in trade talks in Madrid.
• Key issues are tariffs, shipments of rare earths, Chinese purchases of US agricultural products, and the ownership fate of TikTok.
• The talks may set the stage for a meeting between President Trump and President Xi Jinping at the upcoming APEC Forum in South Korea.
• Notably, China has found US chip giant Nvidia in violation of its anti-monopoly law, adding further tension to negotiations.

Quote:
"They could also lay the groundwork for a meeting between President Trump and Chinese leader Xi Jinping Ping, possibly next month at the Asia Pacific Economic Cooperation Forum in South Korea."
— Nancy Marshall Genser (01:47)

2. Consumer Spending Defies Economic Headwinds (02:09–04:07)

• Despite ongoing economic pressures like tariffs and inflation, US retail sales remain robust.
• According to National Retail Federation data, retail sales increased by 0.5% in August and are up nearly 7% year-over-year.
• Experts observe that some spending is driven by necessity (rising prices), but discretionary choices (dining out, travel) remain strong.
• The primary force sustaining consumer spending is wage growth, which is outpacing inflation.

Quote:
"Ted Rossman at Bankrate says over and over again since the pandemic began and inflation spiked, economists have been expecting consumer spending to drop and it just hasn't."
— Samantha Fields (03:10)

Quote:
"The thing that is keeping consumers going right now are wages. Wages continue to exceed the rate of inflation."
— Mark Matthews, National Retail Federation (04:00–04:07)

3. Who Actually Pays For Tariffs? (05:26–08:14)

• The US Labor Department’s import price index helps identify whether foreign producers or US companies/consumers absorb tariff costs.
• In general, import prices have not declined in 2025—meaning Americans are mostly paying the tariffs.
• Exceptions: For some products (electronics, apparel, fabricated metals from China, European alcoholic beverages), foreign exporters are lowering their prices to remain competitive.

Electronics and Apparel:

• Many electronics manufacturers have shifted production away from China, creating overcapacity in China and prompting price discounts.
• Chinese exporters are motivated to drop prices to maintain US market access.

Quote:
"The Chinese manufacturers are looking to further discount to fill that capacity."
— Sudeep Saman, Alix Partners (06:23)

European Alcohol:

• The price of European beer, wine, and liquor is down nearly 11% from December 2024 to July 2025, despite a 10% tariff.
• European exporters are discounting to retain market share amid increasing domestic competition in the US, but can only do so much.

Quote:
"Any even minor price increases from this point onwards in most cases will translate into straightforward sales declines."
— Spiros Melendrakis, Euromonitor (07:35)

• If tariffs persist, higher costs will ultimately be passed onto US consumers, especially for products without ample domestic alternatives.
• The US alcohol market was already soft before tariffs; further price shocks could be disastrous for some firms.

Quote:
"Adding more costs on that already difficult operating environment, some of them will inevitably go under and go bankrupt."
— Samantha Fields summarizing Spiros Melendrakis (07:58)

Notable Quotes & Moments

• On trade talks' implications:
  "They could also lay the groundwork for a meeting between President Trump and Chinese leader Xi Jinping Ping, possibly next month at the Asia Pacific Economic Cooperation Forum in South Korea." (Nancy Marshall Genser, 01:47)

• On consumer resilience:
  "Over and over again since the pandemic began and inflation spiked, economists have been expecting consumer spending to drop and it just hasn't." (Ted Rossman via Samantha Fields, 03:10)

• On the source of consumer strength:
  "Wages continue to exceed the rate of inflation, and as long as that's true, he says, consumer spending will likely stay strong." (Mark Matthews, 04:07)

• On foreign exporters’ price cuts:
  "The Chinese manufacturers are looking to further discount to fill that capacity." (Sudeep Saman, 06:23)

• Alcohol market anxieties:
  "Any even minor price increases from this point onwards in most cases will translate into straightforward sales declines." (Spiros Melendrakis, 07:35) "Some of them will inevitably go under and go bankrupt." (Samantha Fields, 07:58)

Key Segment Timestamps

| Timestamp | Segment Description | |-----------|-----------------------------------------------------------------------------------| | 01:00 | Start of episode; trade talks in Madrid and broad trade agenda | | 01:47 | Nancy Marshall Genser summarizes potential outcome of the talks | | 02:09 | Nvidia under Chinese scrutiny; transition to US retail trends | | 02:58 | Samantha Fields on strong consumer spending despite economic worries | | 03:10 | Ted Rossman on economists' repeated surprises at US consumer resilience | | 04:00 | Mark Matthews on wages driving ongoing consumer spending | | 05:26 | Sabri Benishour explains how to spot who pays for tariffs using the import index | | 06:04 | Justin Ho details price-cutting among Chinese exporters, especially electronics | | 06:55 | European alcohol prices and tariffs; Megan Schoenberger and Spiros Melendrakis | | 07:35 | The challenge of further alcohol price hikes in the US | | 07:58 | Real consequences for importers, distributors, and the alcohol market |

Summary

This concise yet comprehensive episode breaks down the complexity of global tariffs, the dynamics of current US-China trade relations, and how these international policies are felt in the wallets of US consumers and the boardrooms of foreign suppliers. With a focus on recent data and expert analysis, the episode provides accessible insight into who truly pays for tariffs—most often, American consumers, unless foreign exporters are forced to absorb the costs to stay in the game. Tariffs, consumer strength, and the intricacies of global supply chains come through as tightly interconnected threads in the new economic tapestry.