Why people see tariff-induced inflation differently

Summary

Podcast Summary: Marketplace Morning Report — “Why people see tariff-induced inflation differently”

Date: October 27, 2025
Host: David Brancaccio
Guests: Alex Emis (University of Chicago economist), Elizabeth Troval (Marketplace reporter), Hugh Broadhurst (Eclair Resources), Evelyn Wang (MIT), Bridget (Marketplace)
Episode Length: ~8 minutes

Episode Overview

This episode focuses on the complex psychology behind tariff-induced inflation and why Americans may react differently to it compared to standard inflation. The show offers fast updates on global markets, trade relations between the US and China (particularly regarding rare earth minerals), Argentina’s new economic direction, and ends with the latest updates on the ongoing federal government shutdown.

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Key Segments & Discussion Points

1. US-China Trade Relations and Rare Earth Independence

[01:01–03:00]

• Trade Deal Rumors: US officials signal a potential trade agreement with China, aiming to avoid a proposed 100% import tax. In return, China would ease restrictions on rare earth mineral exports, a critical resource for electronics and defense tech.
• National Strategy for Rare Earths:
  • Louisiana Facility Opening: Marketplace reporter Elizabeth Troval explains the US is moving toward rare earth supply independence.
  • Hugh Broadhurst (Eclair Resources): Outlines how their new US facility will process dysprosium and terbium oxides from mining operations in Chile and Brazil, “What our customers need is a robust supply chain that is separated from the geopolitical technical issues…” [02:20]
  • Evelyn Wang (MIT): Highlights the importance of building these separation capabilities domestically due to current Chinese dominance.

    “This capability of separations in particular is… challenging across our allied nations because it’s… dominated by China right now.” [02:47]

• Significance: The facility represents a milestone toward US self-sufficiency, expected to open by 2028.

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2. Argentina’s Political Shift and International Aid

[03:00–03:34]

• Argentina’s main stock index is poised to rally after a conservative victory for President Milei. His platform includes robust free market reforms and austerity, paving the way for a $40 billion US-backed bailout.

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3. Why Tariff-Induced Inflation Feels Different

[04:49–08:15]

• Missing Data: Due to the federal shutdown, the October inflation report will be canceled. September’s report, however, already shows significant price increases attributed to tariffs (e.g., furniture up 4.1%, clothing up 7.1%).
• Consumer Psychology — Interview with Alex Emis:
  • David Brancaccio questions Emis on whether people equally resent tariff-induced inflation as they do the pandemic-induced inflation.
  • Emis reveals that human psychology treats these inflations differently.

    “You would think that price increases are price increases. You know, money’s fungible. If I have less money in my wallet, I don’t like it. And it doesn’t matter why it happened. Some of my research shows that tariffs are special because tariffs are a specific policy tool. People have this attitude where they like consuming things that other people want but can’t have. We call this superiority seeking.” [05:53]

  • Many see tariff-related price hikes as paying an “entry fee” to participate in a needed national policy, lending patience or even pride to the inflation’s cause.
  • Role of Narrative/Spin:

    “This is a move to improve the economy for generations. Now, my guess is that’s not going to be the case. Again, looking back at the last round of tariffs, they increased prices quite a bit and they did not move domestic manufacturing almost at all.” — Alex Emis [06:59]

  • Risks of 'Greedflation': Brancaccio raises the concern that if consumers suspect companies are using tariffs as a pretext for unjustifiable price hikes, support could quickly erode.
    • Emis:

      “If firms are seen as taking advantage of the circumstances… that firm is going to be punished. At least that’s what the data suggests.” [07:51]

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4. Federal Shutdown Impacts

[08:26–09:06]

• The federal shutdown continues, with essential workers unpaid and the threat of food stamp funding running out.
• Air travel is facing increasing delays (up 23% day-over-day), with 8,000 flights disrupted due to unpaid air traffic controllers.

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5. Resources for Kids: Understanding the Shutdown

[09:06–end]

• Marketplace’s Bridget promotes a kid-friendly explanation of the federal shutdown on the “Million Bazillion” podcast, including a personal connection from a young listener with a federal worker parent.

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Notable Quotes

• Alex Emis (on human nature and tariffs):

  “People have this attitude where they like consuming things that other people want but can’t have. We call this superiority seeking.” [05:53]

• David Brancaccio (on the power of rhetoric):

  “Another word for narrative is spin, right?...how they talk about something like this is crucial to building the narrative.” [06:50]

• Alex Emis (on corporate behavior):

  “If firms are seen as taking advantage of the circumstances… that firm is going to be punished.” [07:51]

• Evelyn Wang (on rare earths supply):

  “This capability of separations in particular is… challenging across our allied nations because it’s… dominated by China right now.” [02:47]

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Episode Flow & Tone

The episode moves quickly, mirroring the snappy, informative tone of morning business radio. Brancaccio’s questioning is direct and leads to accessible but nuanced insights from Emis. The episode mixes urgent updates (trade talks, market shifts, federal shutdown) with deeper dives, especially into the psychological side of economic issues for which Marketplace is known.

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Timestamps for Key Segments

• [01:01] – US-China trade update, rare earth minerals strategy
• [02:47] – China’s rare earth dominance and US milestones
• [03:00] – Argentina’s election and economic prospects
• [04:49] – Tariff-induced inflation and consumer psychology
• [05:53] – 'Superiority seeking' and the emotional dimension of tariffs
• [06:50] – The narrative/spin around tariffs
• [07:51] – Risks of corporate greedflation
• [08:26] – Status of the federal shutdown and real-world impacts
• [09:06] – Resources for kids on the shutdown

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Takeaways for Listeners

• Tariff-induced inflation is processed differently by consumers — psychological factors and policy narratives play a large role in how price increases are received.
• The US is investing in its rare earths supply chain as part of wider efforts to reduce dependence on China.
• Argentina enters a new economic era after a conservative victory, with major international aid on the way.
• The ongoing US government shutdown has extensive impacts, from groceries to air travel, and resources are available for families to help children understand it.

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For further details, listeners are encouraged to explore the full interview with Alex Emis and keep an eye on Marketplace for continuing coverage of trade, inflation, and government policy.

Transcript

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[David Brancaccio]

Signs of making nice with China I'm David Brancaccio in Los Angeles. Good morning. We're coming into a business day with senior US Officials suggesting a trade deal is coming together with China ahead of President Trump's face to face meeting with China's President Xi later this week. Treasury Secretary Scott Bessen is saying the emerging deal with avoid a 100% import tax on Chinese goods with China making concessions including holding off restrictions on its rare earth mineral exp this at a time the US Is moving to reduce its reliance on China's rare earths, crucial to everything with a power switch from consumer electronics to fighter jets, Louisiana is getting a first of its kind facility to process the minerals Marketplace's Elizabeth Troval.

[Elizabeth Troval]

Has that that torque you feel after hitting the accelerator of an electric car happens because of special magnets used in.

[Alex Emis]

Motors and those magnets to operate at the temperature they need to. It's based on these heavy rare earths, the dysprosium and terbium.

[Elizabeth Troval]

Hugh Broadhurst is with Eclair Resources, the company opening the new facility which will make dysprosium and terbium oxides through a unique process. It involves separating ionic clay that the company will source from its new mines in Chile and Brazil.

[Alex Emis]

What our customers need is a robust supply chain that is separated from the geopolitical technical issues that are going on today.

[Elizabeth Troval]

This new facility dedicated to ionic clay separation is a milestone, says MIT's Evelyn Wang, as the US develops its rare earths value chains.

[Alex Emis]

This capability of separations in particular is.

[Bridget]

Challenging across our allied nations because it's.

[Alex Emis]

Dominated by China right now.

[Elizabeth Troval]

The new facility is expected to be in operation by 2028. I'm Elizabeth Troval for Marketplace.

[David Brancaccio]

The key stock index in Buenos Aires is expected to rally when it opens at 10 o' clock Eastern. After the decisive win for President Milei's conservatives, Argentine voters backed his freer market reforms and tough austerity measures. The vote means a U.S. bailout plan potentially worth $40 billion is set to move forward.

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[David Brancaccio]

The Trump administration says the government shutdown means not a delay, but the cancellation of the main inflation report that would have covered this month, October. Last week the September inflation report did come out and it showed tariff effects with furniture prices up 4. 10%, clothing up 7. 10%. Now, inflation normally makes people mad, right? But that may not be as true about tariff inflation. Alex Emis is a University of Chicago economist and co author of a newly updated edition of a noted primer on behavioral economics called the Winner's Curse. Welcome.

[Alex Emis]

Thank you for having me, David.

[David Brancaccio]

People hated hated the inflation we saw during the pandemic supply chain snafus and the stimulus payments from the government to households during those years. You'd think prices are prices, inflation is inflation. If we hated 2022 inflation, we'll hate 2026 tariff inflation in the very same way. What does your understanding about how humans really work. Tell you about my proposition that inflation is inflation.

[Alex Emis]

You would think that price increases are price increases. You know, money's fungible. If I have less money in my wallet, I don't like it. And it doesn't matter why it happened. Some of my research shows that tariffs are special because tariffs are a specific policy tool. People have this attitude where they like consuming things that other people want but can't have. We call this superiority seeking. We have a lot of data basically implicating this attitude as being held by a large, large portion of the population. And the price increase that you're paying for this consumption could actually be kind of the price price of entry into this new regime. So, you know, its prices are going up, but I'm willing to take the brunt of it as long as I know, you know, countries that have taken advantage of America now don't have access to US Goods. Maybe given the narrative around the tariffs, it's going to take more than that to make them unpopular.

[David Brancaccio]

I mean, another word for narrative is spin, right? I mean policymakers and how they talk about something like this is crucial to building the narrative.

[Alex Emis]

Yeah, precisely. And something like tariffs, because they have such a policy component on top of the whole tax revenue component component, they're very prone to spinning it because theoretically, as they've been discussed in the past, as they're discussed being discussed now, this is a move to improve the economy for generations. Now, my guess is that's not going to be the case. Again, looking back at the last round of tariffs, they increased prices quite a bit and they did not move domestic manufacturing almost at all. So the data suggests that's not going to be born out.

[David Brancaccio]

Now consumers who are okay with tariffs because they see a long term plan here that might bring back American jobs may not be less in favor of the price increases if they start to detect greedflation gouging on the part of companies raising their prices not because of tariffs, but because they can get away with it in an inflationary environment.

[Alex Emis]

And that goes right into this idea of fairness. If firms are seen as taking advantage of the circumstances, and for example, let's say there's a firm that isn't really exposed to tariffs, but it's also kind of keeping up with inflation that it sees out there just to get a higher profit. If this is well known, that firm is going to be punished. At least that's what the data suggests.

[David Brancaccio]

Alex Emis is an economist at the University of Chicago. He's co author along with Nobel laureate Richard Thaler of the updated edition of the Winner's Curse, just out. Thank you very much.

[Alex Emis]

Thank you.

[David Brancaccio]

It's day 27 of the federal shutdown. Federal workers who have to work are doing so without pay. With their fingers crossed they will eventually be paid. Trump administration officials now say food stamps will be allowed to run out this weekend if the government stays closed. Yesterday, 8,000 flights were delayed, some cancelled, with unpaid air traffic controllers increasingly absent. Delays yesterday were up 23% compared to Friday, according to FlightAware this morning. So far, there are nearly 600 delays to, from and within the U.S. in Los Angeles, I'm David Brancaccio, Marketplace Morning report from APM American Public Media.

[Bridget]

Hey, everyone, it's Bridget, host of Million Bazillion, a podcast from Marketplace. You've probably heard about the government shutdown, but if you're anything like our young caller Esme, whose dad is a federal worker, you might still have questions.

[Elizabeth Troval]

I've noticed that my dad hasn't been.

[David Brancaccio]

Going to work, and I don't know.

[Elizabeth Troval]

When the government shutdown will stop and.

[Alex Emis]

My dad can go back to work.

[Bridget]

We can help tune into our recent episode where we explain what you and the young ones in your life need to know about government shutdowns. Listen to Million Bazillion on your favorite podcast app.