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.

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.

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.

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.

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.

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.

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)

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.

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