Marketplace: Tariff Pain and Retaliation – Episode Summary
Release Date: March 5, 2025
Host: Kai Ryssdal
Introduction: Entering a Trade War
In the episode titled "Tariff Pain and Retaliation," Kai Ryssdal delves into the escalating tensions of a burgeoning trade war. He outlines the current tariffs imposed:
- 25% on Canada
- 25% on Mexico
- An additional 10% on China, complementing the existing 10% retaliatory tariffs.
Ryssdal emphasizes the dynamic and uncertain policy environment, highlighting the ripple effects on businesses caught in the crossfire. He states, “This is the way things go in a trade war have already started” (00:29).
Impact on Agriculture: Avocado Imports
Kristin Schwab reports from the agricultural sector, focusing on Healthy Avocado Imports.
Paul Weissman, the company's representative, discusses the compounded challenges:
- Supply Issues: “Even before tariffs, supply from Mexico has been down because of bad weather” (01:38).
- Price Surge: Avocado prices have doubled since last year, affecting sales and consumer willingness to pay higher prices for products like guacamole.
Erica York from the Tax Foundation adds that tariffs not only increase costs but also inject uncertainty into business planning, deterring long-term investments (02:07).
Manufacturing Challenges
Chip McElroy of McElroy Manufacturing expresses concerns over the tariffs' impact on his business:
- Supply Chain Disruptions: Reliance on components from Canada and Mexico is jeopardized, with retaliatory tariffs driving customers to seek alternatives.
- Competition with Chinese Imports: He notes, “There is an influx of Chinese equipment that is substandard to what we provide but is, well, let's just say Chinese priced” (03:11).
Regional Effects: Texas Feels the Brunt
Elizabeth Trovall from Marketplace explores how Texas, deeply integrated with Mexico’s economy, is disproportionately affected:
- Rising Costs: Tariffs increase prices on essential goods like beer, lumber, and construction materials.
- Industry Strain: Oil producers and the trucking industry face higher costs, potentially reducing demand and affecting employment (04:26 – 05:56).
Economist Ray Perryman highlights that sustained tariffs could disrupt Texas's extensive supply chains, leading to broader economic repercussions across all states (06:13).
Retail Pharmacy Industry Struggles
Samantha Fields discusses the precarious state of major pharmacy chains:
- Walgreens' Potential Privatization: Facing prolonged struggles, Walgreens is reportedly in talks to be taken private by Sycamore for about $10 million (07:40).
- Operational Challenges: Chain pharmacies like Rite Aid and CVS are experiencing declining sales and closing stores due to decreased convenience and reduced prescription reimbursements.
Kristin Schwab and Emily Koharsky explain how consolidation among Pharmacy Benefit Managers (PBMs) has eroded pharmacy profits, creating a vicious cycle of declining customer experiences and reduced earnings (07:48 – 09:32).
Warehouse Space Shortage and Supply Chain Issues
Elizabeth Trovall reports on the critical shortage of small warehouses under 100,000 square feet:
- High Vacancy Rates: Smaller warehouses have a vacancy rate of 3.9% compared to 10.1% for larger ones (11:37).
- Business Adaptations: Companies like Half Price Books are resorting to temporary storage solutions due to the scarcity of suitable warehouse spaces in regions like the Twin Cities (12:54 – 14:14).
The shortage forces businesses to rethink their supply chains and logistics strategies, potentially leading to long-term operational changes (14:32 – 14:54).
Stock Market Repercussions
Ryssdal provides a snapshot of the stock market amidst these economic strains:
- Major Indices Decline: Dow Industrials down 1.5%, NASDAQ slipped by one-third of a percent, and the S&P 500 fell by 1.2% (15:25).
- Retail Impact: Companies like Best Buy and Target are experiencing stock drops due to tariff-induced cost pressures, while Walgreens shares rose amidst takeover rumors (16:43).
Bond markets also react, with the yield on the ten-year Treasury note rising to 4.25% as bond prices fall (16:43).
Forest Service Layoffs and Community Impact
The episode shifts focus to the human cost of economic policies, highlighting layoffs within the Forest Service:
- Case Study: In McCall, Idaho, nearly 150 Forest Service employees have been laid off, sparking protests and community distress (18:30 – 21:39).
- Economic and Environmental Concerns: Layoffs threaten forest management and wildfire prevention efforts, raising alarms about future fire seasons and community safety.
Bryce Baer, a former ranger, voices the loss of invaluable experience and expertise, stating, “There's a ton of knowledge that's being lost right now” (20:33).
Soccer Industry and Entrepreneurship
Ben Shahebar, founder of the soccer shoe brand Eleven, shares his entrepreneurial journey:
- Market Opportunity: Identifying a gap in the soccer footwear market dominated by giants like Nike and Adidas, Eleven aims to innovate with a focus on quality and engineering (22:20).
- Challenges and Progress: Shahebar discusses the difficulties in transitioning from digital designs to tangible products, including manufacturing setbacks and strategic pivots to ensure product quality and market readiness for the 2026 World Cup (24:00).
Concluding Notes
Kai Ryssdal wraps up the episode by touching on diverse topics such as public office space availability in Washington, D.C., and promoting the "Financially Inclined" podcast for personal finance education (25:36 – 27:07).
Notable Quotes:
- Kai Ryssdal: “This is the way things go in a trade war have already started” (00:29)
- Paul Weissman: “Even before tariffs, supply from Mexico has been down because of bad weather” (01:38)
- Chip McElroy: “There is an influx of Chinese equipment that is substandard to what we provide but is, well, let's just say Chinese priced” (03:11)
- Bryce Baer: “There's a ton of knowledge that's being lost right now” (20:33)
- Ben Shahebar: “We spent the first couple months really on the digital design, but then you have to take that design, however detailed it is, and you have to actually make it in real life” (22:52)
This episode of Marketplace provides a comprehensive overview of how tariffs and retaliatory measures are reshaping various sectors, from agriculture and manufacturing to retail and public services, illustrating the widespread and nuanced impacts of economic policies on businesses and communities alike.