The 145% tariff already did its damage

Summary

Planet Money – "The 145% Tariff Already Did Its Damage"

Release Date: May 16, 2025
Host: Sarah Gonzalez, NPR
Episode Description: Exploring the real-world impacts of the unprecedented 145% tariff imposed by the U.S. on Chinese imports, featuring insights from port authorities, small business owners, and logistics experts.

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1. Introduction and Context

In this episode of Planet Money, Sarah Gonzalez delves into the dramatic economic landscape shaped by the U.S.’s imposition of a staggering 145% tariff on Chinese goods. Although this exorbitant tariff was only in effect for a month before being reduced to 30%, its ripple effects have already left significant marks on the global economy. The episode examines the immediate and lingering consequences through the perspectives of individuals directly affected by these policy changes.

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2. Impact on the Port of Los Angeles

Gene Soroka, the head of the Port of Los Angeles, provides a frontline view of how the tariff affected one of the busiest ports in the Western Hemisphere.

• Drop in Activity: "Last year, this port had its second busiest year in its 117-year history. But then last week was one of its slowest." (04:09)

  The port experienced a 20% reduction in ships and a 32% decrease in shipping containers, marking the most significant downturn since the COVID-19 lockdowns.

• Job Implications: "Every four containers that come into the port of Los Angeles create one job." (05:00)

  With fewer containers, there’s a direct impact on employment, affecting dock workers, truck drivers, and warehouse personnel. Gene emphasizes the challenge of maintaining jobs amid reduced cargo flow.

• Adaptation Efforts: "We've been out there hustling, finding where the cargo is." (05:30)

  Gene discusses efforts to source cargo from alternative countries like Vietnam, Indonesia, Malaysia, and Thailand to mitigate the impact of reduced Chinese imports.

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3. The Struggle of Small Businesses: Cara Dyer's Story

Cara Dyer, a mechanical engineer turned entrepreneur, shares her firsthand experience of navigating the tumultuous trade environment.

• Business Disruption: "When the tariff was announced, it was out of our control." (12:16)

  Cara recounts how her small business, Storytime Toys, faced a catastrophic $45,000 additional cost due to the 145% tariff on a $30,000 shipment from China.

• Supply Chain Challenges: "Our products are made from the same materials that yoga mats are made from, which is EVA foam. And China is really the only place where they make it." (15:23)

  Highlighting the lack of domestic alternatives, Cara underscores the difficulty of shifting production away from China without incurring substantial costs or compromising product quality.

• Economic Ripple Effects: "When we import a toy, say we spend, for example, $4 to have that manufactured in a factory in China. Well then once it gets back over here to the United States, I also spend another $15 to $30 getting the product into the hands of our customers." (17:22)

  Cara illustrates how tariffs on imports have downstream effects, increasing costs across various stages of her business operations and forcing her to consider price hikes that could alienate price-sensitive consumers.

• Future Uncertainties: "It is very risky, it's very uncertain, and it's not going to feel okay until there is a real solid trade agreement in place." (26:04)

  The uncertainty surrounding tariff policies leaves Cara and many small business owners in a precarious position, unsure of their ability to plan for the future.

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4. Shipping Logistics and Adjustments: Ryan Peterson’s Insights

Ryan Peterson, from Flexport, provides expert analysis on the logistical upheavals caused by the tariff.

• Cancelled Sailings: "In the last three weeks or so, ocean carriers had canceled between 25 and 40% of their ship sailings from China to the US." (21:16)

  The sudden drop in demand led to a surplus of idle ships, particularly off the coast of China, disrupting the global shipping schedule.

• Shift to Alternative Routes: "Vietnam may be a big winner in all of this because so many people were avoiding China that Vietnam actually surpassed China in exports for Ryan's company." (22:52)

  Ryan explains how businesses are rerouting shipments through countries with lower tariffs, like Vietnam, which has seen a boost in exports as a result.

• Supply Chain Bottlenecks: "Shipping components from China to another country, assembling those through a process that's called substantial transformation, which means you transform it to now it's a made in Vietnam product. Perfectly legal." (23:28)

  This strategy, while legal, adds complexity and time to the supply chain, causing delays and increased costs for businesses attempting to navigate the new tariff landscape.

• Demand Surge and Capacity Issues: "After the pause was announced, bookings from China to the US at Ryan's company was 70% higher than their biggest week of the year." (24:35)

  The temporary reduction in tariffs spurred a rush of orders, overwhelming shipping capacities and leading to skyrocketing freight rates.

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5. Consequences and Future Outlook

The episode highlights the multifaceted impacts of the 145% tariff, emphasizing that even a temporary imposition can have lasting effects on global trade dynamics.

• Economic Strain: Cara Dyer's experience exemplifies how hefty tariffs can strain small businesses, forcing them to absorb significant costs or pass them onto consumers, thus fueling inflation.

• Shift in Global Trade Patterns: Ryan Peterson notes a potential long-term shift in manufacturing hubs, with countries like Vietnam benefiting from diverted manufacturing and exports.

• Uncertainty and Instability: The volatility of tariff policies creates an unstable business environment, discouraging long-term planning and investment among U.S. companies reliant on international supply chains.

• Policy Implications: The episode underscores the need for coherent and stable trade agreements to prevent such disruptions, advocating for policies that balance protecting domestic industries with maintaining healthy international trade relations.

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Notable Quotes

• Gene Soroka, Port of Los Angeles:
  "Every four containers that come into the port of Los Angeles create one job." (05:00)

• Cara Dyer, Storytime Toys:
  "When the tariff was announced, it was out of our control." (12:16)
  "It is very risky, it's very uncertain, and it's not going to feel okay until there is a real solid trade agreement in place." (26:04)

• Ryan Peterson, Flexport:
  "In the last three weeks or so, ocean carriers had canceled between 25 and 40% of their ship sailings from China to the US." (21:16)
  "Vietnam may be a big winner in all of this because so many people were avoiding China." (22:52)

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Conclusion

"The 145% Tariff Already Did Its Damage" provides a comprehensive look at how high tariffs disrupt global supply chains, burden small businesses, and shift international trade patterns. Through the stories of port authorities, entrepreneurs, and logistics experts, Planet Money paints a vivid picture of the immediate and enduring challenges posed by such drastic economic measures. This episode serves as a crucial examination of the delicate balance between protecting domestic industries and fostering a stable, interconnected global economy.

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Produced by Emma Peaslee, edited by Jess Jiang, engineered by Jimmy Keeley, and fact-checked by Willa Rubin. Executive Producer: Alex Goldmark.

Transcript

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[Cara Dyer]

This is planet money from NPR.

[Sarah Gonzalez]

The first ships with the 145% tariffed goods from China had just started started pooling into U.S. ports last week when just a few days later the US announced that that mind bendingly high tariff was now gone. Paused. The US And China agreed to temporarily bring the tariff way, way, way back down from 145% on most Chinese imports to 30%, though the tariff on things like cars and steel and aluminum is higher about 50%. And you know, the deal came pretty quickly after talks in Geneva. And it was maybe unexpected or maybe not at all unexpected because the 145% tariff on China and China's retaliatory tariff on the US was already threatening a global recession. And in all the tit for tat back and forth, some companies got really unlucky, like those whose goods arrived at U.S. ports before the pause. If a medium sized company had a million dollars worth of goods imported, they had to pay an extra million and a half dollars on top of that just in the tariff. And had their ships arrived like a day later, their bill would be punched to the gut so much less. And even though this unprecedented tariff only lasted a month, it already inflicted its scars on the economy. Today on the show, what a month of 145% tariffs looked like and felt like for three people in the global economy who whose lives were all affected and still will be. We'll start at the biggest port in the Western Hemisphere. Yes. Hi, nice to meet you. Oh, in a suit at the port on a 93 degree day.

[Gene Soroka]

This is the uniform.

[Sarah Gonzalez]

Well when you run the port, yeah, that's the uniform. Gene Soroka runs the port of Los Angeles and 45% of everything that comes into this port is from China. So half, half of the business, half of the business. When we met up, we the big scary 145% tariff was still in place. Are you like, stressed? Are you doing okay? How are you feeling?

[Gene Soroka]

I'm doing okay, but I am concerned.

[Sarah Gonzalez]

Gene and I are at one of the seven terminals at this port where the cargo ships pull in to get unloaded. Like where those giant cranes lift the big steel shipping containers off the ship and like stack them on the dock. That's where we're at. At the Evergreen Marine terminal today, there.

[Gene Soroka]

Are nine cranes and their booms are all up. There's not a ship at the Evergreen facility today.

[Sarah Gonzalez]

Are you expecting one today at this terminal?

[Gene Soroka]

Not today.

[Sarah Gonzalez]

And no ships earlier today? Oh, there hasn't been any today.

[Gene Soroka]

This is a huge void. So if there's anything that's emblematic of where we stand right now with international trade, it's the fact that there are no container ships at one of our most famous terminals, Evergreen Marine.

[Sarah Gonzalez]

When there is a ship here, how long is it here?

[Gene Soroka]

On average, it takes about four days to get one of these large workhorse vessels unloaded and reloaded with exports before it heads back to Asia.

[Sarah Gonzalez]

Four days? I thought it was gonna be like hours. So not seeing a boat here actually is like a very stark image.

[Gene Soroka]

It's a huge deal. That's what I've mentioned.

[Sarah Gonzalez]

Last year, this port had its second busiest year in its 117 year history. But then last week was one of its slowest. The port was getting 20% fewer ships, 32% fewer shipping containers.

[Gene Soroka]

That is the biggest drop off save March of 2020 as the country went to lockdown during COVID Even more so than the Great recession. Back in 2008 and 2009, during the.

[Sarah Gonzalez]

Great Recession, there were like 15% fewer containers. And the drop off now at LA has been double that. The Port of LA normally gets 10 to 12 ships a day, but in the month of May, it's been getting eight ships a day. And fewer ships mean fewer containers, mean fewer jobs.

[Gene Soroka]

Every four containers that come into the port of Los Angeles create one job.

[Sarah Gonzalez]

Four of those big 40 foot long steel shipping containers. Four of them equal one job at the Port of LA. And one ship has about 8,000 of those containers. So one fewer ship not carrying goods from China represents 2,000 fewer jobs. Fewer dock workers, truck drivers, warehouse workers. So Jean has been trying to get more cargo coming in or out of this port from anywhere to anywhere. Like the port workers just need cargo.

[Gene Soroka]

We've been out there hustling, finding where the cargo is. So whether it's cargo that is now being sourced out of Vietnam, Indonesia, Malaysia, Thailand, my job is to get that cargo here because every four containers create.

[Sarah Gonzalez]

One job and that or at least keep one job.

[Gene Soroka]

Conversely, let's maintain so we keep those jobs.

[Sarah Gonzalez]

Now. The new temporary tariff on China is substantially lower. And I did check back in with the port, but Gene says he still has not seen a big rush on cargo. A 30% tariff is still in a high, high tariff and he's not sure companies will want to bring in goods that cost 30% more than they used to.

[Gene Soroka]

30% tells me that the importers are going to go look for alternative ways to source their products.

[Sarah Gonzalez]

But let's say demand does come back like in full force and there are signs that it is coming back. Gene says it can still take a month and a half before this port starts to see some of its ship and container volume return because it's just going to take a while to line everything back up.

[Gene Soroka]

It'll take the shipping lines a couple of weeks to line the vessels back up at major ports from Qingdao to Shanghai. It'll take another two weeks to steam across la and then a couple weeks after that to get all that Cargo into the US distribution network.

[Sarah Gonzalez]

The 145% tariff amounted to basically a trade embargo with China. And even though that's now paused, global trade is just not something you can shut off and then turn back on just like that. Hello and welcome to Planet Money. I'm Sarah Gonzalez and today we are bringing you a portrait of this historic moment for the US of an unfathomably high tariff. The ones who got lucky and the ones who got really unlucky. And also, if the tariffs are meant to bring manufacturing back to the U.S. what is the right tariff? Is there one? We consider this from the perspective of one small U.S. company.

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[Sarah Gonzalez]

Today, trying to run a small business during a trade war is about the rollercoaster that you might expect. You try to get ahead of it to shield your company, but so much of it is out of your control. Take Cara Dyer. She always knew she wanted to create a product, a new thing. She wanted to design something and sell it to people. Cara is a mechanical engineer by training.

[Cara Dyer]

Yeah, I started my career designing missile guidance systems and.

[Sarah Gonzalez]

Missile guidance systems?

[Cara Dyer]

Missile guidance systems, yes, yes.

[Sarah Gonzalez]

For the US Military. Cara also used to design cockpit displays for the military. But then she went to business school with the goal of creating and selling her very own product with her own patented technology. And the product she designed.

[Cara Dyer]

Yeah, yeah. It actually is the exact opposite of missiles.

[Sarah Gonzalez]

Her product comes this little box with.

[Cara Dyer]

A handle, and then, you know, it's like this little flap that you open.

[Sarah Gonzalez]

There's like a little book immediately.

[Cara Dyer]

Yeah, you see the little book and then there's all of these pieces.

[Sarah Gonzalez]

It's like sturdy foam puzzle pieces that.

[Cara Dyer]

Kids can build into the fairy tale world that is depicted in the story. Oh, they build the Three Little Bears house, and it's got three bowls of porridge and three chairs and three little beds.

[Sarah Gonzalez]

It's like a gingerbread house kind of vibe.

[Cara Dyer]

Yes, yes. And this is like our patented technology. So, like for the Three Little Pigs, the straw house blows down easily. Like, it's not very stable and you can knock it over. And the stick house is sort of the same way. But the brick house, we've designed it so that, like, it really stands firm.

[Sarah Gonzalez]

The Goldilocks playset and the Three Little Pigs playset are hands down the two most popular items at Storytime Toys, Kara's company. Oh, so you're sold out?

[Cara Dyer]

No, we're totally sold out of these right now.

[Sarah Gonzalez]

Which is why back in December, Kara wanted to put in an order for more of these sold out playsets with the factory that she uses in China to that manufactures her products. And regardless of whether you think we should or should not import goods from China or whether we should all do with less from China, less pencils, less dolls, every time Cara imports one toy from China, it creates and supports more jobs in the US Than in China. Even normally, Cara puts in an order for $100,000 worth of playsets and these 3D puzzles she also makes. But she didn't want to do that in December because she was anticipating that there would be a tariff because President Trump had been saying things like, tariff is the most beautiful word. And she was worried what the tariff.

[Cara Dyer]

Would be because, you know, you have to pay the tariff as a lump sum when the product arrives.

[Sarah Gonzalez]

So she put in a smaller order than usual, just $30,000 worth of the Goldilocks playsets and the Three Little Pigs. Just one small container on a ship. But it takes about a month and a half for the factory in China to make the products for her. And a lot of companies were doing the same thing that Cara was doing, putting in these early orders, anticipating tariffs.

[Cara Dyer]

So our order took a little bit longer than I was hoping, like months longer.

[Sarah Gonzalez]

And then on April 2, the tariffs.

[Cara Dyer]

Were announced and, you know, quickly escalated to 145%. And at that point it was out of our control.

[Sarah Gonzalez]

A 145% tariff on $30,000 worth of goods.

[Cara Dyer]

The tariff that I'd have to pay.

[Sarah Gonzalez]

Would be $45,000 extra on top of the 30,000. Yes, I like that. You just do the math like that quickly in your head.

[Cara Dyer]

I know. I've been thinking about that. $45,000.

[Sarah Gonzalez]

Oh, right, of course. You're like, I know U.S. customs and Border Protection had issued some guidance on when goods needed to leave China to avoid that tariff.

[Cara Dyer]

Yeah, it was on one of their webpages that says it was like on an on the water exemption.

[Sarah Gonzalez]

Oh, on the water exemption. The cutoff was April 9, which happened to be the day that Cara's inventory left the factory in China and likely arrived at the Ningbo port in China, too. So maybe getting in under that on the water exemption deadline. Does on the water mean on a ship in the water, or can it mean like on the dock at the port?

[Cara Dyer]

Yeah, so that's. Yeah, it's super unclear.

[Sarah Gonzalez]

Oh, you don't know?

[Cara Dyer]

Yeah, I don't know.

[Sarah Gonzalez]

Yeah.

[Cara Dyer]

And even our customs shipping coordinator didn't know.

[Ryan Peterson]

Oh, she's, she's got. I got bad news for her. If you're listening. The ship had to depart by April 9th.

[Sarah Gonzalez]

Ryan Peterson runs a global shipping logistics company, so he knows.

[Ryan Peterson]

So ship had to depart. She's going to have to pay it.

[Sarah Gonzalez]

Oh.

[Cara Dyer]

Oh, man, that is so frustrating because at that point, we had no control over our shipment like it had already. Like the, the wheels were in motion.

[Sarah Gonzalez]

This exact thing was happening to businesses across the U.S. these are the unlucky people in the trade war. And Kara says the cost here is not just the tariff on the imported toy itself. When there's any tariff, it has a ripple effect.

[Cara Dyer]

The shipping boxes are going to be more expensive and the labels and everything. So there's so much more that that's adding to the cost too, that I don't know what we're going to do.

[Sarah Gonzalez]

You seem really sad.

[Cara Dyer]

Yeah, it is sad. It is sad. I don't want to lose my business, you know.

[Sarah Gonzalez]

Mm. Well, let me ask you this. Could you make all of your toys in the U.S. at a factory in the U.S. no.

[Cara Dyer]

No, we couldn't. So, I mean, I've, I've looked into it every year. That would be amazing.

[Sarah Gonzalez]

Dream, dream scenario.

[Cara Dyer]

It would be totally a dream scenario.

[Sarah Gonzalez]

The whole trade war started when Trump proposed a 54% tariff on China. And 54%, not 145%, was meant to be so big, so bad, so prohibitive that companies would stop importing from China and start manufacturing in the U.S. but there aren't that many manufacturing facilities in the U.S. that Cara can turn to. She says there'd be like a six month wait, maybe more, and she'd have to order these, like huge quantities for them to even put her in their production line. But more importantly, the US doesn't really have enough of the material that Kara needs.

[Cara Dyer]

Our products are made from the same materials that yoga mats are made from, which is EVA foam. And China is really the only place where they make it.

[Sarah Gonzalez]

There are a couple factories in the US that make the foam, but Kara says their capacity is completely taken up by the shoe industry. The foam is apparently also used for the insoles of shoes, so I couldn't.

[Cara Dyer]

Buy foam from them even if I wanted to. She's dried, so we would have to import all the materials.

[Sarah Gonzalez]

And if she imports the foam material from China, she'd still have to pay a tariff on the material, which is almost as much as paying a tariff on the whole finished product. And the foam is kind of like what sets Kara's toys apart.

[Cara Dyer]

Using this foam is one of our competitive advantages. Like we have these pieces that interlock, then you can pull them apart without any tools. Or screws or glue. So I even hesitate to think about changing our material. And if I was going to change to another material, I still think we would have a similar problem. Like we would if we were to change to cardboard. Well, we would probably have to source the cardboard from China.

[Sarah Gonzalez]

China is the biggest producer of cardboard.

[Cara Dyer]

Or if we were to change to bamboo, same thing.

[Sarah Gonzalez]

Technically, Kara could open her own manufacturing facility and buy and import the fancy printer from probably Germany and the fancy die cutting machine and laminating machine from probably China, which would also be tariffs. But like, Kara has a toy business, not a business building manufacturing facilities. It's not like she can just do all this, like, no big deal. And for Cara, it is very important to point out that even though she is importing goods, every time she imports one toy from China, she spends way more money on the US Side of things.

[Cara Dyer]

When we import a toy, say we spend, for example, $4 to have that manufactured in a factory in China. Well then once it gets back over here to the United states for that $4, I also spend another 15 to $30 getting the product into the hands of our customers.

[Sarah Gonzalez]

15 to $30 on US jobs, every toy. Because when you ask a factory in China to make you something, that would.

[Cara Dyer]

Have been our design that we sent over there and we worked carefully with them. And I would have already probably worked with artists and they designers and possibly some other engineers and packaging designers here in the US and we would have coordinated quite a lot with the factory in China.

[Sarah Gonzalez]

And that's just to get the product made. Then when her product leaves China, it goes on a container and a ship that is often a US based company. There's the logistics coordinators that help her clear customs on the US Side, the dock workers, the truck drivers that drive the container to Cara's warehouse in Buffalo, the people at the warehouse who unload every single Goldilocks box. And then every time an order comes in, they pack, package it up and ship it to a store or a house. There's the photographer who takes pictures of the playsets for the website, the people who maintain the website, the customer service reps, the sales reps, the store clerks who sell the toys at mom and pop stores and big box stores. Like these are all US Jobs, right?

[Cara Dyer]

There's a whole chain of people for that one product that will be affected if I don't bring that product in.

[Sarah Gonzalez]

After the break. We once you effectively shut off trade, how long does it take to turn the faucet back on? Also, why high tariffs on China is Not all bad news for some people.

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[Sarah Gonzalez]

A while for a cargo ship to cross an entire ocean.

[Ryan Peterson]

Oh, you'd be surprised. They, they're, oh, they haul like as fast as a speedboat.

[Sarah Gonzalez]

Oh, the world's just a big place and so it just, I mean like.

[Ryan Peterson]

18 knots or something.

[Sarah Gonzalez]

I don't know what knots are. Ryan this is Ryan Peterson again, who measures speed in knots because he's in the cargo shipment business. His company, Flexport, helps other companies ship cargo all over the world. And there are so many logistics involved in the import export business. So many rules, so many agencies actually just to import like a couch.

[Ryan Peterson]

In fact, in the United States alone, there are 43 government agencies that take an interest in imported products of some kind.

[Sarah Gonzalez]

Name an agency that we wouldn't think.

[Ryan Peterson]

Of Fish and Wildlife. Well, for the couch it's going to be who does the fumigation certificates. If it's made of wood, you have to show that it's not infected with bugs.

[Sarah Gonzalez]

In the last three weeks or so, Ryan said ocean carriers had canceled between 25 and 40% of their ship sailings from China to the US so there have been all these ships with nowhere to go, nothing to carry.

[Ryan Peterson]

If you look at a map of the world's ships, a lot of them are sitting idle off the coast of China. Sitting there emptying, empty, waiting for their next orders because they were supposed to sail to the United States and that sailing got canceled.

[Sarah Gonzalez]

You could actually see all of these ships on this live tracker online. Tankers, passenger vehicles, tugs. Oh, like tugboats.

[Ryan Peterson]

Tugboats, yeah. You don't need to see those. So just the green ones are the cargo vessels.

[Sarah Gonzalez]

All of the cargo vessels that are moving on the ocean and rivers show up as these green arrows indicating the direction that they're headed. If they're idle, they become a green circle on this map.

[Ryan Peterson]

They'll always turn to a circle when they're at the port because they're not moving. But if they're in the ocean and they're a circle, that's odd behavior. They're idling for no reason.

[Sarah Gonzalez]

And off the coast of China, you.

[Ryan Peterson]

See all those circles that aren't moving? Yeah, those are all just ships waiting. They've been canceled for their sailing.

[Sarah Gonzalez]

Oh, so some empty ships idling in the middle of the ocean. But a lot of ships actually already went looking for goods somewhere else.

[Ryan Peterson]

A lot of them actually were repositioned to sail to Europe or sail Vietnam.

[Sarah Gonzalez]

To the US Vietnam may be a big winner in all of this because so many people were avoiding China that Vietnam actually surpassed China in exports for Ryan's company. And it could be good for Vietnam for a while, because many large companies at least, have already been using factories in multiple countries. And when there are high tariffs, there's an incentive to shift even more production to those lower tariff countries.

[Ryan Peterson]

Shipping components from China to another country, assembling those through a process that's called substantial transformation, which means you transform it to now it's a made in Vietnam product. Perfectly legal.

[Sarah Gonzalez]

You may have heard a Planet Money episode about this recently.

[Ryan Peterson]

And then it ships from Vietnam to the US So from a logistics standpoint, you just ship the same thing twice. Once from China to Vietnam, and then once from Vietnam.

[Sarah Gonzalez]

Oh, so that's good for you.

[Ryan Peterson]

Trade might actually go up in all of this.

[Sarah Gonzalez]

Not like trade for the U.S. necessarily, which is like global trade, global trades moving around. And now, now that the Trump administration has backed off of the 145% tariff and agreed to a 30% tariff for 90 days. Well, now Ryan is expecting a ton of demand during those 90 days as businesses rush to ship out goods at the lower tariff rate. After the pause was announced, bookings from China to the US at Ryan's company was 70% higher than than their biggest week of the year. So far. And now Ryan's company says it is too early to tell how many ships can shift back to China and how quickly because, right, they were already rerouted. And when a ship is sailing to, say, Europe to pick up goods, you can't just turn the ship around and send it back to China. Now that demand is back, the ship has to continue to Europe, pick up the goods, sail to, let's say, the US Drop off the goods, then sail to China, get loaded up, sell back to the U.S. and that can take a month, two months, depending on where in the process the ship might be and where in the ocean. So they are bracing four bottlenecks and Kara. Kara, who ordered all those Goldilocks playsets. Her ship is luckily still making its way to the port of New York. So she had not yet paid a tariff. And just like that, she no longer has to pay for 45,000 extra dollars on her shipment. She'll just have to pay 9,000 extra dollars. And how are you feeling?

[Cara Dyer]

Well, I. I have a mixed emotions, honestly.

[Sarah Gonzalez]

She's not quite celebrating.

[Cara Dyer]

I do feel a little bit like a weight has been lifted, just a little bit. But I'm also feeling super cautious.

[Sarah Gonzalez]

She doesn't feel confident that the 90 day pause will even stay in place.

[Cara Dyer]

You don't? No. No, I don't. It's scary. It's super scary. I feel like something could go wrong at any second.

[Sarah Gonzalez]

Right around now. Cara would normally be putting in her big $100,000 order and a 30% tariff on that will still add an extra 50, 30,000 whole dollars. But, like, who knows? In the months it takes for the factory to make her order and ship it, maybe the tariff will be higher.

[Cara Dyer]

Again, like, this has literally already happened to me. And so, like, it is very risky, it's very uncertain, and it's not going to feel okay until there is a real solid trade agreement in place.

[Sarah Gonzalez]

Kara says her business would not be able to handle a surprise higher tariff on her big order. Just extra, like, out of pocket.

[Cara Dyer]

Like, yeah, no, I can't. Like, we. We are a small business. $100,000 order is not that much. Actually.

[Sarah Gonzalez]

She's already preparing for a bunch of extra surprise costs that will come from the technically good news of a lower tariff. Like a bunch of new demand for ships from people rushing to place those orders in the next 90 days. That could mean that ships get a lot more expensive. This happened to Cara during COVID If.

[Cara Dyer]

Shipping is crazy because of the supply chain disruption, that could be a surprise.

[Sarah Gonzalez]

Cost that comes up and yeah, ocean freight rates from China to the US are likely to triple in the next month, according to Ryan at the shipping logistics company. So Cara normally pays $10,000 just in the ocean freight. Now she'll pay about $30,000. And with all the extra costs Cara is expecting, she'll have to increase the price of her products 10 to 15%, which is better than before. But US shoppers are really price sensitive. Think about what 4% inflation felt like just a few months back. This will be like 10 to 15% inflation, basically. It is not insignificant. Cara is actually going to see if she can get her factory in China to share some of the costs of the current 30% tariff and share some of the risk.

[Cara Dyer]

What I'm going to propose to our factory is that we share the tariff, the expense of the tariff, and I think that they can come down a little bit on their price so that we, we can do that and then also both share the risk of the tariff re emerging. So if it ends up that we have to pay a tariff of 50% or 80% that they agree to pay half of that, and I will think.

[Sarah Gonzalez]

They will do that.

[Cara Dyer]

I don't know. I'm gonna propose it to them. Yeah, it's, I'm, I think it's at least worth asking. And I, I don't think that they have a lot of room. But my other choice is to go out of business or, you know, sell all the inventory that I have and then go out of business. So.

[Sarah Gonzalez]

The 145% tariff already did its damage. It was like throwing a bunch of little missiles all over the global supply chain. And to try to understand what all the disruptions might be and the costs and the bottlenecks, I think we're going to try to import a Chinese good ourselves. I have a, I have a idea.

[Ryan Peterson]

Yeah.

[Sarah Gonzalez]

I'm wondering if we could just like put a little Planet money something onto your next shipment.

[Cara Dyer]

Yeah.

[Sarah Gonzalez]

Just so we can kind of like follow along and track the process.

[Ryan Peterson]

We can definitely do this.

[Cara Dyer]

We could work with our factory to make a little Planet Money something.

[Sarah Gonzalez]

But they don't just make like one one off products.

[Cara Dyer]

Well, it's a sample.

[Sarah Gonzalez]

Oh, we could get a Planet Money doll sample.

[Cara Dyer]

You obviously pay them.

[Sarah Gonzalez]

Yeah, no, we could, we would pay them.

[Cara Dyer]

Maybe you could make a plush planet.

[Sarah Gonzalez]

Maybe like a squirrel.

[Ryan Peterson]

Okay.

[Sarah Gonzalez]

Be an astronaut.

[Ryan Peterson]

Yeah. And then the ship will give you a tracking link so you can just follow it as it stops in multiple places across the world.

[Sarah Gonzalez]

So stay tuned for our very own imported tariff toy of some sort. Today's show was produced by Emma Peaslee and edited by Jess Jiang. It was engineered by Jimmy Keeley and fact checked by Willa Rubin. Alex Goldmark is our executive producer. Also, if you want to play around on the live cargo ship map, it is so cool. It is in our show notes. Just select cargo ships and you should check out our newsletter on why there are so many vacant manufacturing jobs. I'm Sarah Gonzalez. This is npr. Thanks for listening.

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[Sarah Gonzalez]

Com.

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