Marketplace Morning Report: "Will Today Be the Day for New Tariffs?" Release Date: January 21, 2025

In this episode of Marketplace Morning Report, host David Brancaccio delves into the latest developments concerning President Donald Trump's potential announcement of new tariffs. Released shortly after Trump's executive orders, the episode features insightful discussions with experts, analyses of economic policies, and perspectives on consumer behavior amidst shifting political landscapes.

1. President Trump's Executive Orders and Tariff Policies

Timestamp: 00:17 - 03:14

David Brancaccio opens the episode by questioning whether today marks the day President Donald Trump will announce new tariffs, following an executive order issued the previous day. To shed light on Trump's actions, Brancaccio interviews Mark Goldwine, Senior Vice President and Senior Policy Director at the Committee for a Responsible Federal Budget.

• Inflation Measures:

  • Mark Goldwine comments on Trump's approach to inflation:

    "Does it solve inflation? Does it even reduce inflation? No. But might that get somebody in some agency to think a little bit more hard about not worsening price increases or bringing them down? Perhaps it could." (00:58)

  Goldwine suggests that Trump's executive orders are more indicative of the administration's priorities rather than concrete policy changes aimed at addressing inflation directly.

• Federal Hiring Freeze:

  • Discussing the implications of a hiring freeze on federal workers, including the IRS, Goldwine notes:

    "This policy would actually worsen the deficit, assuming this freeze is allowed to stay in place." (02:12)

  He points out that while the hiring freeze aims to save government funds temporarily, it could hinder the IRS's ability to expand tax enforcement, potentially leading to increased deficits.

• Tariff Announcements:

  • Goldwine observes the absence of immediate tariff implementations in Trump's orders:

    "I didn't see tariff policy. What I did see is some announcements about what tariff policy might happen." (02:21)

  He mentions potential tariffs on China related to TikTok but clarifies that substantial tariff actions may not materialize instantly due to the rulemaking processes involved.

2. Energy Policies and Production Initiatives

Timestamp: 03:14 - 04:32

Transitioning from tariffs, Brancaccio introduces Nancy Marshall Genzer of Marketplace to discuss Trump's energy-related executive orders aimed at boosting energy production.

• National Energy Emergency:

  • Genzer explains:

    "The national emergency on energy is meant to increase energy production... It allows the government to use the Defense Production Act to increase and speed up energy production." (03:35)

  This measure responds to the rising energy demands of data centers integral to artificial intelligence development.

• Oil and Gas Drilling Reforms:

  • Trump’s orders include reopening Alaska's Arctic National Wildlife Refuge and rescinding Biden-era drilling restrictions along the East and West Coasts. Genzer adds:

    "But US is already producing record amounts of oil, and it's not clear that US energy companies want to expand drilling in the areas that were off-limits during the Biden administration." (04:32)

  She emphasizes that despite these initiatives, global oil markets and existing production levels may limit the impact of these policy changes.

3. International Economic Reactions and European Concerns

Timestamp: 04:37 - 05:21

The conversation shifts to international perceptions of Trump’s economic policies, featuring insights from Harvard economist Ken Rogoff.

• European Nervosity:

  • Rogoff states:

    "I would say the Europeans are by and large nervous and depressed... The tariffs are obviously a huge existential threat to big export countries like Germany." (04:44)

  He highlights Europe's economic unease and the tension tariffs pose to major export-driven economies such as Germany.

• Business Perspectives:

  • Rogoff continues:

    "Among the business types, they, blindly or not, are pretty enthusiastic, not so much about Trump as getting rid of the highly regulatory Biden regime." (05:04)

  This reflects a business community eager to reduce regulatory burdens, irrespective of political affiliations.

4. Consumer Sentiment and Spending Behavior

Timestamp: 06:46 - 08:10

Mitchell Hartman and Joanne Hsu from the University of Michigan provide analysis on consumer behavior in the current economic climate.

• Divergent Consumer Confidence:

  • Hsu remarks:

    "Republicans believe Trump's policies are going to usher in growth, lower inflation in the future, whereas Democrats are quite worried that inflation is going to come surging back." (07:18)

  This division influences how different political groups approach spending.

• Spending Motivations:

  • Hartman summarizes:

    "Republicans are spending out of confidence, Democrats out of fear that things are going to get worse." (07:40)

  Consumers are either optimistic or preemptively purchasing based on their inflation expectations.

• Rising Debt Payments:

  • The report touches on increasing debt obligations:

    "Monthly debt payments keep rising on credit cards, car, and home loans. But analyst Matt Schultz says most borrowers aren't getting in financial trouble." (07:52)

  Despite higher debt payments, sustained confidence in employment and economic stability mitigates financial distress for many borrowers.

5. International Market Trends: French Champagne Sales Decline

Timestamp:08:10 - 08:37

In international news, Brancaccio reports a significant downturn in France's champagne sales.

• Economic Impact on Luxury Goods:

  • He states:

    "Champagne sales fizzled by 10% in the year just ended... economic uncertainty in places like China and inflation... plus war for souring the impulse to buy real French champagne." (07:06)

  Global economic challenges are dampening consumer spending on luxury items like champagne.

Conclusion

This episode of Marketplace Morning Report offers a comprehensive overview of President Trump's executive actions on tariffs and energy, the international economic response, and the nuanced consumer sentiments shaping the U.S. economy. Through expert interviews and data-driven insights, listeners gain a multifaceted understanding of the current economic landscape and its implications for both policymakers and consumers.

Notable Quotes:

• Mark Goldwine:

  "Does it solve inflation? Does it even reduce inflation? No." (00:58)

• Ken Rogoff:

  "The tariffs are obviously a huge existential threat to big export countries like Germany." (04:44)

• Joanne Hsu:

  "Republicans believe Trump's policies are going to usher in growth, lower inflation in the future, whereas Democrats are quite worried that inflation is going to come surging back." (07:18)

Attributions:

• Mark Goldwine, Committee for a Responsible Federal Budget
• Nancy Marshall Genzer, Marketplace
• Ken Rogoff, Harvard University
• Joanne Hsu, University of Michigan

For more in-depth discussions and updates, listen to the full episode of the Marketplace Morning Report.