The Tariff Trade Off: Jobs vs. Higher Prices

Summary

Summary of "The Tariff Trade Off: Jobs vs. Higher Prices" - The Journal Podcast Episode

Podcast Information:

• Title: The Journal
• Host/Author: The Wall Street Journal & Gimlet
• Description: The most important stories about money, business, and power. Hosted by Kate Linebaugh and Ryan Knutson, with Jessica Mendoza. The Journal is a co-production of Spotify and The Wall Street Journal.
• Episode: The Tariff Trade Off: Jobs vs. Higher Prices
• Release Date: April 8, 2025

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Introduction

In the April 8, 2025, episode of The Journal, host Kate Linebaugh delves into the intricate dynamics of tariffs, focusing on their dual impact of creating jobs while simultaneously increasing consumer prices. The episode centers around the small town of Newberry, South Carolina, highlighting how federal trade policies can shape local economies in profound ways.

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1. The Closure of Caterpillar's Plant in Newberry

The episode begins with Rick Farmer, Newberry’s economic development officer, recounting the significant blow the town received in 2016 when the iconic Caterpillar plant closed, resulting in the loss of over 300 jobs.

Key Points:

• Newberry's Community Profile: With a population of approximately 10,000, Newberry prides itself on being a close-knit community, often referred to as "the city of friendly folks."

• Impact of Caterpillar's Closure: The departure of Caterpillar, a leading employer, left a void in the local economy and heightened fears about the town's future.

Notable Quotes:

• Economic Development Officer ([00:42]): “It was our number one brand… the most recognized brand that was here in Newberry County.”
• Rick Farmer ([01:10]): Expresses doubts about the future: “…how much of that I really believed and how much of that I was just trying to keep folks from panicking.”

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2. Trump's Tariff Policies and Their Promise

Amid the economic uncertainty, the town looked towards the promises of then-presidential hopeful Donald Trump, who vowed to rejuvenate American manufacturing through the imposition of tariffs on imported goods.

Key Points:

• Trump's Manufacturing Revival: Promises to bring back jobs to states like Ohio, Pennsylvania, New York, Michigan, and across America by preventing companies from relocating overseas.

• Tariffs as a Tool: Intended to protect American businesses, increase domestic manufacturing, and create jobs.

Notable Quotes:

• Trump's Promise ([01:52]): “I am going to bring back our jobs to Ohio and Pennsylvania and New York and Michigan and all of America. And I am not going to let companies move to other countries.”

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3. Samsung's Investment in Newberry

Following Caterpillar's exit, Newberry experienced a resurgence when Samsung decided to invest $380 million in establishing a washing machine manufacturing plant in the town, a move influenced by Trump's tariff policies.

Key Points:

• Attracting Samsung: Rick Farmer describes receiving a call about Samsung's interest and facilitating their visit to Newberry.

• Economic Impact: The Samsung factory now employs over 1,500 workers and contributes more than one million dollars annually in tax revenue to the city.

Notable Quotes:

• Economic Development Officer ([07:53]): “The feeling was absolutely unbelievable… a very similar feeling to winning a national championship in football.”

• Kate Linebaugh ([08:24]): Highlights the large economic impact on the community and the creation of new career pathways for residents.

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4. Benefits to Newberry

Samsung's investment not only revitalized the local economy but also created a ripple effect, benefiting surrounding businesses and fostering a more robust job market.

Key Points:

• Job Creation: The factory provided numerous employment opportunities, helping retain residents and attract new talent.

• Local Business Growth: Increased customer flow benefited nearby restaurants and other businesses.

• Economic Ripple Effect: The introduction of Korean suppliers to Samsung further multiplied job opportunities.

Notable Quotes:

• Chaodang ([09:22]): “When the factory opened… they had more customers. And then… two Korean firms that were supplying washing machine parts… created hundreds more jobs.”

• Economic Development Officer ([08:24]): “It created sort of a bridge… another pathway for people to kind of leap to the middle of the pack instead of having to just grind your way up.”

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5. The National Perspective on Tariffs

While tariffs brought tangible benefits to Newberry, they also had broader economic implications, particularly in the form of increased consumer prices for products like washing machines.

Key Points:

• Price Increases: An economic study from 2020 revealed that washing machine prices in the U.S. rose by approximately 12% following the imposition of tariffs, averaging an increase of $86 per unit.

• Ripple Effect on Other Products: Even products not directly tariffed, such as dryers, saw price hikes due to their complementary relationship with washing machines.

• Trade-Offs: The episode underscores the delicate balance between job creation and the cost burden on consumers.

Notable Quotes:

• Chaodang ([12:29]): “Prices of washing machines in the US went up about 12% after Trump imposed his tariffs.”

• Economic Development Officer ([14:01]): Acknowledges the cost trade-offs: “For every tariff related job created in America, there are some costs.”

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6. Conclusion and Lessons Learned

The episode concludes by reflecting on the complex nature of tariffs. While Newberry serves as a rare success story where tariffs directly facilitated job creation and economic growth, the broader impact on the national economy remains contentious.

Key Points:

• Complex Impacts: Tariffs have multifaceted effects that can benefit specific communities while imposing costs elsewhere.

• Rarity of Success Stories: Instances like Newberry are uncommon, making them noteworthy but not indicative of the overall efficacy of tariff policies.

• Economic Developer's Stance: The economic development officer maintains a pragmatic view, supporting policies that benefit the community: “I am pro whatever improves my community. Within reason, of course.”

Notable Quotes:

• Chaodang ([16:13]): “The impact of tariffs is very complicated and whether they help or hurt is sort of in the eye of the beholder.”

• Economic Development Officer ([15:07]): Emphasizes focus on tangible outcomes: “I want to talk about jobs and wages and that kind of stuff.”

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Final Thoughts

"The Tariff Trade Off: Jobs vs. Higher Prices" offers a nuanced exploration of how federal trade policies can simultaneously generate economic opportunities and impose consumer costs. Through the lens of Newberry, South Carolina, the episode illustrates the localized benefits of tariffs while highlighting the broader economic debates surrounding their implementation.

For listeners seeking to understand the real-world implications of trade policies on small communities and the national economy, this episode provides valuable insights and firsthand accounts of navigating the complexities of economic development in a shifting global landscape.

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Notable Quotes with Timestamps:

• Economic Development Officer ([00:42]): “It was our number one brand… the most recognized brand that was here in Newberry County.”
• Rick Farmer ([01:10]): “…how much of that I really believed and how much of that I was just trying to keep folks from panicking.”
• Trump's Promise ([01:52]): “I am going to bring back our jobs to Ohio and Pennsylvania and New York and Michigan and all of America. And I am not going to let companies move to other countries.”
• Economic Development Officer ([07:53]): “The feeling was absolutely unbelievable… a very similar feeling to winning a national championship in football.”
• Chaodang ([09:22]): “When the factory opened… they had more customers. And then… two Korean firms that were supplying washing machine parts… created hundreds more jobs.”
• Chaodang ([12:29]): “Prices of washing machines in the US went up about 12% after Trump imposed his tariffs.”
• Economic Development Officer ([14:01]): “For every tariff related job created in America, there are some costs.”

Transcript

[Rick Farmer]

Rick Farmer works in Newberry, South Carolina, as the county's economic development officer. So tell us about Newberry.

[Unnamed Economic Development Officer]

Sure. First of all, it's a great little community. The city's motto is the city of friendly folks. It is. In a lot of ways, it's similar to other small South Carolina towns are small cities. Actually, population's about 10,000.

[Rick Farmer]

Are there grumpy folks in Newberry?

[Unnamed Economic Development Officer]

Oh, sure. They're Everywhere.

[Rick Farmer]

Back in 2016, Rick got some bad news.

[Unnamed Economic Development Officer]

I remember like it was Yesterday. April of 2016, I got a phone call. Hey, Rick, did you hear the news? And the news was our local Caterpillar plant was closing.

[Rick Farmer]

Caterpillar, the iconic American manufacturer of construction equipment. It was leaving its factory in Newberry, and that meant losing over 300 jobs. When you first heard that news that they were moving out, how would you describe it?

[Unnamed Economic Development Officer]

Well, I knew there would be a lot of concern because, again, it was our number one brand. It was the most recognized brand that was here in Newberry County. They were some of the best jobs in the community. And I remember standing on the floor of community hall explaining to the Rotary Club why this is not the end of the world. But at the same time, I just wondered how much of that I really believed and how much of that I was just trying to keep folks from panicking.

[Rick Farmer]

But Newberry was about to get an assist from a presidential hopeful who was promising to revitalize American manufacturing.

[Unnamed Economic Development Officer]

I am going to bring back our jobs to Ohio and Pennsylvania and New York and Michigan and all of America. And I am not going to let companies move to other countries.

[Rick Farmer]

Donald Trump, his main tool to bring those jobs back was tariffs. And for Newberry, that would bring in a new employer and chart a new path to growth. This is the playbook that Trump is now trying to replicate today on a much larger scale. But Newbery's good fortune came at a cost. Welcome to the Journal, our show about money, business, and power. I'm Kate LINEBAUGH. It's Tuesday, April 8th. Coming up on the show, one town that benefited from Trump's tariffs and what it meant for everyone else.

[Kate Linebaugh]

I'm Tim Higgins with the Wall Street Journal. We've got this spot to hear directly from the leaders behind the bold name companies we cover every day. Check out bold names from the Wall Street Journal wherever you get your podcast.

[Rick Farmer]

Our colleague Chaodang covers the economy and has been following Trump's tariff plans. What is his policy goal with these tariffs?

[Chaodang]

Okay, so there are a whole bunch. His administration says that tariffs can raise revenue for the US they can protect American businesses. They can move manufacturing back to the US they can create jobs for American workers.

[Rick Farmer]

Do you have a sense of what he's envisioning?

[Chaodang]

I mean, he has talked about the US Manufacturing glory days. So by that he's essentially pointing to, you know, decades back when we had these American towns that revolved around like, you know, a single factory. So you remember, like when one town revolved around state steel making or another town revolved around furniture making or textile making. At that point, you know, to have a good manufacturing job that was well paying was really a way to, you know, become a middle class American family.

[Rick Farmer]

Newberry was one of those towns. It had a long, cherished manufacturing history tied to the textile industry.

[Chaodang]

If you walk around, especially down its main street, you can see its legacy of being a booming textile town back in the day. If you drive around enough, you can actually see some of these dilapidated buildings that used to be cotton mills. And then when the textile industry in the US Fell back, residents of this town began to flow out. There was some farming left, but there really wasn't much going for it.

[Rick Farmer]

Rick Farmer's job as Newberry's economic development officer is to keep jobs in town and bring in more, which is why it was such a gut punch when Caterpillar said in 2016 it was moving out and leaving Newberry with an empty factory.

[Unnamed Economic Development Officer]

You know, this building's a half a million square feet. This is a very large building and we're going to have to find the right tenant for it. Everybody looks to your local economic developer when there's a closure. But the reality is we don't probably don't have any inside information you don't have. This is just something we're going to have to get through.

[Rick Farmer]

But then Rick caught wind of another project that could turn around his town's fortunes.

[Unnamed Economic Development Officer]

I got a call from the broker saying, I got a private plane landing in Columbia and it's got 25 Asian engineers in it and I need you to meet them at the facility and give them the local spiel. And of course, I did that. I got there and sure enough, this was a large contingent. I knew that this had to be a significant project, but honestly, at that early stage, I don't spend much time worrying about who it is. I care about what they're trying to do and how we're going to make that happen.

[Rick Farmer]

That large contingent of engineers was with Samsung, the giant Korean manufacturer. Rick gave them a tour of the.

[Unnamed Economic Development Officer]

Factory and they're talking about ceiling Heights and water flows and, you know, water pressure and all of this other stuff. And I'm not an engineer, so I just sit back and look pretty when these things are going on and let the engineers hash it out.

[Rick Farmer]

What was at stake for you?

[Unnamed Economic Development Officer]

Well, in a relatively small community, you don't get a lot of opportunities like this. One of the things that worries industrial development prospects is when they're dealing with a small community, where are we going to get the workforce? And that's a big concern because they don't want to have to import labor from outside of the community, and they worry that we're just too small to make it happen. But of course, my job was to convince them otherwise.

[Rick Farmer]

Samsung was in Newberry looking for a new place to build washing machines. It was scouting several locations around the country. After months of looking, Samsung picked Newberry and announced a $380 million investment. And when you found out you won, what did that feel like?

[Unnamed Economic Development Officer]

The feeling was absolutely unbelievable. I've never known what it's like to win a national championship in football or anything like that, but it has to be a very similar feeling. You know, we call these big fish or buffaloes and so forth. And so especially in a small community, you don't win many buffaloes, but we did in this particular case. It was a wonderful feeling.

[Rick Farmer]

So how has this deal been for your community?

[Unnamed Economic Development Officer]

It's been great. It's been a very large economic impact on the community. But even more importantly, I think what it did is it created sort of a bridge. You know, in an ideal situation, a worker will start off with no experience. He's at the bottom of the ladder. He works his way up a little bit, he gains skills and experience, and then at some point he can take a different job because he's now got the training, he's now got the experience. So it created another pathway for people to kind of leap to the. The middle of the pack instead of having to just grind your way up.

[Rick Farmer]

Trump's washing machine tariffs expired in early 2023. The Samsung factory now employs more than 1500 workers, and it brings in more than a million dollars of annual tax revenue to the city.

[Chaodang]

You know, when I was in the town, I talked to some of the restaurants that were near the factory, and they remember when the factory opened and. And they noticed they had more customers. And it just seemed to be a very hopeful moment for the town. And then, you know, months pass, you saw more Korean firms come in. So you had at least two Korean firms that were supplying washing machine parts. To Samsung come in, and they then created hundreds more jobs. So there was a bit of a ripple effect on the local level, but.

[Rick Farmer]

On the national level, things were more complicated. That's next.

[Kate Linebaugh]

I'm Christopher Mims of the Wall Street Journal. Every day we talk to the leaders behind bold name companies, and you can hear from them in bold names from the Wall Street Journal, wherever you get your podcasts.

[Rick Farmer]

Samsung's interest in a US Factory was influenced by Trump's election. He had vowed on the campaign trail to bring more manufacturing jobs back into the country, and he was talking a lot about trade.

[Chaodang]

He didn't have the specificity as he has today, but he was basically threatening tariffs. And if you were Samsung or any other major multinational, you would know that tariffs would have been coming. And then early on, when he became president, he started talking about industries like steel, aluminum, solar panels, and washing machines.

[Rick Farmer]

Washing machines. In Trump's first term, he took specific aim at imports of these everyday household appliances.

[Unnamed Economic Development Officer]

I am taking action to impose safeguard tariffs on imported residential washing machines.

[Rick Farmer]

What was the situation with washing machines in particular?

[Chaodang]

Trump basically slapped tariffs on this industry after a complaint by Whirlpool, which is an American manufacturer. The complaint was that its competitors overseas were unfairly selling their cheap washing machines to US Consumers and that this was threatening US Industry and threatening firms like Whirlpool.

[Unnamed Economic Development Officer]

My administration is committed to defending American companies, and they've been very badly hurt.

[Rick Farmer]

Samsung has previously said that the US Is one of the fastest growing markets for home appliances and called building an American facility a, quote, natural choice. A spokeswoman for Samsung declined to comment on how tariffs affect the company. But those washing machine tariffs from Trump's first term had some downsides. What did these tariffs do to overall US Washing machine prices?

[Chaodang]

So this is where it gets a bit tricky, and we had to turn to a economic study that came out around 2020. And the authors of that study essentially did some math to show that prices of washing machines in the US went up about 12% after Trump imposed his tariffs. And that averages out to about $86 per washer.

[Rick Farmer]

I mean, that's what economists say tariffs do ultimately raise prices.

[Chaodang]

Right. And the rationale for that is that the firms importing the tariffs might be the ones to bear the burden initially, but they're going to do the math and say, well, we can't really stomach all the cost. We need to pass on some of this cost to the consumer. And, you know, that's how these tariffs ultimately filter through an economy and hit American families.

[Rick Farmer]

That same Study found that the prices of dryers also went up even though dryers weren't tariffed. Because washing machines and dryers are often sold as pairs, so companies raise prices on both. Now our reporting shows that the price of washing machines in the US has been going up. So in some ways it feels like there's a trade off between prices and jobs.

[Unnamed Economic Development Officer]

I absolutely paid more for my washing machine because when the tariffs were instituted, everybody raised their prices. Now here's the thing though. The American manufacturers could have decided to keep their prices where they were and take market share from their competitors, but no, they decided to just take the extra profits. So I'm sure there's some truth to the notion that, you know, for every tariff related job created in America, there are some costs. My position is, well, we're not bearing those costs here in Newberry County. We're actually finding a way to profit off of the environment.

[Rick Farmer]

Would you call yourself pro tariff?

[Unnamed Economic Development Officer]

Me? I am pro whatever improves my community. Within reason, of course. I'm not talking about crimes or anything like that, but if it improves my community, it's worth pursuing.

[Rick Farmer]

Do you feel like that kind of policy though helps bring manufacturing to the US and to your community?

[Unnamed Economic Development Officer]

Well, I've heard various different argumentations on tariffs. Tariffs good, tariffs bad. But obviously if you have a facility in your community that is here because of tariffs, you're going to get some benefits out of that. But you know, if you're coming here to avoid tariffs, that doesn't concern me. I want to talk about jobs and wages and that kind of stuff.

[Rick Farmer]

Samsung says it's considering moving dryer production to Newberry from Mexico, but it hasn't yet made a decision. Are there other Newberries?

[Chaodang]

The Newberry example is just a very rare example where we can say that tariffs did help create jobs. It's, you know, very difficult to find other examples like this. I mean, if you look hard enough, you may be able to find instances where a certain company decided that it didn't want to pay tariffs and so therefore it made sense to create jobs in America. But the examples are few and far between.

[Rick Farmer]

What do you think is the lesson from Newberry?

[Chaodang]

I think the lesson is that the impact of tariffs is very complicated and whether they help or hurt is sort of in the eye of the beholder. You know, as we can see with these washing machine tariffs, there was a different impact for businesses, for the local economy, for the industry, for the nation. And so, you know, like, that's why tariffs I think are so controversial. I mean, they just ripple out in all sorts of unpredictable ways. Foreign.

[Rick Farmer]

Do you have any questions about the Trump administration? If you do, email us and let us know. Please send a recording of your question to thejournal sj.com that's thejournal WSJ.com that's all for today. Tuesday, April 8th the Journal is a co production of Spotify and the Wall Street Journal. If you like our show, follow us on Spotify or wherever you get your podcasts. We're out every weekday afternoon. Thanks for listening. See you tomorrow.

[Kate Linebaugh]

Every day, Wall Street Journal reporters talk with the most powerful, influential and interesting people. And now we're bringing some of those conversations directly to you. I'm Tim Higgins. And I'm Christopher Mims. We're teaming up to ask tough questions of the leaders behind the bold name companies found in the pages of the Journal every day. Are you going to build that $20,000 vehicle?

[Rick Farmer]

No, because that market sucks.

[Kate Linebaugh]

Check out bold names from the Wall Street Journal wherever you get your podcasts.