Marketplace Morning Report – “Who Pays When Tariffs Make Things More Expensive?” Release Date: April 25, 2025

In this episode of the Marketplace Morning Report, host David Brancaccio delves into the economic ramifications of President Trump's tariff policies, examines California's standing in the global economy, and explores the administration's attempts to influence independent regulatory bodies. Expert insights from Nancy Marshall Genzer and Elizabeth Wilkins provide a comprehensive analysis of these critical issues.

Tariffs and Their Impact on Consumers

Speaker: Nancy Marshall Genzer

The episode opens with a discussion on the Trump administration's implementation of tariffs aimed at bolstering American manufacturing and job creation. Nancy Marshall Genzer from the Institute on Taxation and Economic Policy (ITEP) provides an in-depth analysis of how these tariffs affect different income groups.

• Economic Redistribution: Genzer explains, “President Trump's tariffs are meant to boost manufacturing and create jobs in the U.S., but economists say importers will pass the cost of import tariffs taxes on to consumers.” (00:22)

• Impact on Low-Income Families: The ITEP report highlights that Americans earning less than $29,000 annually would see their expenses increase by approximately 6% of their income due to higher prices. Middle-income consumers would face a 5% increase, while the wealthiest Americans would only experience a 1.7% rise. This disparity is attributed to the higher proportion of income that low-income households spend on necessities.

• Overall Consumer Burden: Genzer emphasizes, “This is because low income consumers spend a higher proportion of their paychecks on necessities than wealthy families do.” (00:22)

California’s Economic Position in the Global Arena

Speaker: Nova Safo

David Brancaccio transitions to a discussion about California’s economy, featuring insights from Marketplace’s Nova Safo.

• Economic Ranking: Safo confirms that California's GDP stood at $4.1 trillion in 2024, slightly surpassing Japan's $4 trillion, making it potentially the fourth largest economy globally. However, she notes that "these totals don't account for inflation, so take them with a grain of salt." (01:47)

• Governor Newsom’s Claims: Governor Gavin Newsom touts California as a powerhouse in agriculture, technology, and entertainment, reinforcing the state's significant economic footprint.

• Shifting Rankings: Safo points out that "according to the same measure California used to calculate its 4th place global ranking, it's possible the state has already slipped back to fifth place as Japan's latest economic projections are looking a bit stronger." (01:47) This fluctuation underscores the competitive nature of global economies and the importance of accurate economic metrics.

Federal Reserve Independence and Administrative Interference

Speakers: David Brancaccio and Elizabeth Wilkins

The conversation shifts to the independence of the Federal Reserve and recent attempts by President Trump to influence key regulatory bodies.

• Threats to the Federal Reserve: Brancaccio raises concerns about President Trump's suggestions to oust Federal Reserve Chair Jerome Powell, noting Powell’s assertion that such an action "would be illegal." (03:03) The president's desire to lower interest rates is seen as a move to stimulate the economy, though it risks triggering inflation if mismanaged.

• National Labor Relations Board (NLRB) Controversy: The administration’s recent firing of two high-ranking NLRB officials has left the board without a quorum to make decisions. Elizabeth Wilkins, President and CEO of the Roosevelt Institute, provides a critical perspective on these actions.

  • Legal Precedent: Wilkins explains, “There is a 90 year old legal precedent called Humphreys Executor that says no, the President may not fire one of these commissioners for any reason that they want. They have to have cause.” (04:06) She criticizes the administration for “testing that precedent.” (04:06)

  • Contradiction of Pro-Labor Image: Despite President Trump’s pro-labor rhetoric, Wilkins argues that his administration’s actions towards the NLRB reveal a different stance. “We are watching in real time the administration walk back on its promises.” (04:33)

• Federal Trade Commission (FTC) and SEC Issues: Wilkins highlights similar tactics used against the FTC, where the administration illegally fired two Democratic commissioners. She warns that these actions not only undermine worker protections but also threaten the independence of other regulatory bodies like the SEC and the Federal Reserve. “If we watch the Supreme Court side with the administration in the NLRB case or the Federal Trade Commission case, I think we will really see the independence of the Federal Reserve questioned as well, and that's a really scary prospect.” (06:00 – 06:26)

Conclusion

The episode underscores the broader implications of the Trump administration's policies on tariffs and regulatory bodies. While aiming to strengthen domestic industries, the tariffs disproportionately affect lower-income consumers. Additionally, the administration's actions against independent agencies like the NLRB and FTC pose significant threats to the checks and balances designed to maintain economic stability and protect consumer and worker rights.

Elizabeth Wilkins provides a stark warning about the potential erosion of independent regulatory bodies, cautioning against the long-term impacts on the Federal Reserve’s autonomy. The episode serves as a critical examination of the intersection between political power and economic policy, highlighting the delicate balance required to foster a fair and robust economy.

Notable Quotes:

• “President Trump's tariffs are meant to boost manufacturing and create jobs in the U.S., but economists say importers will pass the cost of import tariffs taxes on to consumers.” – Nancy Marshall Genzer (00:22)

• “This is because low income consumers spend a higher proportion of their paychecks on necessities than wealthy families do.” – Nancy Marshall Genzer (00:22)

• “There is a 90 year old legal precedent called Humphreys Executor that says no, the President may not fire one of these commissioners for any reason that they want. They have to have cause.” – Elizabeth Wilkins (04:06)

• “We are watching in real time the administration walk back on its promises.” – Elizabeth Wilkins (04:33)

• “If we watch the Supreme Court side with the administration in the NLRB case or the Federal Trade Commission case, I think we will really see the independence of the Federal Reserve questioned as well, and that's a really scary prospect.” – Elizabeth Wilkins (06:00 – 06:26)

This comprehensive summary encapsulates the key discussions and expert insights presented in the episode, providing listeners with a clear understanding of the economic and political dynamics at play.