
President Donald Trump’s long-awaited tariffs took effect Thursday, imposing sweeping new taxes on imports from dozens of countries. Economists say American consumers and companies will pay the price.
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Elahe Izadi
We've been hearing about President Donald Trump's tariffs for months. And honestly, I kind of just stopped thinking about them because first they were on. Mr. President, is there anything China, Canada and Mexico can do tonight to forestall your implementation of tariffs tomorrow?
David Lynch
No, nothing. Not right now, no.
Elahe Izadi
And then they were off. It looks like the US has blinked because in the last few minutes, I'm just looking at the markets now, they've rocketed up. The US stock market up 6% on that news. The deadlines kept moving. Just literally in the last couple of minutes, we're hearing that President Trump has announced that there will be a 90 day pause on reciprocal tariffs for all countries except China. He's saying sometimes it seemed like the tariffs weren't actually going to happen, but the threat of them were just negotiating tactics. Huge deal was tough negotiations.
David Lynch
I knew it at the beginning and it was indeed very tough. But we came to good conclusions from both sides.
Elahe Izadi
So again, congratulations and many thanks.
David Lynch
Thank you very much.
Elahe Izadi
Thank you. But then I woke up this morning and the tariffs are here and they are real. So now what? From the newsroom of the Washington Post, this is Post Reports. I'm Elahe izadi. It's Thursday, August 7th today, what these tariffs mean for all of us now that they're here. I talk with my colleague David Lynch. He's the Washington Post's in house expert on tariffs and global trade. He literally just wrote a book on the subject. David, thanks so much for being here.
David Lynch
Glad to be here.
Elahe Izadi
So, David, we are talking at 10am These sweeping tariffs took effect at midnight. What does that mean? What countries have, what tariffs as of right now?
David Lynch
Well, the tariffs that took effect just past midnight last night apply to something like 90 countries. And they range on the low side from 10% for places like the United Kingdom all the way up to 50% for countries like Brazil. But the numbers vary depending on whether a trading partner has signed a deal with the president, depending on how much of a trade deficit we're running with that country because the president is trying to close the trade deficit. But the one thing that I think is clear, if you're a supply chain manager for any company in the United States that brings in widgets to make a product here or that brings in retail goods to sell to consumers like you and I, anything you're bringing in from abroad is going to be more expensive than it was. And it's also going to be a much more complicated landscape because you've got to figure out where is this good coming from how is it being assessed? What product is it? In some cases, it's just a much more complicated landscape than it was, say, at the beginning of the year.
Elahe Izadi
Yeah, and I know we've talked about this on the show before, but, David, just remind us, what are tariffs exactly?
David Lynch
Well, tariff is just a fancy word for tax. That's all it is. This is a tax on imported goods because again, the President wants Americans to buy. Buy fewer things from overseas. He wants more stuff to be made here. That sounds like a laudable objective. Most people, at first glance, would support that. The difficulty is we don't make everything here. We don't grow a lot of coffee here. That's why we bring it in from Brazil or Kenya. We don't have a lot of banana farms. That's why we bring bananas in from elsewhere. But the idea is by making those foreign products more expensive, you as a consumer, and American businesses, as a intermediate consumer, will be encouraged to buy stuff made here in the United States, not overseas.
Elahe Izadi
But just to be clear, these other countries, like Brazil itself, as a country, is not paying this tax, Right? Like, when a good arrives here, what happens?
David Lynch
Yep, yep. No, that's an important point because the President has clouded the issue by repeatedly saying that countries will pay the tax. That's not the case. The US Importer of record is legally responsible for paying that tax, and they pay it in the following way. The good that they're importing lands, say, at the Port of Los Angeles. As it enters the country, officials with the U.S. customs and Border Protection Agency determine what type of product it is, where it's from, and they assess the appropriate tariff against that product. Let's say it's $100 worth of stuff from China and the applicable tariff should be 55%. $100 worth of stuff. 55%.
Elahe Izadi
Thanks for picking $100 for my math mind.
David Lynch
Yeah, I haven't taken a math course in a long time, but this I can handle. So you owe the government, you, the importer, the American importer, you owe the government$55, and you have to pay the customs agency that money. Just like when you and I come back from traveling overseas, if we've bought a rug in Turkey or some chocolates somewhere. If there's a customs duty, you have to pay it to bring that item into the country. Same for a US Importer. They pay systems agency, they bring the product in. Now we can have a slightly longer conversation about how that cost is ultimately apportioned, and maybe we'll do that later.
Elahe Izadi
Well, yeah, I actually do want to ask you this because, you know, like I said, I kept hearing about this deadline. It kept getting extended. It kept getting extended. So now that it's here, my immediate question is, if I go to the store later today or tomorrow, will a product that I saw on Monday now be 20% more? No, first of all, so like, immediately prices are not immediately overnight going up.
David Lynch
No, this is, this is more what I would describe as a slow burn. It's not like flipping a light switch and suddenly every type of product is x percent more expensive. It's a little more complicated than that. And companies, you know, they've seen a lot of these tariffs coming because Lord knows the President's been talking about them since January 20th in some cases. So if you're an importer and hear the President talking about tariffs just about every day, you react to that. And so in many cases, companies have been bringing more stuff into the country, particularly in the first three months of the year, trying to get ahead of any tariff increases. So they've been stocking up their inventory and then they've been selling that off over the past few months. And so that has insulated many of us from price increases so far. Some companies have already begun raising prices because, you know, there are tariffs that have taken effect already before the ones that took effect last night on things like steel and aluminum. So steel prices have gone up. That's affected folks who make Campbell's Soup or beer cans or cars or all sorts of things. So in many cases they've adjusted their prices, but not everything in the economy. And likewise, what happened just past midnight today is not something where you should rush out to the store right now. But you're gonna start seeing more of this. Again, a slow burn percolate through the economy as companies run out of that inventory that they brough before tariffs took effect and start importing more product that is hit with the new tariff, then they're going to have to. In many cases, not all, but in many cases, they've talked about raising prices.
Elahe Izadi
What goods should consumers expect to see most impacted in this slow burn?
David Lynch
Well, just yesterday, the company that makes Florsheim and Nunn Busch shoes said they began raising prices July 1 because of the tariffs that they were already paying and expected to pay. Procter and Gamble a week or two ago said they'd be lifting prices on about a quarter of their product portfolio. And, you know, P and G makes tons of stuff that every American household uses. Tide Detergent, head and shoulders, Mr. Clean and Pampers Diapers. Now I should say that the Procter and Gamble didn't say they were going to raise prices on everything they make. They said about a quarter of their price product.
Elahe Izadi
But those are some essential items. Absolutely. Diapers, things that, I mean, if I hear, you know, maybe the price of diapers will go up, that feels pretty big.
David Lynch
Absolutely. And again, the other thing that's complicated about tariffs is people hear, oh, there's, you know, a 25% tariff on products from country X. That doesn't mean the final price of that good goes up by 25%. Because if I'm the importer and I'm. I have a Chinese factory making my product, and my costs as the importer are going up by 25% because I have to pay for it, as we discussed, to bring it into the country. Well, I don't want to bear that all myself if I can find somebody else to pay it. So I may lean on you as my Chinese supplier and say, look, you got to help me out here. You got to eat some of this cost, or I'm going to find somebody else to make my diapers or to make my detergent. And maybe in many cases, you want to hang on to your American business because this is a big market, it's a lucrative market, and so you'll find ways to make your operation a little more efficient. And so you'll say, yeah, I'll eat about 5% of that, or I'll eat 10% of that. And then I, as the importer, can find a way to maybe operate a little more efficiently. Maybe I'll use more machinery than people in my factory, or I'll cut costs somewhere else. I won't give out pay raises or whatever. And then when we get to the point where, okay, you've taken as much as you can take, I've taken as much as I can take, then I got to turn around and raise prices on the final customer, the American consumer. But it won't be 25%, because maybe you've eaten 10 and I'll eat 10, so maybe the price will go up by 5%.
Elahe Izadi
I don't know. The cynic in me feels like, why wouldn't a company just turn to raising prices as the first option, especially if the product they're making, the competition is all kind of in the same boat as you?
David Lynch
Well, they often don't do it as the first option because many markets are still very competitive. And we've come out of this episode under the Biden administration where inflation was quite high for a couple years. People Got very angry about it. They were unfamiliar with inflation after the previous 15 or so years when inflation had been almost non existent. And so companies were able to raise prices during that episode. They've been a little slower to act this time because nobody really knew where the tariffs were going to land. The first three or four months of this, the President would say one thing about tariffs on Monday, he'd say a different thing on Tuesday. A week later, he'd say something completely different. And companies said, you know what? I don't know what I'm going to be paying in three months or six months for my goods from overseas. Let me just try and hunker down and get through this and see where things land. And now we're getting a little more clarity. They feel like they know where things are going to be to some degree. So now the price increases are starting to happen. And another important point is, even though the tariffs make the foreign products more expensive, domestic makers who compete with foreign goods see that happening and say, oh, my foreign competition just became 10% more expensive. Well, I'm going to raise my prices 8%.
Elahe Izadi
Oh, but it still seems like, hey, I'm cutting you a deal.
David Lynch
You know, I'm. As long as I'm cheaper than the foreign guy, I'll probably pick up some market share. I'm not gonna just stand still. There's money on the table here. I'm gonna grab it.
Elahe Izadi
Yeah. Wow. Have individual companies been trying to directly lobby the Trump administration to get exemptions to these tariffs?
David Lynch
Yeah. I mean, companies have been, as you would expect, in as fluid and irregular a landscape as we're in at the moment, have been trying to pull whatever le can to, frankly get on the President's good side, to convince administration officials that, you know, their product is essential or special in some way.
Elahe Izadi
One thing that really caught my eye, though, was the CEO of Apple, Tim Cook, appearing in the oval office yesterday.
David Lynch
Mr. President, thank you very much for having me here today. You've been a great advocate for American innovation and manufacturing. I'm grateful for your leadership.
Elahe Izadi
He gave Donald Trump this gift. And what deal exactly were they talking about? Because that moment really struck me as, wow, this massive company is striking a deal in this moment with the President directly, not a country, this company.
David Lynch
Yeah. And Apple, I think, has been among the most successful at sort of playing the Trump administration game, if you will. And yesterday, Mr. Cook, as you say, was in the Oval Office with the President for a ceremony to highlight Apple's decision to up its planned investment in the United States. To $600 billion over the next several years.
Elahe Izadi
Investment of what?
David Lynch
Well, there are questions about this. It's described as an American manufacturing initiative. And Apple, which has long had a supply chain centered in China, is moving production of some items back to the United States.
Elahe Izadi
So. But then what do they get in exchange for saying that they're going to do this?
David Lynch
Well, they get a tariff consideration. And that tariff exemption applies the semiconductors, the computer chips that Apple brings into the country and other products that it makes in China. And I should say this was a big deal to Apple. This was something that the decision had gone the other way, could have cost them a couple hundred million dollars, the company said a few months ago, I think to investors. And Tim Cook personally got involved, lobbied Howard Lutnick, the commerce secretary, and I think is generally seen as one of the more successful CEOs, not just in the president's current term, but back in his first term, been very successful at sort of getting what he needs out of the Trump administration and dodging the worst of the rhetorical brickbacks that the president can throw at CEOs.
Elahe Izadi
After the break, we talk about what these tariffs could mean for the broader economy. We'll be right back.
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Elahe Izadi
So in the lead up to this moment, President Trump has talked about this deadline and these tariffs being a negotiating tactic in some way and extracting deals. I know things are fluid, things could change. But as of right now, what sort of deals? And I'm using quotation marks here, deals have been struck and which may happen in the coming days with what countries?
David Lynch
Yeah, the president has announced deals with some major trading partners like the European Union and Canada, Vietnam, Indonesia, and the details vary from country to country. These are not what we think of as full blown trade deals like the NAFTA, the North American Free Trade Agreement. Back in the mid-90s, which most people are familiar with, that sort of agreement was A, approved by Congress, B, as thick as a phone book and also thus legally binding. It was an actual treaty, as was the usmca, which was the United States USM Mexico Canada agreement that the President negotiated in his first term that replaced NAFTA. That was also an actual treaty with 30 chapters, lots of details. These are a few pages.
Elahe Izadi
Are they legally binding?
David Lynch
No, because they're just agreements. And there's nothing to stop the President from deciding to raise tariffs in a different way six months or a year from now. And in many cases, like the European Union and I think Korea and Japan have pledged to make certain investments in the United States. Well, the European Union or the European Commission, which is the executive arm of it, has no power to compel European companies to make investments anywhere. So these are aspirational goals. When they say they're going to invest $600 billion. Well, you know, Ursula von der Leyen, the head of the ec, cannot command Mercedes Benz to go open a new plant in the United States.
Elahe Izadi
Can the President just unilaterally do this, make these decisions around tariffs? I thought Congress had to be involved in this.
David Lynch
You're not alone in that thought. Yeah, there's one big interesting question that hangs over this whole enterprise, which is, does the President have the authority that he's claimed to do what he's been. And from the start, the President has invoked a law, the International Emergency Economic Powers act, which does not mention the word tariffs anywhere in its text. It gives the President authority at a time of national emergency to do all sorts of things with the economy, including regulate imports. Now, the administration has said that gives the President carte blanche authority to do whatever he wants to levy tariffs of any number on any product. Now, no president in history has used this law, which is referred to as IIPA in this way. No one has ever used it to raise tariffs.
Elahe Izadi
So we're in a truly unprecedented moment.
David Lynch
Truly unprecedented. The national emergency that he declared is the trade deficit that we've been running every year since nineteen nineteen seventy five. So is something that started fifty years ago. Does that qualify as an emergency? The administration's argument is, yes, that the economic effects have been so dire that it is now an emergency that we must meet with these high tariffs. This is being tested in court. The administration has already lost once at a specialized court called the Court of International Trade. Appropriately enough, those judges ruled that the President does not have this authority. The administration has appealed in federal appeals court arguments. There were heard last week. We should get a decision from that 11 judge panel sometime in the coming weeks. No one's sure when. It's likely that this question will eventually make its way to the Supreme Court, which has shown a deference to executive power, but there have been limits. The Court has said, for instance, that the Federal Reserve is sort of a special case. The President can't exert his authority willy nilly over the Fed. So it would be an interesting test to see this case reach the Supreme Court if the administration were to lose, which is a real possibility. You can't be certain, but it's a possibility. The President would effectively have to start over. And in theory, it would also require the government to refund all the tariff money that they've been collecting to the importers who paid it, which would be quite an administrative and financial burden.
Elahe Izadi
What countries are you paying attention to on the question of will they try to come to the table and sit down and have some kind of framework agreement to lower their tariff?
David Lynch
Yeah, I think that the big ones that are still out there are India, Brazil, Switzerland's a smaller economy, but they were stunned by the President's decision to hit them with a 39% tariff. And before you ask me why, I have no idea.
Elahe Izadi
And what about India? Because I think that was a new one, right?
David Lynch
Yeah. And the India situation is striking because the bigger picture here is for several years now, under both Republicans and Democrats, the US has been trying to develop a better relationship with India as a counterweight to China. And this is a strange way to develop that relationship because the tariff, what the President calls reciprocal tariff, was 25%. It's now been doubled to 50%.
Elahe Izadi
Oh my gosh.
David Lynch
Because the President doesn't like that India is continuing to buy Russian oil. And so just in the blink of an eye, he doubled that tariff. U.S. trade negotiators always complain about dealing with India. It's always a tough negotiation, even under the best of circumstances. There are protectionist pressures within India. Their agricultural industry is a lot of very small and often very poor small scale farm holders. And so the government's very wary of just opening up that market and letting giant American operations meet the demand there would put a lot of people out of work. So those negotiations are always fraught. So it's not a surprise that this has become difficult. What is a surprise, though, is for a country that has strategic value and importance to the United States to hit them in the face with a 50% tariff is interesting.
Elahe Izadi
We've talked a lot about what These tariffs could mean for U.S. consumers. What could these tariffs mean for the broader global economy?
David Lynch
Well, the global economy has been remarkably resilient so far. It has not been growing at sort of, you know, a particularly impressive pace, but it has been growing and been continuing to grow, been continuing to make progress globally on bringing down inflation. But what's going to happen as these tariffs take effect going forward is it acts almost like a runner trying to run a marathon. You'd rather be running it without a 25 pound backpack. This is the 25 pound backpack that the global economy is going to have to run with. It's just going to make things a little less efficient. It's going to slow things down and it's going to become an increasing problem.
Elahe Izadi
And what about the US Economy? I took a look at the stock market today. It seemed like the markets looked okay. What could these do to the US Economy going forward?
David Lynch
Yeah, the market has been remarkably strong since it sold off quite noticeably back in April after the President first announced all of these again, what he calls reciprocal tariffs. Dozens and dozens of countries affected, the market took a nosedive.
Elahe Izadi
Oh yeah, I remember people saying, if you have a 401k, don't look at it.
David Lynch
Yeah, it was always good advice.
Elahe Izadi
Yeah, I guess so.
David Lynch
But since then, it's up from the depths of that sell off, it's up something like 26, 27%. So it's been, the market has looked at this and said, okay, we can live with it, which is not what people initially expected. But you're starting to see an erosion in the economic performance. And this was behind the President's decision last week to fire the head of the Bureau of Labor Statistics when he got a jobs report that he, he didn't like. That jobs report showed that some of the strength that we thought the US Economy had over the last few months was a mirage that the job growth that we thought had occurred in May and June basically had not occurred. And for the last three months, job growth has been anemic at best. So we're going into what is going to be sort of the blank just got real phase of this trade episode.
Elahe Izadi
Because the no longer theoretical. No longer theoretical.
David Lynch
They're here, here. And so economists are starting to say the economy that already has been slowing, job growth, anemic, inflation pressures still proving stubborn and ticking up just a bit. Economists expect now further slowing in the growth. Of course, you can get different estimates from different people, but somewhere around zero to maybe 1%. That's going to feel pretty slow. And if job growth remains where it is. That's, that's going to feel not so great to the average person, but not, I should say, not a recession, not the end of the world, not a financial crisis. Things aren't falling off a cliff. It's just again, you're going to be running with that 25 pound backpack.
Elahe Izadi
Well, David, thank you so much for taking time to explain all this. Once again, I truly appreciate it and I wish you many cups of coffee in the coming hours and days of and weeks.
David Lynch
Sounds good. Thanks.
Elahe Izadi
David lynch covers trade for the Post. He's also the author of a new book, the World's Worst how the Globalization Gamble Went Wrong and what Would Make It Right. That's it for Post Reports. Thanks for listening. Today's show was produced by Sabi Robinson. It was edited by Maggie Penman with help from Rena Flores. It was mixed by Sam Baer. Thank you to Tadeo Ruiz Sandoval, Renny Svenofsky, Laura Benshoff and Jen Liberto. If you value this kind of reporting, please subscribe to the Washington Post. We actually have a great deal going right now on a premium subscription that comes with three extra logins that you can share with friends and family. Check it out@washingtonpost.com and we'll also include a link to it in our show notes. I'm Elahe Izadi. We'll be back tomorrow with more stories from the Washington Post.
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Post Reports: “Trump’s Tariffs Are Finally Here. Now What?” – Detailed Summary
Released on August 7, 2025 by The Washington Post
In this episode of Post Reports, hosts Martine Powers and Elahe Izadi delve into the long-anticipated implementation of President Donald Trump's tariffs. The discussion is anchored by Elahe Izadi and features insights from David Lynch, The Washington Post’s in-house expert on tariffs and global trade, who has also authored a book on the subject.
Elahe Izadi opens the conversation by highlighting the fluctuating status of the tariffs, noting recent market reactions:
“[00:26] Elahe Izadi: …they’ve rocketed up. The US stock market up 6% on that news.”
David Lynch explains the scope and scale of the tariffs now in effect:
“[02:05] David Lynch: …the tariffs that took effect just past midnight last night apply to something like 90 countries. And they range on the low side from 10% for places like the United Kingdom all the way up to 50% for countries like Brazil.”
He emphasizes that the tariffs are designed to reduce the U.S. trade deficit by making imported goods more expensive, thereby encouraging domestic production.
The hosts explore how these tariffs will affect both businesses and consumers. Lynch clarifies the nature of tariffs:
“[03:16] David Lynch: Well, tariff is just a fancy word for tax. That’s all it is. This is a tax on imported goods…”
He further explains the financial implications for importers:
“[04:08] David Lynch: …If you owe the government, you, the importer, the American importer, you owe the government $55, and you have to pay the customs agency that money.”
When questioned about immediate price hikes, Lynch assures that changes will be gradual:
“[05:35] Elahe Izadi: …immediately prices are not immediately overnight going up.”
“[06:01] David Lynch: …this is more what I would describe as a slow burn. It’s not like flipping a light switch…”
He cites examples of companies like Procter & Gamble and Florsheim that have already begun adjusting prices in response to the tariffs, particularly for essential items such as diapers and detergents.
The discussion shifts to how companies are navigating the new tariff landscape. Lynch mentions the strategic decisions businesses are making, including absorbing some of the costs to remain competitive:
“[08:30] David Lynch: …you as my Chinese supplier and say, look, you got to help me out here. You got to eat some of this cost…”
This collaborative approach delays significant price increases for consumers. However, as companies exhaust these options, price hikes become inevitable.
A notable highlight is the appearance of Apple CEO Tim Cook in the Oval Office. Lynch details the strategic investment Apple is making:
“[13:01] David Lynch: …Apple, which has long had a supply chain centered in China, is moving production of some items back to the United States.”
In exchange for investing $600 billion in American manufacturing, Apple secured tariff exemptions on semiconductors and other products, showcasing a major corporate-government negotiation:
“[12:13] David Lynch: …Apple’s decision to up its planned investment in the United States. To $600 billion over the next several years.”
Elahe Izadi inquires about ongoing negotiations and potential agreements with other countries. Lynch outlines the partial agreements reached with the European Union, Canada, Vietnam, and Indonesia, though he notes these are far less comprehensive than previous trade treaties like NAFTA or USMCA:
“[15:38] David Lynch: …these are not what we think of as full-blown trade deals… these are a few pages.”
He underscores the non-binding nature of these agreements, emphasizing their aspirational goals rather than enforceable commitments.
A critical aspect discussed is the legal authority under which President Trump has enacted these tariffs. Lynch explains the invocation of the International Emergency Economic Powers Act (IEEPA):
“[17:24] David Lynch: …the President has invoked a law, the International Emergency Economic Powers act…”
He highlights the unprecedented use of IEEPA for imposing tariffs and the ensuing legal battles:
“[18:21] David Lynch: …The administration has already lost once at a specialized court called the Court of International Trade… they ruled that the President does not have this authority.”
The potential escalation to the Supreme Court could determine the future of these tariffs, potentially requiring refunds of collected tariffs if the administration is unsuccessful.
The conversation broadens to the global and U.S. economic impacts. Lynch uses a metaphor to describe the burden on the global economy:
“[21:53] David Lynch: …acts almost like a runner trying to run a marathon. You’d rather be running it without a 25-pound backpack…”
He anticipates slowed global growth and increased inefficiencies due to the added tariffs.
Regarding the U.S. economy, Lynch observes mixed signals in the stock market juxtaposed with underlying economic weaknesses:
“[22:45] David Lynch: …the market has been remarkably strong since it sold off quite noticeably back in April… it’s up something like 26, 27%.”
However, he warns of a potential economic slowdown:
“[23:06] Elahe Izadi: Yeah, I guess so.”
“[23:07] David Lynch: But since then, it’s up… but you’re starting to see an erosion in the economic performance.”
He concludes that while the economy is not on the brink of a recession, the tariffs impose a significant strain akin to carrying an extra weight.
As tariffs take effect, the United States faces a complex landscape of increased costs for imported goods, strategic corporate responses, ongoing negotiations with major trading partners, and significant legal challenges. The broader global economy grapples with reduced efficiency, while the U.S. economy enters a phase of cautious adjustment amidst mixed economic indicators.
Notable Quotes:
This episode provides a comprehensive analysis of the newly implemented tariffs, their immediate and long-term effects on various sectors, and the intricate interplay between government policy and corporate strategy.