Trump’s Tariffs Force a New Era in Global Trade

Summary

Summary of "Trump’s Tariffs Force a New Era in Global Trade" – The Journal Podcast

Release Date: April 3, 2025

Introduction

In the April 3, 2025 episode of The Journal, hosted by Kate Linebaugh and Ryan Knutson in collaboration with The Wall Street Journal and Gimlet, the focus is squarely on the seismic shift in global trade initiated by President Donald Trump's sweeping tariff announcements. The episode delves into the immediate and long-term implications of these tariffs on the global economy, U.S. businesses, and international relations.

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The White House Rose Garden Announcement

Timestamp: 00:15 – 01:17

The episode opens with a vivid description of the White House Rose Garden on an overcast and windy day, setting the scene for a significant political event. Brian Schwartz, a Wall Street Journal reporter present at the event, narrates the atmosphere:

"[There] was a brass band playing behind us reporters as the President was about to enter the Rose Garden." (00:22)

As President Trump takes the stage, he brands the day "Liberation Day," marking it as the rebirth of American industry. In a historic move, Trump announces sweeping new tariffs on dozens of countries, including both allies and adversaries, aiming to reinvigorate U.S. manufacturing.

Donald Trump: "My fellow Americans, this is Liberation Day waiting for a long time. April 2, 2025, will forever be remembered as the day American industry was reborn." (01:02)

Analysis of the Tariff Announcement

Timestamp: 01:17 – 08:37

Kate Linebaugh prompts Brian Schwartz to encapsulate the impact of Trump's tariff announcement in one word. Schwartz encapsulates it as "short term pain," highlighting potential losses in the stock market, struggles for companies with earnings, and possible job cuts as businesses navigate the new trade landscape.

Brian Schwartz: "One phrase, short term pain... significant losses in the stock market, maybe some companies having some struggles with their earnings, and maybe some companies deciding that there may have to be some cuts, job cuts." (01:48)

Schwartz emphasizes the historic nature of the event, describing it as "an attempt to reorient the global trade order."

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Details of the Tariffs and Policy Goals

Timestamp: 03:23 – 08:37

During the Rose Garden event, Trump presents a large poster listing various countries subjected to the new tariffs. The tariffs vary significantly, with China facing a 34% tariff, the European Union (EU) at 20%, and Japan at 24%.

Donald Trump: "In other words, they charge us, we charge them, we charge them less. So how can anybody be upset?" (05:56)

Trump rationalizes these tariffs as a method to balance trade deficits, accusing other nations of exploiting the U.S. economy.

Donald Trump: "For decades, our country has been looted, pillaged, raped, and plundered by nations near and far, both friend and foe alike." (06:32)

Brian Schwartz provides context by referencing past trade agreements like NAFTA, which critics argue harmed the middle class by forcing companies to relocate production overseas, leading to job losses in the U.S.

Brian Schwartz: "He is right where that has kind of been a detriment at certain points to the middle class and to workers across the country." (07:41)

Trump's policy goals with these tariffs are clear: revitalize the American middle class, bring back jobs that were outsourced, and reduce dependency on imports. Schwartz notes that Trump has held this vision since the 1980s.

Brian Schwartz: "He has believed that the country has been ripped off by other countries." (08:37)

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Impact on U.S. Businesses: A Case Study

Timestamp: 11:36 – 17:02

The podcast features an interview with Steve Greenspan, owner of Honey Can Do, a company manufacturing household goods for major retailers like Walmart and Target. Greenspan provides a firsthand account of the tariffs' impact:

Steve Greenspan: "We cannot produce our products in the US. These are low cost products that require so much labor and so many inputs and so many different materials. The US does not have the infrastructure in order to produce these low cost products." (12:18)

Greenspan explains the financial burden of moving production to Vietnam—a strategic decision made seven years prior to escape earlier tariffs:

Steve Greenspan: "Oh, I can't give you a quantifiable number, but it wouldn't surprise me if it's millions of dollars... had we known, of course, that the tariffs were coming, we would have reconsidered." (12:43)

With the new tariffs imposing a 46% duty on goods from Vietnam, the company's investments are now at risk, leading Greenspan to anticipate:

• Passing tariff costs to customers, resulting in higher prices or reduced sales.
• Potential layoffs due to decreased demand and increased operational costs.
• Limited alternatives for relocating production without incurring similar tariffs.

Steve Greenspan: "There's no question demand is going to be down... consumers are going to say, you know what, I've got a chair or a peloton or whatever they have lying around, and they're not going to buy a drying rack." (14:03)

This case study underscores the tangible challenges U.S. businesses face in adapting to the new tariff regime, highlighting the broader economic implications.

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Market and Global Reactions

Timestamp: 17:30 – 20:42

The podcast shifts focus to the immediate reactions from global markets and governments:

• Asian Stock Markets: Experienced significant declines post-announcement.

  Steve Greenspan: "Japan's benchmark stock index Nikkei was down by 4% in early trading." (18:36)

• U.S. Stock Market: Suffered its largest one-day wipeout since March 2020, with major corporations like GM, Apple, Nike, and Intel losing billions in value.

• Global Government Responses:

  • Canada retaliated with a 25% tariff.
  • France's President Emmanuel Macron indicated Europe was considering its own tariffs against the U.S.
  • China vowed countermeasures, escalating the trade war.

Brian Schwartz comments on the unprecedented nature of these developments, noting the administration's aggressive stance on both allies and adversaries.

Brian Schwartz: "These aren't all, like, adversaries. These are a lot of US Allies and how we're dealing with them on the trade front..." (19:40)

The podcast also explores the possibility of Trump retracting some tariffs, though Schwartz remains skeptical given Trump's longstanding commitment to reshaping U.S. trade policies.

Brian Schwartz: "Sure. This could all be one big bluff... but I highly doubt it because this is what he has wanted to do for decades." (20:15)

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Conclusion and Future Outlook

Timestamp: 20:42 – End

The episode wraps up with a brief comment from President Trump, who remains optimistic about the tariff strategy:

Donald Trump: "I think it's going very well." (20:42)

The Journal concludes by emphasizing the transformative impact of Trump's tariff policies on global trade, the U.S. economy, and international relations. As businesses grapple with the new realities, the podcast hints at continued volatility and uncertainty in the months ahead, underscoring the profound and lasting changes ushered in by Trump's decisive actions.

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Key Takeaways

• Historic Shift: Trump's tariff announcement represents a bold attempt to redefine global trade dynamics and prioritize American manufacturing.

• Economic Impact: While aimed at bolstering the U.S. economy, the tariffs have led to significant market volatility, business operational challenges, and retaliatory measures from other nations.

• Business Struggles: Companies like Honey Can Do face increased costs, reduced demand, and difficult decisions regarding production locations and staffing.

• Global Tensions: The aggressive tariff strategy has strained relationships with both allies and adversaries, potentially leading to a prolonged and intensifying trade war.

• Uncertain Future: The long-term effects of these policies remain to be seen, with potential for continued economic turbulence and shifts in international trade alliances.

This episode of The Journal provides a comprehensive analysis of the immediate repercussions of Trump's tariff policies, offering insights from reporters on the ground, affected business owners, and an overview of the global economic landscape in flux.

Transcript

[Tim Higgins]

Ladies and gentlemen, the President of the United States.

[Kate Linebaugh]

It was an overcast, windy day at the White House yesterday and a crowd gathered in the Rose Garden.

[Brian Schwartz]

There was a brass band playing behind us reporters as the President was about to enter the Rose Garden.

[Kate Linebaugh]

That's our colleague, Brian Schwartz. He was there for a big event. So were cabinet members, Republican senators and union workers in hard hats.

[Donald Trump]

Thank you very much. Thank you. Nice crowd. What a good looking group of people. Well, we have some very, very good.

[Brian Schwartz]

News today, and it was pretty surreal. It was very kind of regal, with this kind of blue collar feel. There were American flags draped behind the President while he was speaking.

[Donald Trump]

My fellow Americans, this is Liberation Day waiting for a long time. April 2, 2025, will forever be remembered as the day American industry was reborn.

[Kate Linebaugh]

The day American Trump announced sweeping new tariffs on dozens of countries, from allies to adversaries, in a bid to reinvigorate U.S. manufacturing. But these tariffs have sent markets into a tailspin as businesses, governments and investors digest an escalating global trade war. In one word, what could these tariffs mean for the global economy?

[Brian Schwartz]

Well, I don't know if it's one word, but one phrase, short term pain, that that is what the administration concedes could happen. So short term pain, I translate that into significant losses in the stock market, maybe some companies having some struggles with their earnings, and maybe some companies deciding that there may have to be some cuts, job cuts, because they have to figure out how to navigate these new trade waters post Trump's announcement.

[Kate Linebaugh]

How historic is this moment?

[Brian Schwartz]

It's a big deal. It is an attempt to reorient the global trade order. I mean, there is no disputing that.

[Kate Linebaugh]

Welcome to the Journal, our show about money, business and power. I'm Kate LINEBAUGH. It's Thursday, April 3rd. Coming up on the show, A New Era in U.S. trade Policy.

[Tim Higgins]

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 podcasts.

[Donald Trump]

I'd like to see the chart if you have it. Could you bring it up, Howard?

[Kate Linebaugh]

In the Rose Garden, Trump held up this big poster that had a long list of countries on it.

[Donald Trump]

We didn't want to bring. It's very windy out here. We didn't want to bring out the big charts because it had no chance of standing.

[Brian Schwartz]

Yeah. The poster was a list of different countries. China, I believe, was at the top. The European Union. I remember the first Few. The European Union was at the top. This is what Trump was trying to emphasize. And it was all a list of the tariffs they're going to levy on goods coming from those countries and regions of the world. And at the time, reporters were given this pamphlet of not just that chart, but pages worth of tariffs that the President was moving to initiate on countries around the world. It was stunning because, you know, when I think back at it, I had never seen anything like this before. I don't think any of us had seen somewhere like this before from a president to come out on stage, particularly a Republican president, and say, hey, this is what we're going to do to countries all over the place. It was a really fascinating and historic moment for governance in this country.

[Kate Linebaugh]

Was the scope of the tariffs he announced surprising?

[Brian Schwartz]

Yes, it was. I mean, the thing is, you know, as we were reporting this out, there were a bunch of different options. We were aware of coming into this. We were aware of this idea where the President was considering a 20% or thereabouts universal tariff rate, where a vast majority of countries would get hit with one tariff rate. Then the another option was to do this reciprocal type tariff. And so they kind of ended up doing a little bit of both. They had a bunch of countries that got hit with a standard 10% tariff. So that's kind of like the universal tariff. But then others, including China and the European Union, were hit with much higher tariffs than that. And that, in my view, is what I would define as a nuclear option. That would be. Basically, he went full bore with both ideas, combined them into one, and let them loose at the Rose Garden. At the White House.

[Kate Linebaugh]

Trump sees reciprocal tariffs as a kind of tit for tat tariff.

[Donald Trump]

In other words, they charge us, we charge them, we charge them less. So how can anybody be upset?

[Kate Linebaugh]

The reciprocal tariff on China was set at 34%. For the EU, it's 20%. And on Japan, 24%, just to name a few. The administration says these tariffs were calculated to balance trade deficits. One thing he said is, you know, other countries have been sort of feasting on the US Economy while it. While hollowing it out, and he wants to make them pay.

[Donald Trump]

For decades, our country has been looted, pillaged, raped, and plundered by nations near and far, both friend and foe alike.

[Brian Schwartz]

He's not entirely wrong about that. We have been involved with some trade deals that have been a little controversial over the years. The original NAFTA was, you know, from the critics view, a hit on the middle class because it did start to Kind of in theory force some companies to start making goods overseas. And so I do think he has a point where countries have been relying on these trade deals that at times have not always benefited the United States and have benefited other countries more. And they have at certain times seen US Companies deploy jobs to other nations. And he's right where that has kind of been a detriment at certain points to the middle class and to workers across the country.

[Kate Linebaugh]

What are Trump's policy goals with these tariffs?

[Brian Schwartz]

The president doesn't seem to buy the theory that tariffs will hurt the economy, at least long term. He might concede there could be some short term pain. And he believes the American people will rally around him for that. But he does not believe that there will be an impact on the price of goods, particularly long term. And what he does believe is that these tariffs, this is a vision he's had for the country, will start to help the middle class, that it will bring back jobs that went overseas, that we will have more American made goods here and less of a focus on imports. That is how he's been thinking for years.

[Kate Linebaugh]

For years, Years. How far back does this go?

[Brian Schwartz]

The 80s? He has believed that the country has been ripped off by other countries.

[Kate Linebaugh]

Here's Trump on the Oprah Winfrey Show.

[Brian Schwartz]

In 1988, we let Japan come in and dump everything right into our markets and everything. It's not free trade. If you ever go to Japan right now and try to sell something, forget about it, Albert. Just forget about it. It's almost impossible. So he is trying to move ahead with this broad vision of reorienting trade that we know here in the United States. And he's had this belief system for the past at least 40.

[Kate Linebaugh]

And in the Rose Garden event, he listed off several companies that have pledged to build factories in the U.S. billions and billions of dollars. Does that mean this policy is achieving its aims?

[Brian Schwartz]

I'm not sure if it's achieving the aims. I think. Well, think about this for a minute. You know, you know, this is another way to look at it. There are companies that have said, we're going to come build a plant in the United States, we're going to invest more money into the United States. What they haven't said is we're going to close up shop and move a bulk of our production to the United States. That is a critical difference. The reason I'm saying it like that is because despite the fact that these companies have said they are going to make more things in the United States, the President still moved ahead with the tariffs. Anyway, it's interesting. It's like he's saying, I want more things to be made in the United States. But it also seems like whatever has happened so far with these companies isn't enough.

[Kate Linebaugh]

For months, companies have been sort of dealing with the uncertainty of tariffs. And, you know, for better or worse, now we have the answers. Will that help companies make decisions?

[Brian Schwartz]

Well, I don't think it gives corporate America really much of a leg to stand on it. What are they, what are they supposed to do? I mean, what is the answer to this? I mean, so many of these executives have gone and bent the knee to the president and have done at least a version of what he has asked them to do. I get it. But look at what the White House has been touting. I mean, they're the ones touting these investments by other countries from the President's pressure campaign. Like, I don't know what else they can do to adapt to this than what they're doing now.

[Kate Linebaugh]

After the break, how the world is reacting to Trump's Liberation Day.

[Tim Higgins]

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.

[Kate Linebaugh]

When you heard what was announced, what was your immediate reaction?

[Steve Greenspan]

Dismay, anger, disbelief, sadness, Scratching my head.

[Kate Linebaugh]

Right after Trump's announcement, we called up Steve Greenspan. Steve owns a company called Honey can do that makes household goods he sells to major retailers like Walmart and Target. We also spoke to him last month. Steve used to manufacture most of his goods in China. But seven years ago, during Trump's first term, in reaction to tariffs then, Steve decided to move some production out of China and into Vietnam.

[Steve Greenspan]

And we cannot produce our products in the US These are low cost products that require so much labor and so many inputs and so many different materials. The US does not have the infrastructure in order to produce these low cost products.

[Kate Linebaugh]

How much did you spend to move production to Vietnam?

[Steve Greenspan]

Oh, I can't give you a quantifiable number, but it wouldn't surprise me if it's millions of dollars. This is tooling. This is time and resources. This is working with our partners to buy land and build buildings and put in tooling and machinery and so much. You know, had we known, of course, that the tariffs were coming, we would have reconsidered.

[Kate Linebaugh]

Yesterday, Steve watched As Trump put 46% tariffs on goods coming from Vietnam.

[Steve Greenspan]

It just seems wrong that these companies, including our company, made these monstrous investments in Moving things to Vietnam and other countries that are on the list. And now it's for not. It's for waste. It's out the window.

[Kate Linebaugh]

Will you pass along the tariff cost to your customers?

[Steve Greenspan]

Of course. We can't absorb this type of thing, so yes, it's going to be passed along. You know, we'll work with our customers and we'll take a hit and the customers will take a hit and the consumers will take a hit and we'll get it worked out.

[Kate Linebaugh]

What do you think it will do to your sales?

[Steve Greenspan]

There's no question demand is going to be down. It reaches a point where the simple supply and demand is you've got X number of consumers that are going to be willing to pay $20 for a drying rack. As soon as you make the price $30, it's going to be significantly less. At a certain point, instead of buying a drying rack, consumers are going to say, you know what, I've got a chair or a peloton or whatever they have lying around, and they're not going to buy a drying rack.

[Kate Linebaugh]

If your sales fall, will you have to lay off staff?

[Steve Greenspan]

Yeah, of course. We're going to have to reduce expenses, whether it's staff or cutting other areas. You know, in a company like ours, the staff is certainly the largest expense.

[Kate Linebaugh]

Do you think these moves could bring this kind of manufacturing back to the.

[Steve Greenspan]

US not for our categories. Not for household goods, not for these types of products. There are no alternatives for our types of products to be made in the US or made in countries that don't have these massive tariffs. If consumers want to buy our type of products, the coat hangers, the trash bins, the drying racks, the shelving units, the laundry hampers, going forward with these tariffs, they're going to pay a much, much higher price or they're not going to buy them.

[Kate Linebaugh]

Do you regret moving production to Vietnam now?

[Steve Greenspan]

I don't know if regret is the right term. Obviously, had we known about this, we would not have made these decisions. So I guess regret might be the right term. At the time that we made the decisions, I feel like they were the right decisions with the information that we had.

[Kate Linebaugh]

Will you keep your production in Vietnam?

[Steve Greenspan]

Nothing is going to happen quickly. I'll say that this was hundreds of thousands, if not millions of dollars invested in order to get to the point where we could produce the products in Vietnam. And who's to say if we move it to Cambodia or Thailand or pick any country that we're not going to be hit with tariffs at that point? I mean, it just, it throws a loop into how we can make a long term investment.

[Kate Linebaugh]

Are you worried that you could go out of business?

[Steve Greenspan]

Of course, always. But if demand due to these higher tariffs continues to go down, there's no question that that's certainly something that you have to explore, you know, and it's sad. You know, it's a good company doing good things and this is something that's completely out of our control. And that's what makes it even more frustrating.

[Kate Linebaugh]

Brian, I wanted to get your thoughts on this conversation I had with an American businessman. Yeah, he shifted some operations from China to Vietnam to get away from China tariffs and now is being hit by these new tariffs. Yeah, and he was trying to see things positively, but he also said he just felt sad.

[Brian Schwartz]

Look, geez, look, I don't blame him. What can I say here? I mean, here we are again with an example of how a company was actually trying to navigate these waters. And in the end, how can I put this delicately? The President still moved ahead with this anyway. I think that for business leaders who have to deal with this, it is gonna be over the next few months if Trump stays on this path, a very, very rough road because it's going to be an expensive endeavor. Right. People, business leaders who are in these countries are gonna have to figure out a way to handle these tariffs. And to your point, they might have to make job cuts at these places to balance out what the tariff represents. The tariff announcement has sent unprecedented ripples through the markets worldwide.

[Kate Linebaugh]

Today. Global investors reacted to the news.

[Brian Schwartz]

Asian stock markets are slumping after US President Donald Trump announced sweeping global tariffs.

[Steve Greenspan]

Japan's benchmark stock index Nikkei was down by 4% in early trading.

[Kate Linebaugh]

When markets opened in the US they plunged. Stocks from GM to Apple, Nike to in video lost billions of dollars in value. You are seeing the opening bell be rung. US Stock futures plummeted this morning. By the end of the day when US markets closed, stocks had suffered their biggest one day wipeout in value since March 2020.

[Tim Higgins]

President Trump's trade war threatens to stunt growth, reignite inflation and and increase unemployment.

[Kate Linebaugh]

Governments around the world are already pushing back. Canada today announced a retaliatory 25% tariff. French President Emmanuel Macron said Europe is weighing its response including tariffs against the US And China vowed its own countermeasures. It just feels like the world changed yesterday.

[Brian Schwartz]

It did. I made the global. It is at least short term. I don't know what he does by the time we get to next week. But I mean it's it's, it's a massive effort to change around how the US Deals with, frankly, allies. I mean, these aren't all, like, adversaries. These are, these are a lot of US Allies and how we're dealing with them on the trade front with, as Trump said, very few exemptions, is there.

[Kate Linebaugh]

A chance that Trump will back off?

[Brian Schwartz]

Sure. This could all be one big bluff. He could be using this as a way to see how countries and companies react to him. I've seen that story before. So it is possible that he's just doing this to get them to bend the knee. And within a few days, he may back off of this, but I highly doubt it because this is what he has wanted to do for decades.

[Kate Linebaugh]

This afternoon, President Trump was asked about the tariffs. He said, quote, I think it's going very well. That's all for today. Thursday, April 3rd. 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.

[Tim Higgins]

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?

[Kate Linebaugh]

No, because that market sucks.

[Tim Higgins]

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