Is The U.S. Economy Beginning To Show The Effects Of Trump's Policies?

Summary

NPR Politics Podcast Summary

Episode: Is The U.S. Economy Beginning To Show The Effects Of Trump's Policies?
Date: August 25, 2025
Host: Deepa Shivaram
Guests: Domenico Montanaro, Scott Horsley

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Overview

This episode explores whether the U.S. economy is beginning to reveal the tangible effects of President Trump's recently implemented economic policies, especially tariffs on imports, immigration changes, and the latest domestic policy shifts. The hosts discuss early signs in inflation and consumer behavior, analyze voter and political perspectives, and consider winners and losers of existing policies. They conclude by assessing potential impacts of other Trump administration actions beyond tariffs.

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Key Discussion Points & Insights

1. Tariffs: Effects on Prices and Inflation

• Tariffs Have Kicked In: New tariffs cover a broad range of imports, with rates ramping up for various countries.
• Immediate Impact:
  • Inflation in July ticked up, particularly for imported goods like toys and furniture.
  • Retail prices haven't fully absorbed increased costs, as importers are shouldering some burden so far.
  • “The full force of the tariffs has not yet made its way to the price that consumers see at the checkout stand.” — Scott Horsley [01:30]
• Tariff Revenue: The federal government is collecting around $30B/month in tariff revenue, though much of this comes from U.S. businesses and consumers.
• Rapid Tariff Escalation: August saw jumps to 15% tariffs on Europe, 20% on Vietnam, 50% on Brazil, likely impacting future data.

2. Public and Political Perception

• Voter Divisions:
  • Overall: 61% of Americans oppose significant tariff increases, per Pew Research.
  • Republicans: 68% favor them but with underlying worry; 85% approve of Trump generally, though ~27% acknowledge potential negative impacts.
  • Independents and Democrats: Broadly opposed.
  • “...there's a little bit of indecision among Republicans, a little bit of concern, but clearly wanting to give Trump a long leash here...” — Domenico Montanaro [02:59]

3. Shifts in Consumer Behavior

• Spending Growth Slows: Consumer spending is up but at half the rate of last year.
• Lower Income Pinched:
  • Big retailers and fast-food chains report reduced foot traffic, especially among lower-income households.
  • “Tariffs...tend to hit lower income customers harder because lower income customers spend more of their budget on goods.” — Scott Horsley [05:24]
• Bifurcated Market:
  • Wealthier consumers still spend comfortably, possibly owing to rising asset values.
  • Both lower and higher income groups are bargain-hunting more.

4. Administration Response & Policy Goals

• Stock Market Sensitivity: Trump’s reactions to economic realities, such as pausing tariffs after market drops or firing the BLS head over jobs data, indicate a focus on immediate numbers.
  • “For Trump, what's most important when it comes to whether or not he adjusts anything is the stock market.” — Domenico Montanaro [07:51]
• Populism and ‘Bringing Back’ Manufacturing:
  • Policy is framed as reviving mid-century factory jobs, appealing to ‘forgotten’ workers.
  • In practice, genuine revitalization of large-scale, labor-intensive manufacturing is unlikely.
  • Example: Sony increasing PlayStation prices but not planning U.S. factory openings [09:58]
• Other Stated Goals:
  • Using tariffs as leverage for trade access—minor success with some EU goods.
  • Revenue generation, which is working—but at U.S. expense.

5. Winners and Losers

• Winners:
  • U.S. businesses competing with imports (can raise prices/increase share).
  • Select workers who felt undercut by competition.
• Losers:
  • Lower-income consumers—majority of their spending is on tariffed goods.
  • Broad U.S. consumer and import-reliant businesses, facing higher costs.
  • “...it's just a question of whether those benefits outweigh the pretty severe costs.” — Scott Horsley [12:04]

6. Additional Economic Policies

• Immigration:
  • Net loss of immigrants projected for 2025, a first since 1960; already reflected in slower labor force and job growth.
  • “That's a huge economic story... We've seen...much slower job growth in May, June and July...” — Scott Horsley [13:08]
• Tax Cuts:
  • Extensions of 2017 cuts; small effect expected, mostly preventing pay decreases.
• Deregulation:
  • Impacts uncertain, too recent to evaluate.
• Political Ramifications:
  • If tariffs bite harder or labor/wages falter, backlash could hit GOP in midterms.

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Notable Quotes & Memorable Moments

• On Tariff Impact Timeline:
  • “We are definitely starting to see some effect of the tariffs.” — Scott Horsley [01:30]
• On Lower-Income Impact:
  • “Tariffs are aggressive tax that fall hardest on the lower income people.” — Scott Horsley [05:24]
• On Trump's Motivations:
  • “He ran on this right wing populism...trying to turn the clock back to a 1950s, 1960s kind of culture...” — Domenico Montanaro [09:00]
• Immigration Effects:
  • “We could have an actual net outflow of immigrants from this country in 2025 for the first time since at least 1960. So that's a huge economic story.” — Scott Horsley [13:08]
• On Future Risks:
  • “If all of this is going to take several months, that doesn't bode particularly well for Republicans in the 2026 midterms, if it is something that does wind up pinching...people's pockets.” — Domenico Montanaro [14:46]

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Important Timestamps

• Tariffs and Inflation Explained: [01:10–02:55]
• Voter Opinions on Tariffs: [02:59–03:59]
• Consumer Behavior & Income Levels: [04:10–06:16]
• Administration’s Political Calculation: [07:39–08:50]
• Intended Policy Goals: [08:50–11:57]
• Winners and Losers: [12:04–12:52]
• Immigration and Other Policies: [12:52–14:46]
• Midterm Risk Outlook: [14:46–15:45]

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This episode offers a candid look at early evidence from Trump’s economic efforts, with particular concern for inflation and income inequality. The panel is cautious but attuned: while major disruption has yet to materialize, significant risks are on the horizon—especially for lower- and middle-income Americans—should trends continue as tariffs and other policy shifts take full effect.

Transcript

[Deepa Shivaram]

Americans are living longer than ever before. On the Sunday story from up first, we look at a growing number of people using these extra years to find new meaning.

[Scott Horsley]

You get to the point where you start asking, what did you do in your life that was significant?

[Deepa Shivaram]

A look at the transformative power of human passion and finding your purpose in the third act of life. Listen now on the up first podcast from npr. Hi, this is Laura. I'm at the Baltimore Animal Rescue and Care Shelter on a walk with Gatsby, a one and a half year old pity mix that we can work on his loose leash walking skills. This podcast was recorded at 1:08pm on Monday, August 25, 2025. Things may have changed by the time you hear this, but Gatsby will hopefully be an expert loose leash walker and in his forever home. Okay, here's the show. Gatsby. Come join the podcast. I love the panting.

[Domenico Montanaro]

That's sweet. That's great work.

[Deepa Shivaram]

No, that is. I love that so much. Hey there. It's the NPR Politics podcast. I'm Deepa Shivaram. I cover the White House.

[Domenico Montanaro]

And I'm Domenico Montanaro, senior political editor and correspondent.

[Deepa Shivaram]

And we also have NPR chief economics correspondent Scott Horsley with us today.

[Scott Horsley]

Hey, Scott, great to be with you with my rescue dog at my side.

[Deepa Shivaram]

Oh, I love. Okay, so today on the show, is the US Economy starting to show the effects of President Trump's economic policies? So, Scott, let's start with you. You know, tariffs are now in effect on a wide range of imports. What sort of effects from this are you see?

[Scott Horsley]

I think we're seeing a loose leash effect. You know, we haven't the tariffs have not pulled up tight, but we are definitely starting to see some effect of the tariffs. Inflation in July was a little bit hotter than it had been the month before. And you're seeing it in particular on some goods prices that we import, a lot of things like toys and furniture. But the full force of the tariffs has not yet made its way to the price that consumers see at the checkout stand. Importers are still absorbing some of the cost and we expect more those costs to make their way into the retail prices in the months to come.

[Deepa Shivaram]

And we should point out that tariffs generally will increase costs for consumers, right?

[Scott Horsley]

Yes. I mean, right now the federal government is collecting something like $30 billion a month in tariffs. Some of that cost is being absorbed by foreign suppliers, but most the cost is being paid by importers here in this country. And in some cases they're passing that along to the end consumer you know, the latest inflation figures we have are for July. That's before the most recent escalation in tariffs, where the sort of 10% worldwide tariffs were adjusted the beginning of August. Now it's say 15% on goods coming from Europe. It's 20% on goods coming from Vietnam. We're seeing 50% on goods coming from Brazil. So we're going to see higher tariffs already taking effect this month, and that'll show up in the data in the months to come.

[Deepa Shivaram]

And Domenico, what do we know about how voters feel about these tariffs?

[Domenico Montanaro]

Well, you know, overall, they've been pretty negative about the effects of tariffs and the potential effects of tariffs. The most recent survey I found specifically on it was the Pew Research center, which found that 61% of people disapprove of increasing tariffs substantially, as Trump has on some places. 68% of Republicans, though, approve of it. So apparently they're willing to give him some leash, though there still is a fairly significant number of Republicans there who are concerned, it appears, considering that, you know, he gets 85% approval rating from Republicans overall for the job that he's doing. So you see a little bit of a gap there. And about 27% of Republicans said that they think that it's going to have an equally positive and equally negative impact on the country as a whole. So, you know, I think that there's a little bit of indecision among Republicans, a little bit of concern, but clearly wanting to give Trump a long leash here while independents and Democrats are just very hotly opposed.

[Deepa Shivaram]

Yeah, well, Scott, you know, there's the voter side of this, but there's also, you know, consumer behavior. How are people spending differently? And has there been any shift since these tariff announcements have come out?

[Scott Horsley]

Yeah, you're right. People vote every day with their spending decisions. And we are seeing spending continues to grow, but it's growing much more slowly than it was say, last year. In the second quarter, I.e. april, May, June, we saw consumer spending grow at about half the pace that it did last year. Some of that may be tariff related, but it also just may be people feeling in general a little bit worn out. They're not getting government stimulus checks anymore. The pay raises that they were getting are not as big as they once were. Pay raises are still keeping pace with inflation, outrunning inflation a little bit, but not by a whole lot. And so people may be feeling a little bit more cautious. We had a number of big retailers reported earnings last week, and a number of them talked about consumers being more careful with what they spend especially lower income consumers. McDonald's reported earnings a couple of weeks ago and said that the fast food industry as a whole, which relies heavily on lower income consumers, has seen a slowdown in foot traffic from those consumers, especially at breakfast time when people do have a choice are they going to maybe skip breakfast altogether or maybe just eat something at home? So they're seeing less breakfast business. Walmart says they've seen especially lower income consumers being more coffee. They've also seen more higher income customers coming to fast food chains and to places like Walmart looking for bargains. So everyone's looking to economize a little bit. But there is kind of a bifurcated market where lower income consumers are definitely dialing back their spending more. And upper income consumers who might be feeling pretty good about their stock market returns, maybe feeling good about their housing values going up, they're still spending more freely. We should say tariffs because they mostly apply to goods, do tend to hit lower income customers harder because lower income customers spend more of their budget on goods and higher income people spend more on services, experiences, travel, recreation, that kind of stuff. So tariffs are aggressive tax that fall hardest on the lower income people. So that may be one factor in why they're dialing back their spending a little bit more.

[Deepa Shivaram]

Interesting. All right. We're going to have to take a quick break here, but we'll be back in a moment. This message comes from Cook Unity. Fuel your day with fresh, fully cooked meals from award winning chefs. Every dish is crafted with hand picked ingredients and delivered to your door. Commitment. Free subscriptions start as low as $11ameal. Skip, pause or cancel anytime. Go to cookunity.com code or enter code code before checkout for free Premium meals for life cookunity.com code or enter code Code before checkout. Terms and conditions apply. NPR's wild card podcast is all about embracing the unexpected. Like when Harrison Ford stopped by.

[Scott Horsley]

My phone just rang.

[Deepa Shivaram]

Jay Leno is calling you right now.

[Domenico Montanaro]

About my toilet seat.

[Scott Horsley]

Yeah, Jay's printing a 3D printed toilet seat for me. What?

[Deepa Shivaram]

Listen to NPR's Wild Card wherever you get your podcasts or watch it on YouTube.

[Scott Horsley]

I'm Peter Sagal. NPR is very serious. Mostly it treats newsmakers with all due respect almost all the time.

[Domenico Montanaro]

It brings you the most important information.

[Scott Horsley]

About the issues that really matter usually. And it never asks famous people about things they don't know anything about except once in a while. Join us for the great exception. Listen to Wait, wait, don't tell me the news quiz from npr.

[Deepa Shivaram]

And we're back. So, Domenico, how is the Trump administration responding to these shifting economic realities? I mean, are there indications that they are slowing down or backing off on tariff plans?

[Domenico Montanaro]

Well, you know, I think that for Trump, what's most important when it comes to whether or not he adjusts anything is the stock market. And the stock market's proved fairly resilient. I mean, it's hit all time highs. You know, when the Liberation Day announcement happened back in April, there were some big drops in the market and you saw Trump back off. But given a little bit of time and space, he feels like politically he's able to now kind of push these through with the economy at a fairly strong foundation, foundational base. It appears. Of course, he did get irritated with the Bureau of Labor Statistics, wind up firing the head because he didn't like the numbers that came out on the jobs report. So, you know, we're going to see this kind of stuff that Trump does with a little bit of a knee jerk reaction, whether it's the stock market telling him which direction it thinks things should be going or if he sees economic indicator numbers that he doesn't like, or if the chairman of the Federal Reserve, Jerome Powell, won't lower rates, which he wants him to do.

[Scott Horsley]

Yeah.

[Deepa Shivaram]

And remind us, you know, kind of big picture here, what is the president's goal with these tariffs? Like what is the problem that he has been trying to solve?

[Domenico Montanaro]

Well, I mean, he ran on this right wing populism. Right. Which is something that we've seen a lot of people around the globe. Do they blame immigrants for taking away jobs in economically depressed areas, which there's little evidence of, but it resonates with a strong population of voters who, you know, feel like they've been left behind or forgotten. And with that in mind, that's where Trump is trying to appeal to folks who could benefit from potential manufacturing jobs. Kind of trying to turn the clock back to a 1950s, 1960s kind of culture where the world wasn't flat economically as it is today as much and wanting people to be able to get those kinds of good paying jobs where you don't necessarily need a college degree as the economy has changed. But you know, the whole point of what Trump's trying to do is, you know, bring back manufacturing to the United States for this kind of right wing populism that he's been able to use to propel him politically and appeal to this sort of blue collar working class base. But, you know, it's not likely to be something that happens anytime soon. I mean, think about the announcement from Sony that they're hiking prices on their PlayStation, where their consoles are going up from 500 to about $550. And it's not like Sony is going to be building factories in Ohio anytime soon.

[Scott Horsley]

We have seen some companies announce plans to build manufacturing facilities here in the US it's going to take us some time, I think, to figure out if those are plans that they probably would have done anyway or if this really is a response to the new tariff regime. But you know, for the most part, we're not going to see the kind of labor intensive manufacturing come back to the US that would actually put a whole lot of people into manufacturing jobs. To the extent factories are operating here in the US they have to be very efficient and they're generally not going to require a whole lot of workers. That's when manufacturing in the United States makes sense. Now, getting manufacturing back was one of several goals that the president's talked about for tariffs. He also talked about using this as a bargaining chip to get other countries to open up their markets to US Exports. We haven't seen a whole lot of movement in that direction yet. We just saw some of the details of the trade pact with the European Union and there is some opening there of European markets to say lobster and bison exports, for example. And they're talking about buying more energy from the United States, which they might have done anyway. Doesn't look like they're going to be buying a whole lot more pork and chicken from the United States, however, or beef from the US the other goal that the president talked about for these tariffs was just to generate revenue, revenue from the government. And that is happening. They are bringing in, as I said earlier, a lot of money for the government. Of course, that's mostly coming from US Businesses and consumers.

[Deepa Shivaram]

So Scott, at this point then, are there companies or specific people, you would say who are benefiting from these tariffs then?

[Scott Horsley]

Yes, there are definitely some domestic winners from tariffs. You know, there are businesses in the US that compete with imports and they may be getting more business or more market share now or at a minimum, they're in a position now where they can probably raise their prices because their import competition is going to be more expensive as a result of tariffs. So domestic producers can raise prices. That's a win for them. There are also, I've talked to some workers in the US who felt like they were competing with overseas competition, who feel like they will have more opportunities now as a result of this tariff. So we shouldn't say that these tariffs don't create any benefits for domestic businesses. It's just a question of whether those benefits outweigh the pretty severe costs.

[Deepa Shivaram]

So to end on this, I mean, I want to ask both of you, besides from tariffs, are there other policies by the Trump administration? I'm thinking, you know, immigration policy, you know, Trump's big domestic bill that passed through Congress earlier this year. Are any of those having significant effects on the economy?

[Scott Horsley]

Oh, I think the immigration policies are absolutely having an impact, whether it's a drop in new immigrants coming into the country either with or without authorization, or immigrants who are being deported or voluntarily leaving the country. You know, we had a forecast from researchers at the Brookings Institution and the American Enterprise Institute that we could have an actual net outflow of immigrants from this country in 2025 for the first time since at least 1960. So that's a huge economic story. And you can already see it in some of the labor force that we get each month with the jobs report. We've seen, for example, much slower job growth in May, June and July than we were seeing, say, a year ago. But that's partly because businesses are demanding less work, but it's also because there's fewer workers available to take those jobs. We've seen a much slower growth in the labor force because of this sea change in immigration. So that's huge. In terms of tax cuts, we won't really see the effects of that until next year, for the most part. And I think that impact will be pretty limited because for the most part, the tax cuts were extending the tax cuts in the 2017 bill. So I don't think people are going to see a huge jump in their take home pay. They won't see less take home pay than they otherwise would have. So there will be some impact from the tax cuts. And then the other big thing that we could see some economic impact from is the deregulatory moves that the White House has made. Probably too soon to say what that's going to look like.

[Domenico Montanaro]

Yeah. And I just, politically, I think the big question is going to be when or if these tariffs actually have an impact on prices in a big way. You know, companies having stockpiled goods in shipments that came over in the first quarter into the second quarter, those things are going to wear out. Eventually they're going to run out. And, you know, Trump has been kind of lucky in the sense that the US Economy is strong foundationally, that, you know, wages have been outpacing, you know, inflation. But if that starts to change, if the labor market becomes weaker, if people have less money to spend, then all of a sudden when you start to see the pitchforks come out from people upset with how things are going with the government because they're not able to spend as much. And if all of this is going to take several months, that doesn't bode particularly well for Republicans in the 2026 midterms. If it is something that does wind up pinching, you know, people's pockets.

[Scott Horsley]

Yeah.

[Deepa Shivaram]

No, that's definitely something to keep an eye on. All right. We're going to leave it there for today. Thank you for reporting, Scott, and for joining the pod today.

[Scott Horsley]

Great to be with you.

[Deepa Shivaram]

I'm Deepa Shivaram. I cover the White House.

[Domenico Montanaro]

And I'm Domenico Montanaro, senior political editor and correspondent.

[Deepa Shivaram]

And thank you for listening to the NPR Politics podcast.

[Scott Horsley]

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