A toymaker who got tariffed

Summary

Podcast Summary: "A toymaker who got tariffed"

Podcast: Today, Explained (Vox)
Hosts: Noel King, Sean Rameswaram
Original Air Date: February 25, 2026
Main Guests: Stephen Woldenberg (SVP, Learning Resources), Ben Harris (Brookings Institution)

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Overview of the Episode

This episode explores the fallout from the Supreme Court’s landmark ruling declaring President Trump’s tariffs unconstitutional, focusing on their impact on American businesses, especially Learning Resources—a family-owned educational toymaker that successfully sued the administration. The episode dives into the personal, legal, and economic consequences of the tariffs, featuring insights from company leadership and a prominent economist. The hosts unpack what the data shows about the broader effects on the American economy, public sentiment, and the future landscape of tariffs post-Supreme Court decision.

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Key Discussion Points and Insights

1. Setting the Stage: The Supreme Court Ruling and Trump’s Defense

• [00:01–00:48] The Supreme Court ruled Trump’s tariffs unconstitutional, stating he exceeded his authority. Trump defends tariffs in his State of the Union, touting economic successes and revenue from tariffs.
• Memorable Moment:
  • Donald Trump [00:14]: “I used these tariffs, took in hundreds of billions of dollars to make great deals for our country both economically and on a national security basis. Everything was working well.”

2. Learning Resources’ Story: Family Business Caught in the Trade War

• [02:15–04:04] Introduction to Stephen Woldenberg and the origins of Learning Resources, a multigenerational educational toy company manufacturing mostly overseas.
• [04:04–04:39] Motivation and legal basis for suing over tariffs—company challenged the use of IEEPA as a vehicle for tariffs.
  • Stephen Woldenberg [04:12]: “We sued the administration over tariffs because we did not think that IEEPA... provided for tariffs.”
• [04:39–05:32] Supreme Court victory brings relief and a sense of vindication.

3. The Costs and Consequences of Tariffs on Business

• [05:32–06:33] Tariffs hit Learning Resources hard: over $10 million paid, with rates reaching 145%.
  • Stephen Woldenberg [05:36]: "We've paid in excess of $10 million and the payments were still coming due, you know, up until Friday."
• [06:33–07:42] Business impacts: decisions to raise prices, cut marketing, investments, slow hiring—uncertainty stalls innovation.
  • Stephen Woldenberg [07:10]: "Because, like so many businesses, we crave certainty. And so when we didn't have certainty into what our tax bill was... it became much more difficult to make investment decisions."
• [07:42–08:12] Tariffs forced company to consider supply chain relocation.

4. Why Not Manufacture in America?

• [08:12–08:56] Trump’s goal was to encourage U.S. manufacturing, but Learning Resources found American production costs 10–20x more.
  • Stephen Woldenberg [08:56]: "That's correct. 10 to 20 times higher than what we would pay if we manufactured the product overseas. ... It's difficult to imagine that consumers would buy our products at the price we would have to sell them at..."

5. Legal Victory, Refunds, and Ongoing Uncertainty

• [09:29–11:28] Supreme Court ruled against the tariffs; Learning Resources expects to be reimbursed. However, the government quickly reimposed new tariffs via a different statute.
  • Stephen Woldenberg [09:40]: "We expect to [get tariff money back]. ... It was not difficult for them to take the money. And so we expect they should be able to turn the tubes around and send it right back to us."
  • Stephen Woldenberg [10:16]: "They the government reimposed tariffs... 10% on Friday and then increased it to 15% on Saturday... If this is a revenue raising exercise, they should go to Congress..."

6. The Macroeconomic View: Did Tariffs Tank the U.S. Economy?

• Guest: Ben Harris, VP & Director of Economic Studies, Brookings; former Assistant Treasury Secretary
• [15:29–17:55] Economists expected dire effects, possibly recession, from tariff increases (from ~3% to >20%)—but the economy proved resilient.
  • Ben Harris [17:29]: "If you told 100 economists that the average tariff rate was going to jump... many would have predicted a recession. And that was... not what we saw."

7. Why Didn’t Tariffs Cause Economic Collapse?

• [17:55–20:31] Three main lessons:
  1. Pass-through to consumers was slower than expected.
     • Companies hesitant to instantly raise prices; waited to see if tariffs stuck.
  2. Economic context matters.
     • Major stimulus (“one big, beautiful bill”) offset pain for many families.
  3. Unanticipated lack of retaliatory tariffs.
     • Instead of retaliation, many trading partners sought new frameworks with the U.S.
  • Ben Harris [19:37]: "That bill had a lot of stimulus... For a middle class family, the extra taxes you were paying in tariffs was roughly offset by the extra tax benefit you were getting from the one Big, beautiful bill."

8. Did the Tariffs Work? What Actually Happened?

• [21:36–23:17] Tariffs raised significant revenue ($200+ billion) but at the expense of disproportionately burdening lower-income Americans; unclear on other objectives.
  • Ben Harris [22:58]: "...we've seen tariff revenue spike well over $200 billion... The problem is it falls disproportionately on lower income households..."

9. American Sentiment and Lessons Learned

• [23:17–25:13] Despite overall economic resilience, Americans remain frustrated, largely blaming tariffs for inflation and higher prices.
  • Ben Harris [23:38]: "One of the pieces of credit that we might give President Trump is that his chaotic nature sometimes illuminates things that we were unaware of."
• [25:13–26:10] U.S. economy is large and resilient; only massive shocks (pandemic, financial crisis) risk true recession, not even sweeping tariff policies.

10. The Road Ahead: Rebates, Legal Battles, and Policy Uncertainty

• [26:10–28:37] Prices are likely to stabilize but legal and legislative battles over new tariffs/rebates loom. New tariffs (section 122) face time limits and require Congressional approval after 150 days.
  • Ben Harris [27:25]: "So the major takeaway is the Supreme Court did the president a favor and limited his authority on tariffs. Tariffs, outside of a few select circumstances, are unequivocally bad for American consumers and they're unequivocally bad for US Businesses."

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Notable Quotes & Memorable Moments

On Legal and Business Uncertainty

• Stephen Woldenberg [04:49]: "It was surreal. We were not expecting a ruling on Friday..."
• Stephen Woldenberg [05:48]: "No company can afford to pay 145% tariff and still sell a product at a price where a consumer would actually buy it."

On the Reality of U.S. Manufacturing

• Stephen Woldenberg [08:56]: "10 to 20 times higher than what we would pay if we manufactured the product overseas."

On Tariffs’ Broad Economic Impact

• Ben Harris [17:29]: "...many would have predicted a recession. And that was... not what we saw."
• Ben Harris [22:58]: "We've seen tariff revenue spike well over $200 billion. The problem is it falls disproportionately on lower income households..."

On Lessons of National Economic Resilience

• Ben Harris [25:13]: "We are the largest economy in the world. ...It takes more than a temporary change in our trading policy to throw us into recession."

On Supreme Court's Check on Executive Tariff Powers

• Ben Harris [27:25]: "The Supreme Court did the president a favor and limited his authority on tariffs. Tariffs... are unequivocally bad for American consumers and they're unequivocally bad for US Businesses."

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Timestamps for Key Segments

• 00:01–00:48: Supreme Court ruling & Trump’s State of the Union defense
• 02:15–04:04: Learning Resources background—family business and product lines
• 04:04–05:32: Company’s lawsuit and Supreme Court victory
• 05:32–07:42: Business impact—tariffs’ costs and planning disruption
• 07:42–08:56: Rethinking manufacturing—why reshoring wasn't viable
• 09:29–11:28: Legal win, expectation of tariff refunds, and new government tariffs
• 15:29–17:55: Economic expectations vs. reality—no recession
• 17:55–20:31: Three lessons from the latest round of tariffs
• 21:36–23:17: Did tariffs work? Analysis of goals vs. outcomes
• 23:17–25:13: American sentiment—consumers’ reaction to inflation and tariffs
• 26:10–28:37: What’s next—rebates, ongoing uncertainty, and economic resilience

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Takeaways

• Legal Limitation: The Supreme Court set a clear limit on executive authority regarding tariffs, pushing future efforts to Congress.
• Business Pain: Companies like Learning Resources suffered massive financial strain and operational uncertainty, but their legal victory sets a precedent.
• Economic Surprises: Contrary to dire predictions, tariffs did not trigger a U.S. recession, although significant revenue was raised at the cost of consumer welfare.
• Public Sentiment: Consumers acutely feel the pain of higher prices from tariffs and largely blame them for persistent inflation.
• Future Uncertain: Rapid legal and legislative shifts, new tariff statutes, and pending rebates mean more instability ahead for businesses and households.

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For listeners and non-listeners alike, this episode gives a rich, nuanced view of the effect and fate of Trump’s tariffs—through a personal business lens and a macroeconomic context marked by legal, political, and economic complexity.

Transcript

[Noel K. Sa]

Late last week, the Supreme Court ruled that President Trump's tariffs are unconstitutional. Court said when he implemented them, he exceeded his authority. Last night, in his State of the Union, the president had a chance to defend himself.

[Donald Trump]

One of the primary reasons for our country's stunning economic turnaround, the biggest in history, where the Dow Jones broke 50,000 four years ahead of schedule.

[Noel K. Sa]

The Dow, the Dow right now and

[Donald Trump]

the S and P hit 7,000 where it wasn't supposed to do it for many years were tariffs. I used these tariffs, took in hundreds of billions of dollars to make great deals for our country both economically and on a national security basis. Everything was working well.

[Noel K. Sa]

Everything wasn't working well. But USA did learn some important lessons from the tariffs, and the story of those and of some of the people who took Trump to court and won is coming up on Today. Explained I got in the water in the very early morning before the sun had risen and the water was pitch black. I started swimming and I felt the water hollowing out around me and felt like something really big was swimming below. I'm Phoebe Judge and this Is Love, a show about the surprising things that love can make us do. More than 100 episodes available now on this Is Love.

[Nilay Patel]

You don't normally tune into a late night TV show expecting a rigorous debate about free speech, but somehow this is the world we live in. This week on the Vergecast we're talking about how FCC Commissioner Brendan Carr has turned his agency into the speech police and why it's falling to people like Stephen Colbert and Jimmy Kimmel to fight back. That plus the gadgets we are and maybe aren't getting from Apple and others this year. And the latest in the chatbot wars on the Vergecast. Wherever you get podcasts,

[Ben Harris]

This is Today Explained.

[Noel K. Sa]

Stephen Woldenberg is the Senior Vice President of Sales at Learning Resources, a family company.

[Stephen Woldenberg]

Learning Resources was founded by my grandmother in 1984. We make educational toys.

[Donald Trump]

Jack has five big dinosaurs.

[Noel K. Sa]

He can make the move.

[Stephen Woldenberg]

So we serve the markets ranging from the preschool market to schools. We also actually make pet toys too.

[Noel K. Sa]

Thank you Spot.

[Stephen Woldenberg]

Most of our products are manufactured overseas, so we make products in China, Vietnam, India, Taiwan, Korea as well as a small amount of products here in the United States. We make hands on learning products so they range from anything from early childhood products to help children master their fine motor or gross motor skills to imaginative play products like our Pretend and play cash register.

[Noel K. Sa]

My cash register is a calculator.

[Stephen Woldenberg]

Two products that inspire a love of learning of stem. This microscope shows so many details science to coding.

[Noel K. Sa]

Robots make coding magic with magic coders

[Stephen Woldenberg]

and of course, teacher and classroom resources as well.

[Noel K. Sa]

Tell me about your grandma who started this business. That's cool.

[Stephen Woldenberg]

Yeah, so she started the business in 1984, definitely did not consider this or expected to be a full time job. So she hired her tennis partner to help her answer the phones. And one thing led to another and over time, the business expanded. So it really grew up in the education and school markets. And over time we found that our products were being used as toys and we went into toy shops and saw that our products were on shelf there. And lo and behold, here we are today selling to mass market retailers and one of the leading brands and educational toys in the country.

[Noel K. Sa]

All right, so the reason that you and I are talking today is that you and your family, on behalf of the company, sued the Trump administration over the tariffs.

[Stephen Woldenberg]

Yes, we sued the administration over tariffs because we did not think that IEEPA, IEEPA is the international Emergency Economics Powers act, provided for tariffs. And so we wanted to challenge it in court. And ultimately the case made it all the way up to the Supreme Court.

[Donald Trump]

We will hear argument this morning in case 2412 87, learning resources versus Trump and the consolidated case.

[Stephen Woldenberg]

And on Friday, the Supreme Court agreed with our position and ruled in our favor. It was a landmark victory and we're super excited about it and feel quite vindicated and gratified.

[Noel K. Sa]

What was your reaction and the family's reaction when you won? Did everyone go out for drinks? Like, how did you guys respond?

[Stephen Woldenberg]

It was surreal. We were not expecting a ruling on Friday, so I was actually in a one on one with my father, who's the CEO. And at about 9:02, 9:03, I was on the SCOTUS blog website. Refreshing like everybody else does when they're trying to figure out what ruling is going to come down today. And I saw that it was about tariffs and so I interrupted him. I said, it's tariffs, it's tariffs. We won. And so from there, it was sort of a whirlwind. It's been a blur since Friday. But one of the most gratifying parts of the ruling of our case was the reinforcement of rule of law in our country.

[Noel K. Sa]

How much did y' all have to pay in tariffs since they were announced about a year ago?

[Stephen Woldenberg]

So it's actually a more difficult question to answer than you might think. But okay, we've paid in excess of $10 million and the payments were still coming due, you know, up until Friday.

[Noel K. Sa]

Wow.

[Stephen Woldenberg]

In 2024, we paid just over $2 million in tariffs. Those were Section 301 tariffs that were imposed in the first Trump administration. Those continued into 2025. It was the incremental that was really disruptive. When a manufacturer imports product and arrives in the U.S. the manufacturer, the importer of record, is responsible for paying the tariff. These tariff rates ranged all the way up to 145% at its peak. And that's quite disruptive. No company can afford to pay 145% tariff and still sell a product at a price where a consumer would actually buy it. And so as these tariff rates spiked, it became increasingly more difficult to plan and execute on our business.

[Noel K. Sa]

Okay, so the sort of bargain that you would have had to strike, as I understand it, is that in order to sell in the United States, you would have had to be charging your customers, what, like double for a toy, triple for a toy?

[Stephen Woldenberg]

At its peak, it was. We were looking down the barrel at having to do that. So that was one of the challenges of tariffs all along, is order to fund the tax. The tax bill, which tariffs are a tax. In order to fund the tax bill, we had to cut expenses elsewhere. We had to cut marketing expenses, investments. We had to look to slow hiring.

[Noel K. Sa]

Wow.

[Stephen Woldenberg]

All to fund the tariff tax bill that we had. Because, like so many businesses, we crave certainty. And so when we didn't have certainty into what our tax bill was going to look like, it became much more difficult to make investment decisions. It became much more difficult for us to move forward on investing in innovation, which is really what drives our business. These are all things that were heavily disrupted in addition to resource allocation internally. So coming into 2025, we were already working on resourcing our supply chain. The President was very clear on the campaign trail, he was going to impose tariffs.

[Noel K. Sa]

You're talking about 60% tariffs on Chinese.

[Ben Harris]

Good.

[Noel K. Sa]

Is that in the cards?

[Ben Harris]

No.

[Donald Trump]

I would say maybe it's going to be more than that.

[Stephen Woldenberg]

We didn't think it would get that far. We felt. We felt like it would settle in a little below that. But nevertheless, we took him seriously and at his word. And we were beginning to look at resourcing our supply chain. So we already had people working on this project. However, after tariff rates spiked 145% for goods manufactured in China, we really had to double down. It was make or break for us.

[Noel K. Sa]

When President Trump introduced tariffs, he was clear in a number of ways about what he wanted, and maybe the strongest argument that he made, according to a lot of people who like the president's policies was, I want to encourage businesses to move manufacturing to the United States. If you're going to manufacture, do it in America. Did you ever consider doing that? Was that ever a possibility?

[Stephen Woldenberg]

We've looked into really isn't possible in our industry at a price where a consumer would buy the product. And so when we've looked to manufacture products in the US before, we've sent items out for quotes, and they typically come back with prices that range from 10 to 20 times higher than what we would pay.

[Noel K. Sa]

10 to 20 times higher?

[Stephen Woldenberg]

That's correct. 10 to 20 times higher than what we would pay if we manufactured the product overseas. And so we make products that, generally speaking, are under $40 for the consumer market. There are products that are above that, but more or less most products are below that. And so it's difficult to imagine that consumers would buy our products at the price we would have to sell them at if we manufacture them in the US and this is confirmed to us because if it was possible, we would see our competitors doing it. And really, we're not.

[Noel K. Sa]

Mm. All right. So you ended up paying millions of dollars in tariffs. The Supreme Court says this was not legal. Does that mean that your business is getting some money back?

[Stephen Woldenberg]

We expect to. And the administration has been clear several times in court in writing that they, and, you know, during different arguments at different stages of our of our case, that they will expect to pay back the tariffs if the Supreme Court ruled in our favor. And so we're going to let the process play out. But we know one thing, it was not difficult for them to take the money. And so we expect they should be able to turn the tubes around and send it right back to us.

[Noel K. Sa]

What does the future look like for your company now?

[Stephen Woldenberg]

Well, we're moving forward. After the ruling. They the government reimposed tariffs over the weekend under a different statute, 10% on Friday and then increased it to 15% on Saturday. So we didn't expect or anticipate that after the ruling, tariffs would go away. Our general perspective on this is if this is a revenue raising exercise, they should go to Congress, as the Supreme Court suggested they had to for the tariffs that were overturned over last Friday and have Congress vote in daylight and allow people in the US to see the decision they have made to raise taxes on Americans. And if it's really a national security concern, they should focus in on the products that are most vital to national security, whether that be chips or cars or whatever it might be. But don't take down toys in the process.

[Noel K. Sa]

Stephen Woldenberg he's the SVP at Learning Resources. Coming up what did the tariffs do to the American economy? The data's in.

[Sponsor/Ad Voice]

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[Noel K. Sa]

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[Donald Trump]

gonna charge you tariffs if you don't.

[Ben Harris]

Ben Harris I'm the Vice President and Director of Economic Studies at the Brookings Institution. Prior to this role, I was Assistant Treasury Secretary for Economic Policy, which also carried the title of Chief economist of the U.S. treasury.

[Noel K. Sa]

All right, when President Trump was elected and it became clear that he planned on implementing tariffs, what were you hearing from responsible economists about what was gonna happen to the American economy?

[Ben Harris]

So the first thing I would say is that many economists were caught by surprise.

[Stephen Woldenberg]

The lights on the financial system are flashing yellow.

[Ben Harris]

Every part of your life is about to change.

[Stephen Woldenberg]

None of this makes a whole lot of sense, but I suppose that may be you. Since last November, we've become immune or numb to all this insanity.

[Ben Harris]

The average tariff rate in the first Trump administration went from about 1.5% to about 3%, which was a big proportional increase. But I think there was a bit of a failure of imagination by economists when it came to the second Trump administration, where post Liberation Day, we saw that average rate jump well over 20% with specific reciprocal tariffs on what he calls the worst offending nations. That's 34% on China, 20% for the European Union, likely meaning Americans pay higher prices for electronics, clothing, construction equipment, even imports from the microstate of Liechtenstein population 40,000, sandwiched in between Switzerland and Austria, will be taxed 37%. The second thing that caught economists by surprise was that the really sharp increase that we just didn't predict in advance didn't have the type of impact that we thought it would have. My guess is, is that if you told 100 economists that the average tariff rate was going to jump from 3% to well over 20%, many would have predicted a recession. And that was, in fact, not what we saw.

[Stephen Woldenberg]

Yeah.

[Noel K. Sa]

And it wasn't just your guess, because I remember covering Liberation Day last year, and it was something close to hysteria. It was like, oh, my God, the American economy is so in so much trouble. And then we were all sitting and waiting for the really big trouble for the economy to tank. And we heard in the first half of our show from a small business owner whose business actually faced a ton of trouble. But broadly, the American economy did not tank. What did happen?

[Ben Harris]

So we learned a lot of lessons about tariffs, and I think we learned three big lessons about why this increase in tariffs did not tank the US Economy. So the first lesson was that the time that the tariffs pass through to US Consumers really matters. So in the first Trump administration, you might remember that the President put in place a tariff on washing machines.

[Donald Trump]

When we do this, a lot of manufacturers will be coming to the United States to build washing machines and also

[Ben Harris]

solar, which meant that every American consumer paid about $90 more for every washing machine that they bought. And that pass through happened really quickly. That was about a 12% increase.

[Donald Trump]

And that stayed there the whole time the tariffs were in place.

[Ben Harris]

Data from financial analysis firm thinknum shows

[Stephen Woldenberg]

prices of whirlpool washers creeping up as

[Sponsor/Ad Voice]

its stock price slides.

[Ben Harris]

There were also increases on dryers and dryers. There were no tariffs on that. And so I think the expectation was that same speed of transmission would happen in a second Trump administration, and that, in fact, didn't happen. So importing companies did not pass through the tariff cost to consumers with the same speed. And that may be because companies weren't sure if the tariffs would stick and were waiting to see what happened. Or maybe they thought that US Consumers didn't have the wealth and income to handle these tariffs all at once. But for whatever reason, the first lesson we learned was that there was a slow pass through. The second lesson that we learned is that it also matters what's happening in the rest of the economy. And as you know, the President and Republicans in Congress passed this massive, one big, beautiful bill.

[Donald Trump]

Six or even seven bills.

[Noel K. Sa]

Six or even seven.

[Donald Trump]

And I said, let's make it one big, beautiful bill, Mike. Right.

[Ben Harris]

That bill had a lot of stimulus in it at the first couple years. And so for a middle class family, the extra taxes you were paying in tariffs was roughly offset by the extra tax benefit you were getting from the one Big, beautiful bill. The third lesson I think we learned was that the expected response from our trading partners isn't always what we think. And so if I had told a bunch of economists at the beginning of 2025 that the tariff rate was going to shoot up as much as it did, I think we would have expected that our trading partners in and in Asia and elsewhere around the world would react by putting in place additional tariffs on US Exports, maybe putting in place quotas, other trade restrictions. That's exactly the opposite of what we saw outside of China. We saw a lot of our trading partners racing to put together these trade frameworks rather than putting in place punitive measures against us. So lots of surprises all around.

[Noel K. Sa]

Why was there not the retaliation we expected?

[Ben Harris]

So I think we'll learn more after a few years. I think that our trading partners, like domestic economists, were caught off guard by the size of the increases, and they didn't really have plans in place to go ahead and put in place punitive measures.

[Stephen Woldenberg]

Donald, they point out that even though you're a very smart guy, this is a very dumb thing to do.

[Ben Harris]

Indeed. One of the great strengths of this nation is our ability to keep a cool head. We don't intend to give up.

[Stephen Woldenberg]

We're Australian.

[Ben Harris]

Also, the United States has a massive export market. And this is something that President Trump, I think, recognized in the outset. And we do have a fair amount of leverage over our trading partners. And so it just takes time for them to put in place alternatives to trading with the United States. I think that when 2026 closes and if we get into 2027, we'll probably see more punitive measures and more shift trading patterns away from the United States. If these tariffs stay in place, if

[Noel K. Sa]

the economy didn't tank, and I feel like this is a question worth asking, does that mean that the tariffs worked? Whether the Supreme Court says they're constitutional or not, did they work?

[Ben Harris]

Yeah. So that's a tough question because one would have to ask, why were the tariffs put in place in the first place? And the messaging out of the Trump administration is a little muddled. Sometimes you hear that they put in place tariffs in order to reshore supply chains or to build up American manufacturing.

[Donald Trump]

Instead of taxing our citizens to enrich other countries, we will tariff and tax foreign countries to enrich our citizens.

[Ben Harris]

Sometimes they say, well, we put in place the tariffs temporarily as an incentive to get our trading partners to the table, because what they've done to us,

[Donald Trump]

other countries, what they've done, they almost put us out of business.

[Ben Harris]

I think that's probably more justification to that explanation, because we did see trading partners come to the table, at least to put in place frameworks, but not necessarily trade agreements. The third thing the Trump administration said they were putting the tariffs in place for was to increase revenue and to offset this $4.2 trillion cost of their signature bill.

[Donald Trump]

Said, after this kicks in, our country is going to be a rocket ship economically.

[Ben Harris]

And that's certainly true. We've seen tariff revenue spike well over $200 billion. So there is, I think, a good justification that is a source of revenue. The problem is it falls disproportionately on lower income households, and in the end, it really falls on American households. So it's not a great way to tax people.

[Noel K. Sa]

We could, we can sit here and say all day long that the American economy did not do badly last year or over the last 12 months, but we do know that Americans feel differently about the tariffs. Many of them say they don't feel like the economy is working well. Do we trace that back to the tariffs raising prices on certain goods, or do we trace that to something bigger going wrong?

[Ben Harris]

I think there are two big takeaways that I have from surveys of American consumers. The first is, and this is no surprise, that people really hate inflation. And I learned this lesson during the Biden administration when I was serving as chief economist of the Treasury Department, where we had the unemployment rate at 3.5%. It was a record low, but people were still really frustrated with the economy because prices were higher. And that's, I think, true today, where President Trump ran on a platform of lowering prices and inflation has stayed around 3% or a little bit less. But the second thing is also really interesting, where if you look at surveys of both Democrats and Republicans, where they're asked, why do we have higher prices? Really high percentages of Democrats and even high percentages of Republicans attribute the higher prices to those tariffs, which is economically correct. Tariffs definitely raise the. Raise the price of goods. So, you know, I think that American consumers are fairly astute, and they're also really frustrated with this policy.

[Noel K. Sa]

One of the pieces of credit that we might give President Trump is that his chaotic nature sometimes illuminates things that we were unaware of. So in his first term, he puts tariffs on China, and people say, actually China in some, some segments of the economy was proving to be a problem for the United States. And so the Biden administration actually leaves those tariffs on, and everybody gets a little bit of a lesson about, hey, you know, the last 20 years were not entirely what we thought they were.

[Stephen Woldenberg]

Come on, man.

[Noel K. Sa]

Did we learn any lessons about the American economy from the Liberation Day tariffs, the past 12 months of tariffs?

[Ben Harris]

RIP I think we learned one big lesson about the American economy and one lesson about trade. So the big lesson about the American economy that we learned, or at least I learned, was that that we are the largest economy in the world. We're a well diversified economy. It takes more than a temporary change in our trading policy to throw us into recession. We just have so much diversification, so many assets, so much wealth, that it takes something like a once in a hundred year pandemic or the bursting of a financial bubble like we saw in 2008 to throw us into a recession. And what I learned about trade policy, and I want to be fair to President Trump, is that we do have these legal trade authorities that he used in the first term, which sometimes can be beneficial for global trade and for penalizing our trading partners, like we saw with China, when they're not acting in a fair manner.

[Noel K. Sa]

What happens next? Now that the tariffs are lifted, should people expect that prices go down?

[Ben Harris]

So I think that we'll probably see prices stabilize, particularly if the president starts to remove some of the tariffs that have proven to be unpopular. It's a real question as far as what the White House and the Republicans in Congress are going to do in advance of the midterms. Republicans in the House are obviously concerned about losing to Democrats and potentially even the Senate. Some people are speculating that you'll see a bill coming out of Congress that will rebate some of the costs of tariffs directly to American households. And the second thing is we're going to see a bunch of legal challenges to the tariffs that will determine exactly what happens moving forward. So you've heard of these section 122 tariffs the President announced after the Supreme Court decision.

[Donald Trump]

It's incorrect. Their decision is incorrect. But it doesn't matter because we have very powerful alternatives that have been approved by this decision.

[Ben Harris]

Those are universal tariffs of 15%. The tariffs can only be in effect for 150 days and then require congressional approval. So there's a lot of uncertainty about how this is going to play out over the next couple months.

[Donald Trump]

Section 122 is supposed to deal with a balance of payments crisis. We don't have such a crisis. So a strict reading would strike it down.

[Ben Harris]

There will be a court ruling on whether or not he can use those. And there's also a question as far as the rebates. And so roughly $160 billion in tariffs have been illegally collected. Will those get rebated back to so the multitude of companies that have gone ahead and filed for rebates will get rebated to states. Governor Pritzker in Illinois requested roughly $9 billion rebated to the citizens of his state. That's what he should do. He won't do it because he actually doesn't care about working families and he thinks he's right. So the major takeaway is the Supreme Court did the president a favor and limited his authority on tariffs. Tariffs, outside of a few select circumstances, are unequivocally bad for American consumers and they're unequivocally bad for US Businesses. So the Supreme Court ruling was good news. The American economy continues to truck along at a slow rate, but in general, I think that we should not expect a recession in the near term and we should rest assured that we have a great number of resources and we'll continue to grow to moderate rates.

[Noel K. Sa]

Ben Harris of the Brookings Institution, formerly the assistant treasury secretary for economic policy, if you can believe that. Kelly Wessinger and Ariana Espudu produced today. Aman El Saadi edited, Patrick Boyden, David Tadashore engineered and Andrea Lopez Cruzado checked the facts. It's Today explained. I'm Noel K. Sa.