Who pays for tariffs?

Summary

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

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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.

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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)

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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)

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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)

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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)

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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 |

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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.

Transcript

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[Sabri Benishour]

Are Talking Trade from Marketplace I'm Sabri Ben, ashore in for David Brancaccio. US And Chinese trade negotiators have begun a second day of talks today in Madrid. Tariffs obviously are on the agenda, and so is the fate of TikTok as marketplaces Nancy Marshall Ganzer reports.

[Nancy Marshall Genser]

Treasury Secretary Scott Besant and U.S. trade Representative Jameson Greer are leading the American delegation to the talks. In a statement, the Treasury Department says they'll discuss key national security, economic and trade issues of mutual interest, including TikTok. TikTok faces a deadline this week to find a new owner that's not Chinese or be banned in the US the latest tariff truce between Washington and Beijing expires in November. Besides tariffs, the two sides are expected to talk about shipments of rare earths from China and Chinese purchases of U.S. agricultural products. 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. I'm Nancy Marshall Genser for Marketplace.

[Sabri Benishour]

And just as those latest trade talks got going, China's market regulator found US Chip giant Nvidia had violated Chinese anti monopoly law. Did not elaborate on how exactly Nvidia would have done that, but it is another piece of leverage as the US And China continue negotiating. Consumers are the engine of this economy and tomorrow we will get government data on just how consumey they have been feeling recently. We're talking about the level of retail sales in the country. But we already have some clues from private sector data on how that is going to go. The National Retail Federation released numbers on Friday showing that retail sales rose half a percent in August and were up almost 7% year over year. And that is pretty good news in this economy. Marketplace's Samantha Fields has more.

[Samantha Fields]

If you just look at how much people are spending on all sorts of things, you'd never guess how worried many of them are over tariffs, rising inflation and a slowing job market.

[Podcast Sponsor Announcer]

Consumer spending continues to surprise to the upside.

[Samantha Fields]

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.

[Sabri Benishour]

I continue to be curious about how.

[Podcast Sponsor Announcer]

Long can this last.

[Samantha Fields]

Some of the increased spending people are doing is because they have to and because things cost more, he says. But some is because they want to go out to eat or travel. Charles Lieberman at Advisors Capital Management says the important thing is that they're buying something.

[Justin Ho]

Does it really matter if you spend money on a tape recorder versus steak? You're spending money.

[Samantha Fields]

The main reason consumers were able to keep spending money in 20, 21 and 22 as prices rose is that they had a lot of savings from early in the pandemic. But Mark Matthews at the National Retail Federation says that's not the case anymore.

[Sabri Benishour]

The thing that is keeping consumers going.

[Podcast Sponsor Announcer]

Right now are wages. Wages continue to exceed the rate of.

[Samantha Fields]

Inflation, and as long as that's true, he says, consumer spending will likely stay strong. I'm Samantha Fields for MarketPL.

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[Podcast Sponsor Announcer]

Try it out [e-mail] this podcast is supported by Odoo. Some say Odoo business management software is like fertilizer for businesses because the simple, efficient software promotes growth. Others say Odoo is like a magic beanstalk because it scales with you and is magically affordable. And some describe Odoo's programs for manufacturing, accounting and more and more as building blocks for creating a custom software suite. So Odoo is fertilizer Magic Beanstalk building blocks for business. Odoo exactly what businesses need. Sign [e-mail] that's o d o o.com.

[Sabri Benishour]

The Labor Department keeps track of the prices of imports coming into this country before any tariffs are applied. This is called the import Price Index. It comes out tomorrow and you can tell by looking at it who is paying for the tariffs. Basically, if import prices come down you it means foreign companies are lowering their prices to eat some of the tariff costs. They mostly have not been doing that this year. So far US Consumers and companies have been paying the tariffs. But there are some high profile exceptions where import prices have fallen in recent recent months and foreign exporters are trying to offset the cost of tariffs marketplaces, Justin Ho reports.

[Justin Ho]

One category where import prices have fallen is computers and other electronics from China. Sudeep Saman at the consulting company Alex Partners says a lot of electronics manufacturing has moved away from China because of tariffs and Chinese manufacturers want to keep the lights on because this caused a surplus capacity. The Chinese manufacturers are looking to further discount to fill that capacity. Siman says another reason is because manufacturers are worried that the president's tariffs will make their products too expensive in the US if the prices are not at the right level in United States, ultimately everybody loses. Other categories where import prices have been falling include Chinese apparel and fabricated metals. Megan Schoenberger, senior economist at kpmg, says the price of European beer, wine and liquor is down too.

[Samantha Fields]

They are actually down from December 2024.

[Podcast Sponsor Announcer]

To July 2025, nearly 11% now.

[Samantha Fields]

As of July, the tariff on those.

[Justin Ho]

Products was 10%, Schoenberger says. That's a sign that many European exporters are concerned about losing market share to their American competitors.

[Samantha Fields]

We expect there to be more discounting in sectors that have alternative domestic sources of supply. The US does make a lot of.

[Justin Ho]

Wine, schoenberger says many exporters will eventually have to pass tariff costs on to American consumers. But the alcohol industry is concerned that consumers can't handle many more price hikes, says Spiros Melendrakis with the research company Euromonitor.

[Samantha Fields]

Any even minor price increases from this point onwards in most cases will translate into straightforward sales declines.

[Justin Ho]

Alcohol sales in the US were already falling in the three years before the president's tariffs even took effect, according to Euromonitor. And Malindracki says many alcohol importers and distributors here in the US can't afford to absorb the cost of tariffs either.

[Samantha Fields]

Adding more costs on that already difficult operating environment. Some of them will inevitably go under and go bankrupt.

[Justin Ho]

And that possibility could be what's pushing alcohol exporters in Europe to keep their prices down. I'm Justin Ho for Marketplace.

[Sabri Benishour]

And in New York, I'm Sabri Benishour with the Marketplace Morning Report from apm American Public Media.

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