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
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.
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:
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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."
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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.”
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:
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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.
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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.”
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:
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Attracting Samsung: Rick Farmer describes receiving a call about Samsung's interest and facilitating their visit to Newberry.
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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:
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Economic Development Officer ([07:53]): “The feeling was absolutely unbelievable… a very similar feeling to winning a national championship in football.”
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Kate Linebaugh ([08:24]): Highlights the large economic impact on the community and the creation of new career pathways for residents.
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:
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Job Creation: The factory provided numerous employment opportunities, helping retain residents and attract new talent.
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Local Business Growth: Increased customer flow benefited nearby restaurants and other businesses.
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Economic Ripple Effect: The introduction of Korean suppliers to Samsung further multiplied job opportunities.
Notable Quotes:
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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.”
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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.”
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:
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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.
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Ripple Effect on Other Products: Even products not directly tariffed, such as dryers, saw price hikes due to their complementary relationship with washing machines.
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Trade-Offs: The episode underscores the delicate balance between job creation and the cost burden on consumers.
Notable Quotes:
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Chaodang ([12:29]): “Prices of washing machines in the US went up about 12% after Trump imposed his tariffs.”
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Economic Development Officer ([14:01]): Acknowledges the cost trade-offs: “For every tariff related job created in America, there are some costs.”
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:
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Complex Impacts: Tariffs have multifaceted effects that can benefit specific communities while imposing costs elsewhere.
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Rarity of Success Stories: Instances like Newberry are uncommon, making them noteworthy but not indicative of the overall efficacy of tariff policies.
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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:
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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.”
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Economic Development Officer ([15:07]): Emphasizes focus on tangible outcomes: “I want to talk about jobs and wages and that kind of stuff.”
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.
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.”