Will today be the day for new tariffs?

Summary

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.

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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.

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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.

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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)

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Attributions:

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

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

Transcript

[Mitchell Hartman]

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[David Brancaccio]

Is today the day Donald Trump will announce new tariffs? Because yesterday wasn't the day. I'm David Brancaccio. Let's get right to President Donald Trump's executive orders right out of the gate. Mark Goldwine joins us this morning. He's senior vice president and senior policy director at the Committee for a Responsible Federal Budget, a nonpartisan organization with bipartisan roots. Mark, good morning.

[Mark Goldwine]

Good morning. Thanks for having me.

[David Brancaccio]

Voters spoke early and often about their anger over inflation. President Trump addressed inflation yesterday by, what is it? Directing every piece of the federal government to deal with it. I looked for details and didn't see see details. What about you?

[Mark Goldwine]

No, I mean, so look, I wouldn't say he addressed inflation, but on the other hand, I wouldn't say what he did was particularly strange. Right. So a lot of the executive orders you're going to see early on are sort of orders to start thinking about how to make orders. And that's what this inflation one is. 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. Either way, it's mainly sort of a statement of the administration's priorities more than an actual change in policy.

[David Brancaccio]

Now on federal government workers, president's getting strict on remote work for federal workers. But a hiring freeze, including at the Internal Revenue Service, something you will have noted in the work you do.

[Mark Goldwine]

Yeah, look, it's supposed to be temporary while they, quote, figure things out. Overall, hiring freezes, an opportunity to save the government money. Maybe it's not the most efficient one, but allows you to have a smaller workforce. The interesting thing is one agency that's supposed to be really ramping up its hiring is the irs. And the reason is that they were given special funding to expand their tax enforcement. And if we don't let them ramp up their funding, that's lost tax revenue. This policy would actually worsen the deficit, assuming this freeze is allowed to stay in place.

[David Brancaccio]

And a lot to digest here, but from your first and second read through, are you surprised by what's not in here?

[Mark Goldwine]

Well, we heard there's going to be tariffs on day one. I didn't see tariff policy. What I did see is some announcements about what tariff policy might happen. And I think he talked about a tariff on China related to TikTok, but we've been seeing announcements about the tariffs themselves, and that was really what President Trump ran on. The other thing, and this doesn't surprise me, but it might surprise some listeners or some people that have been listening to the campaign stump. There wasn't a reversal that I saw of the electric vehicle rule or some of the other bigger, costly Biden executive actions. And the main reason for that is a lot of these actions actually go through the rulemaking process. And so they do take time to unravel. You can't necessarily just snap your fingers and do it on day one or day two.

[David Brancaccio]

Mark Goldwine, senior vice president and senior policy director at the Committee for Responsible Federal Budget, thank you very much.

[Mark Goldwine]

Thanks for having me.

[David Brancaccio]

President Trump has issued a slew of executive orders on energy. He established a national energy emergency and started the process of trying to roll back some Biden administration energy policies. Marketplace's Nancy Marshall Genzer now looks at how much of an impact these attempts by the new administration to increase energy production are likely to have.

[Nancy Marshall Genzer]

The national emergency on energy is meant to increase energy production. It's partly a response to the soaring power needs of the data process centers used in the development of artificial intelligence. The national emergency allows the government to use the Defense Production act to increase and speed up energy production. President Trump signed another executive order that would reopen Alaska's Arctic National Wildlife Refuge to oil and gas drilling. Another executive order is aimed at rescinding former President Biden's restrictions on drilling in areas along the east and West Coast. The idea is to boost energy supplies and stabilize prices. But the 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. Plus, the global oil market sets prices. I'm Nancy Marshall Genser for Marketplace.

[David Brancaccio]

Some call them the great and the good business and thought leaders, plus politicians meeting at the Davos ski resort in Switzerland as they do this time of year. Harvard's Ken Rogoff used to be the chief economist for the International Monetary Fund.

[Ken Rogoff]

I would say the Europeans are by and large nervous and depressed. They see their European economy is not doing well. They don't know what to do about it. They see Donald Trump wanting them to spend money they feel they don't have. The tariffs are obviously a huge existential threat to big export countries like Germany. They're very nervous. 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.

[David Brancaccio]

Harvard economist Ken Rogoff.

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[Emily]

Hi, this is Emily from Paxton, Nebraska. I live in a rural area where the written local news has been outsourced to a bigger city and the local newscast is not very good. I enjoy listening to Marketplace programs because they are informative and thought provoking. I learn about things, places and people that I would not have found anywhere else. I am so grateful for Marketplace's dedication to bringing the news to the people. Join me in supporting Marketplace with a gift today. Go to marketplace.org donate and thank you.

[David Brancaccio]

President Trump yesterday painted a dire picture of the United States, and few would say there isn't room for at least some improvement. That said, America's job creation machine has been going gangbusters. Unemployment is down, wages have been rising faster than inflation. But consumers? Well, that's a conundrum, as Marketplace's Mitchell Hartman reports.

[Mitchell Hartman]

Consumers have been spending a lot, but they still feel pretty mediocre. And as political power has shifted, consumer sentiment has too, says Joanne Hsu at the University of Michigan surveys.

[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.

[Mitchell Hartman]

All that drives consumers to spend more.

[Joanne Hsu]

Republicans are spending out of confidence, Democrats out of fear that things are going to get worse. If you think prices are going to go up in the future, then now is the time to buy.

[Mitchell Hartman]

Meanwhile, LendingTree reports Americans 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.

[David Brancaccio]

If you're feeling good about your job.

[Mitchell Hartman]

And your overall situation, you're not necessarily scared of taking on debt, especially if it's to invest in education, a home or small business that could build future wealth. I'm Mitchell Hartman for Marketplace, and there's.

[David Brancaccio]

News from France that champagne sales fizzled by 10% in the year just ended. The Comite Champagne blames economic uncertainty in places like China and inflation in a lot of places around the world, plus war for souring the impulse to buy real French champagne. I'm David Brancaccio. You're listening to the Marketplace morning report from apm, American Public Media.

[Ken Rogoff]

Hey, everybody, it's Kai. Listen, is it time to upgrade your car? Give it new life by donating it to Marketplace? We'll use the proceeds to bring you more news about finance and the economy and how they affect you. Let us turn your old car into a donation to power the journalism you rely on. Go to marketplace.orgvehicle to donate your car today.