Marketplace: Remember Tariff Exclusions?
Hosted by Kai Ryssdal
Released on March 12, 2025

Introduction

In this episode of Marketplace, host Kai Ryssdal delves into the murky waters of tariff exclusions amidst ongoing economic uncertainties. With insights from economists, business owners, and market analysts, the episode navigates the complexities of trade policies, labor market shifts, and the evolving role of technology in retail. The discussion is enriched with firsthand accounts and expert opinions, making it an invaluable resource for listeners seeking to understand the current economic landscape.

Labor Market and Economic Data

Kai Ryssdal opens the discussion by highlighting recent labor market indicators. The January Job Openings and Labor Turnover Survey (JOLTS) from the Labor Department revealed a nearly 9% decrease in job openings compared to the previous year, signaling a cooling labor market. Additionally, the February Small Business Optimism Index from the National Federation of Independent Business (NFIB) indicated that many small businesses continue to struggle with filling open positions.

Kai Ryssdal [01:02]: "Job openings have fallen almost 9% since the same period a year ago. It's a sign that the labor market is slowing a bit, of course."

These data points underscore the broader economic uncertainty affecting both employers and employees.

Corporate Earnings and Market Impact

The episode transitions to corporate earnings, focusing on Kohl's and its bleak outlook. Kohl's projected a 5-7% decline in revenue for the year, surpassing Wall Street’s pessimistic expectations. This cautionary forecast is mirrored by other companies like Delta Air Lines and Dick's Sporting Goods, each issuing gloomy projections that have adversely affected their stock prices.

Heather Whaling [05:57]: "Projections are the hardest thing to get right in finance. As a broad rule of thumb, if a company's earnings come in lower than what either the company or Wall street analysts expected, the stock price goes down."

Economist Zachary Waring from CFRA emphasizes skepticism towards corporate guidance, highlighting the inherent challenges in financial projections.

Discussion on Stagflation with Shebnem Kalemli Ozkan

A significant portion of the episode is dedicated to the concept of stagflation—a troubling combination of high inflation and stagnant economic growth. Shebnem Kalemli Ozkan, an economist from Brown University, clarifies that while the current economy does not exhibit stagflation, the conversation is spurred by heightened uncertainty due to recent trade policies.

Shebnem Kalemli Ozkan [09:17]: "It is basically higher prices and higher unemployment. Recession has a double whammy. The economy is slow, people are unemployed. At the same time, prices are high."

She attributes the potential for future stagflation to extreme uncertainty created by fluctuating trade policies, particularly tariffs imposed by the Trump administration. Ozkan argues that this uncertainty dampens consumer demand and business investment, potentially leading to a recession.

Shebnem Kalemli Ozkan [10:15]: "The Fed's role here is to look at what happens to expectations, to inflation expectations... if the Fed, Jay Powell, sees those expectations are elevated... then obviously they are going to increase the interest rates."

Ozkan stresses that reducing policy uncertainty is crucial to preventing a downturn, highlighting the Federal Reserve's challenging position in balancing inflation control with economic growth.

AI in Retail: Home Depot and Lowe's Generative AI Assistance

Shifting gears, the episode explores the integration of Generative AI in retail, specifically by Home Depot and Lowe's. Both companies have launched AI assistants—Magic Apron for Home Depot and Milo for Lowe's—to enhance the consumer shopping experience.

Megan McCarty Carino [13:56]: "Lowe's Milo AI suggested I might need mulch to suppress new weeds once I've sprayed and after some coaxing it calculated how many bags I'd need to buy."

These AI tools aim to simulate in-store assistance by providing product recommendations, summarizing reviews, and offering practical advice for home improvement projects. While promising, experts like Anastasia Ghosh, a marketing professor at the University of Arizona, caution about the risks of AI hallucinations and errors.

Anastasia Ghosh [15:02]: "But the more personalized and creative these chatbots get, the bigger the risk. Generative AI is still prone to hallucination and other errors."

Despite these challenges, retailers view AI assistants as valuable for gathering consumer data and refining customer interactions.

Stock Market Updates

Kai Ryssdal provides a snapshot of the stock market's performance amidst the economic uncertainties. Major indices such as the Dow Industrials, NASDAQ, and S&P 500 experienced declines, influenced by negative corporate forecasts from companies like Kohl's and Delta Air Lines.

Kai Ryssdal [16:17]: "The downside outlook from Kohl's... drove shares in the retailer down more than 24%. Dick's Sporting Goods deducted 5.7%."

However, there was a silver lining in the airline sector as Southwest Airlines saw an 8.3% increase following the announcement of changes to its baggage policy.

Tariff Exclusions: Past and Present

A central theme of the episode is the tariff exclusion process, drawing parallels between the current situation and the trade policies during President Trump's administration. Randy George, co-owner of Red Hen Baking Company, and Randy George from Husco discuss the challenges businesses face in navigating tariff exclusions.

Randy George [22:50]: "Austin Ramirez at Husco... reduced its imports from China by about 80%, though none of those supply chains shifted."

The discussion highlights the opacity and randomness of the exclusion process under Trump's administration, where factors like political contributions influenced approval rates.

Randy George [21:13]: "Hasija says... businesses that made campaign contributions to the Republican Party were more likely to be granted exclusions."

With the Trump administration yet to announce a formal exclusion process for the current tariffs, businesses are left in a state of uncertainty, potentially leading to reduced investments and operational disruptions.

Closing Remarks: Tariffs as Tax Cuts

In a final commentary, Marketplace critiques the White House's misleading portrayal of tariffs. A Press Secretary was quoted saying,

Megan McCarty Carino [27:05]: "Tariffs are a tax cut for the American people."

Kai Ryssdal counters this assertion by reaffirming the true nature of tariffs:

Kai Ryssdal [27:08]: "Tariffs are a tax on the American people."

He underscores the program's commitment to factual accuracy, emphasizing that facts matter in economic discourse.

Conclusion

The episode "Remember Tariff Exclusions?" offers a comprehensive exploration of the intertwined issues of labor market dynamics, corporate financial strategies, technological advancements in retail, and the intricate dance of trade policies. Through expert analysis and real-world business experiences, Marketplace provides listeners with a nuanced understanding of the current economic challenges and anticipates potential future developments.

Notable Quotes:

• Kai Ryssdal [01:02]: "Job openings have fallen almost 9% since the same period a year ago. It's a sign that the labor market is slowing a bit, of course."

• Heather Whaling [05:57]: "Projections are the hardest thing to get right in finance... you can under promise and over deliver."

• Shebnem Kalemli Ozkan [09:17]: "It is basically higher prices and higher unemployment. Recession has a double whammy."

• Megan McCarty Carino [13:56]: "Lowe's Milo AI suggested I might need mulch to suppress new weeds."

• Kai Ryssdal [27:08]: "Tariffs are a tax on the American people."

This structured and detailed summary encapsulates the key discussions, insights, and conclusions of the episode, providing a clear and engaging overview for those who have not listened to the full broadcast.