The Businesses Adding an Extra Charge With Trump’s Name On It

Summary

WSJ What’s News: The Businesses Adding an Extra Charge With Trump’s Name On It
Release Date: April 18, 2025
Host: Pierre Bienname, The Wall Street Journal

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Introduction

In this episode of WSJ What’s News, Pierre Bienname delves into the latest developments surrounding the Trump administration's policies and their ripple effects on various sectors of the U.S. economy. The discussion ranges from high-profile regulatory pressures on academic institutions to the nuanced reactions of businesses grappling with new tariffs. This comprehensive analysis offers listeners an in-depth understanding of how political maneuvers influence market dynamics and consumer behavior.

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Trump Administration’s Pressure on Harvard University

Key Developments:

The Trump administration is intensifying its scrutiny of prominent institutions, with Harvard University at the forefront. The White House is requesting Harvard to disclose records of foreign funding received over the past decade, signaling a broader campaign to ensure that leading universities are not unduly influenced by foreign entities.

Notable Quotes:

• Pierre Bienname (00:55): "President Trump is replacing the acting IRS commissioner he appointed just three days ago."

• Secretary of Education Linda McMahon (Statement at 01:15): "The request is meant to ensure Harvard is not being manipulated by or doing the bidding of foreign entities."

Harvard’s Response:

Harvard counters the administration's claims by affirming its long-standing compliance with federal laws that mandate reporting of significant foreign donations. The university maintains transparency and denies any wrongdoing or undue foreign influence.

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Leadership Shake-Up at the IRS

Key Developments:

In a swift move, President Trump is replacing the acting IRS commissioner after just three days in the role. Deputy Treasury Secretary Michael Falkender steps in as the new leader of the IRS, marking the fifth individual to hold this position within the year. This change comes amidst widespread departures from key managerial positions within the IRS, exacerbating instability within the agency.

Notable Quotes:

• Pierre Bienname (02:00): "Deputy Treasury Secretary Michael Falkender will now run the Internal Revenue Service, becoming the fifth person to hold that job so far this year."

Implications:

The frequent leadership changes have heightened uncertainty surrounding tax enforcement and regulatory policies, potentially impacting both taxpayers and the broader economic landscape.

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Consumer Sentiment and Retail Adjustments

Key Insights:

Despite a general decline in consumer confidence, higher-income consumers continue to spend, albeit with strategic adjustments. Middle and lower-income consumers are increasingly opting for more budget-friendly options, leading retailers to adapt their offerings to cater to shifting preferences.

Discussion Highlights:

• Jennifer Williams (03:08): "They are also shopping at chains that still cater to the budget-conscious shopper, but they're not selling items with price tags at a dollar."

• Performance Metrics:

  • Academy Sports and Outdoors: Experienced a mid single-digit increase in higher-income consumer traffic, despite a 3% drop in same-store sales.
  • Dollar Tree: Noted a 2% growth in same-store sales driven by increased average purchase tickets and customer traffic.

Strategic Responses:

Retailers are investing in targeted marketing and adjusting their product assortments to attract higher-income shoppers. For instance, Academy Sports and Outdoors introduced Jordan products to elevate their premium offerings, aiming to draw in affluent customers.

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Businesses Implementing “Trump Tariff” Surcharges

Key Developments:

In response to ongoing tariff uncertainties, many U.S. businesses are introducing additional charges labeled as "Trump Tariff" surcharges. This transparent pricing strategy aims to clarify the reasons behind price increases and mitigate consumer backlash.

Notable Quotes:

• Pierre Bienname (06:27): "You may see them labeled Trump tariff surcharge or something like that as businesses want to make one thing clear, these tariffs weren't our idea."

• Ryan Babazzine, CEO of Jolie (07:58): "Our business is off about 15 to 20%, not because of price increase, because of uncertainty."

• Alexandra Fine, CEO of Dame (08:54): "Everyday consumers don't understand how the tariffs are going to impact them... We thought this would be a good opportunity to educate and kind of just let people know that this is the policy that is impacting our price."

Business Strategies:

Companies across various sectors, from bathroom fixtures to sexual health products, are adopting this surcharge approach to maintain price stability while transparently communicating the influences of tariffs on their operations. This method contrasts with blanket price increases, allowing businesses to adjust surcharges dynamically as tariff rates evolve.

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International Tensions: U.S. Accusations Against China

Key Developments:

The U.S. has accused China of supplying satellite imagery to Yemen's Houthi militants, exacerbating tensions in the Red Sea region. This allegation underscores the growing cooperation between Beijing and Moscow in supporting rebel groups, prompting the U.S. to escalate military presence and actions to secure key commercial routes.

Notable Quotes:

• State Department Spokesperson (09:00): "A Chinese company has been providing the group with satellite imagery even after the US had pressed China to stop the support."

Implications:

The increased U.S. military intervention, including deploying a second aircraft carrier, highlights the strategic importance of the Red Sea for global commerce and the lengths to which the U.S. is willing to go to protect these interests amidst rising geopolitical tensions.

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The Rise of Artificial Intelligence in Marketing

Key Insights:

Marketers are increasingly leveraging artificial intelligence to enhance brand communication and campaign efficiency. AI technologies are being integrated into various aspects of marketing, from personalized content creation to dynamic campaign management, signaling a shift towards more automated and data-driven strategies.

Notable Quotes:

• Patrick Coffey (11:39): "Brands aren't waiting for perfection."

• Ryan Babazzine (07:58): "Marketers have a constant demand to produce more content... using generative AI tools, and they do everything from creating websites to straight up generating ideas for campaigns and now making videos."

Future Outlook:

As AI continues to evolve, its role in marketing is expected to expand, potentially automating entire campaign processes and enabling more precise and personalized consumer interactions. This technological advancement promises to revolutionize how brands engage with their audiences, although it also raises questions about the balance between automation and human creativity.

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Looking Ahead

• Upcoming Segment (Pierre Bienname): "Over the coming weeks, we're going to be taking a look at how companies are responding to Trump's tariffs and the tactics and strategies they're using to react, to survive or even take advantage of the new trade war."

• Future Episodes:

  • Weekly Markets Wrap-Up: A detailed analysis of market movements and trends.
  • What’s News Sunday Deep Dive: Exploring how Trump administration policies may force U.S. universities to reevaluate their financial strategies.

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Conclusion

This episode of WSJ What’s News provides a thorough exploration of the interplay between political decisions and business strategies in the current economic climate. From regulatory pressures on academic institutions to strategic pricing maneuvers by retailers and businesses, the discussions highlight the adaptive measures companies are taking to navigate uncertainty and maintain consumer trust. Additionally, the episode touches on international tensions and the burgeoning role of AI in marketing, offering listeners a comprehensive overview of the factors shaping today's business landscape.

Produced by: Anthony Banci
Supervising Producer: Michael Kosmides
Theme Music by: Michael Lavalle
Development Producer: Aisha Al Muslim
Deputy Editors: Scott Salloway and Chris Sinsley
Head of News Audio: Falana Patterson

Host: Pierre Bienname
Thank you for listening.

Transcript

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[Pierre Bienname]

President Trump is replacing the acting IRS commissioner he appointed just three days ago. Plus, for lower income shoppers, dollar store prices aren't as attractive as they used to be.

[Jennifer Williams]

Some are, if they can, trading down to even lower cost options. And when they've already traded down, they are cutting back on how much they.

[Pierre Bienname]

Are spending and how some US Businesses are passing tariff costs on to customers. It's Friday, April 18th. I'm Pierre Bienname for the Wall Street Journal, filling in for Alex Osila. This is the PM edition of what's News, the top headlines and business stories that moved the world Today. We exclusively report that the Trump administration is pressing Harvard University to turn over records on the money it receives from foreign sources going back a decade. It's the latest move in the White House's growing pressure campaign against the country's most prominent university. Secretary of education Linda McMahon said in a statement that the request is meant to, quote, ensure Harvard is not being manipulated by or doing the bidding of foreign entities. An Education Department letter to the school presented no evidence that that was occurring. In a written statement, Harvard said it has filed such reports for decades as part of its ongoing compliance with the law. Federal law requires universities to report donations from foreign sources of more than $250,000. President Trump is replacing the acting IRS commissioner he appointed just three days ago. That's according to people familiar with the matter. Deputy Treasury Secretary Michael Falkender will now run the Internal Revenue Service, becoming the fifth person to hold that job so far this year. He replaces Gary Shapley, the former IRS criminal investigator who had criticized the government's investigation of Hunter Biden. The move furthers upheaval at the agency. The managers overseeing tax enforcement, human resources, finances, communications, privacy, risk, information technology and legal counsel have all left this year or are leaving soon. As we've discussed many times on the show, consumer sentiment has fallen to near historic lows in the US but higher income consumers still seem to be spending with a bit of an adjustment. Consumers on the wealthier side are now spending at chains that typically cater to more budget conscious shoppers. Jennifer Williams is a reporter on the Wall Street Journal's CFO Journal team and she joins me now. Jennifer, where are these wealthier shoppers going exactly? Is it just dollar stores?

[Jennifer Williams]

It's not just dollar stores. They are also shopping at chains that still cater to the budget conscious shopper, but they're not selling items with price tags. At a dollar, it would be like Academy Sports and Outdoors, which sells grills and bicycles and outdoor gear but at a lower cost than you might find.

[Pierre Bienname]

In other store shelves and a wealthier clientele. Is that good news for some of the retailers out there?

[Jennifer Williams]

It is because their core consumer, which tends to be in the middle income range, is pulling back as is the lower income consumer. And that means they've been trading down into lower cost options as well as cutting back on how much they spend. And so the thinking is that this higher income consumer is a bit more insulated from some of the economic pressures and so can spend more, whether that's buying more or showing up more to the store. At Academy, their higher income consumer traffic increased by mid single digits in December and that continued into January. And so while they're seeing an overall drop in Same store sales by 3% for their latest quarter, they have seen that pick up from the higher income consumer. At Dollar Tree, they have seen same store sales for the latest three month period grow 2% and that's driven by a 1.3% lift in average purchase ticket and a 0.7% increase in traffic. And that's another example of a store that is seeing a higher income consumer increasingly shop for their range of goods.

[Pierre Bienname]

What are these stores doing to cater to these new kinds of customers they've attracted?

[Jennifer Williams]

They are invested in marketing that will attract the consumer and they are also changing what's on the shelves. So at Academy this month, they are for the first time rolling out Jordan products in 145 of their stores and online. And so their thinking is that they have historically had three categories of items in their stores, good, better and best. And that goes up in price range as you go from good to best. They see Jordan as situated in that best category and they're rolling that out towards the end of this month and they are hoping that that brings in the higher income consumer.

[Pierre Bienname]

Jennifer Williams covers corporate finance for the Wall Street Journal. Jennifer, thanks so much.

[Jennifer Williams]

Thanks for having me.

[Pierre Bienname]

Coming up, some businesses are labeling surcharges with names like Trump Tariff to show responsible. That's after the break.

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[Pierre Bienname]

Over the coming weeks, we're going to be taking a look at how companies are responding to Trump's tariffs and the tactics and strategies they're using to react, to survive or even take advantage of the new trade war. Have you noticed anything different on your shopping bills recently? An extra fee maybe? You may see them labeled Trump tariff surcharge or something like that as businesses want to make one thing clear, these tariffs weren't our idea. Natasha Khan covers business for the Wall Street Journal and she joins me now. Natasha, what kinds of businesses are making this move, adding a charge that's specifically chalked up to the effects of tariffs?

[Natasha Khan]

Well, we're seeing this tariff surcharge come up in a variety of companies selling things to consumer, you know, from bathroom fixture makers to toy shops, especially companies that make a lot of their products. In China, they're really starting to tack tariff surcharges onto invoices as a separate line item. They want to be as transparent as they can with their customers about why there's suddenly a price differential between a product they might have been buying for some time or how they plan to attribute that tariff charge. One example we'll have is Jolie, which sells high end filtered shower heads. Jolie's chief executive, Ryan Babazzine told us that they haven't raised prices yet, but they are considering a price hike later in the year depending on the situation. And he told us that the uncertainty is making consumers pull back on discretionary spending.

[Ryan Babazzine]

Our business is off about 15 to 20%, not because of price increase, because of uncertainty. And I think you're seeing that across the board. I think you're seeing that in home purchases. I think you're seeing that in hoarding of, you know, basic items where people concerned that prices will go up. So they're going to buy these basics, but everything else is sort of on pause.

[Natasha Khan]

Babazzin told us that in anticipation of these tariffs, the company had been stocking up on inventory as much as they can before this latest announcement. Alexandra Fine is the chief executive Dame, which is a sexual health company which markets vibrators made in southern China. Her company has already added what it calls a Trump tariff surcharge. Fine was telling us that the flat fee actually doesn't cover the full cost of what the tariffs have added to her cost of doing business, but that she felt that it was better than pretending that everything was normal.

[Alexandra Fine]

Everyday consumers don't understand how the tariffs are going to impact them and they don't necessarily understand how and why businesses manufacture in the places they do and what it could look like elsewhere. And we thought this would be a good opportunity to educate and kind of just let people know that this is the policy that is impacting our price.

[Natasha Khan]

In previous years, perhaps companies might have absorbed that cost or just sort of raised the price of the products. And so that's really something that is a little bit different about the situation, is that they're specifically calling it out.

[Pierre Bienname]

We're in the midst of a 90 day pause on many tariffs and a whole bunch of uncertainty regarding what happens after that, or maybe even sooner. Do the executives say that these charges could change if and when tariff rates do?

[Natasha Khan]

Yes, definitely. One of the companies that we mention in our story, which is a toy store in Wisconsin, laid out all of these extra charges to their customers in an email soon after the latest tariff rate was announced and expressing sentiment of really regret that there has to be an increase in prices, but also promising that as the tariff rates adjust or perhaps get removed in the future, that they would accordingly also adjust that tariff surcharge. This is slightly different from a strategy of raising prices across the board. If they use this strategy of having a tariff surcharge, the price could be more dynamic as the situation changes.

[Pierre Bienname]

That was WSJ business reporter Natasha Khan. The US has accused China of helping Yemen's Houthi militants target their attacks on American interests, a sign of Beijing and Moscow's increased support for the rebel group. A State Department spokesperson said yesterday that a Chinese company has been providing the group with satellite imagery even after the US had pressed China to stop the support. President Trump began a campaign of airstrikes against the Iran backed militants last month, bringing a second aircraft carrier into the region in an effort to stop attacks that have snarled key commercial routes through the Red Sea. China said it has worked to reduce tensions in the Red Sea since the situation escalated, implying that the US was making them worse. Marketers are getting more comfortable with using artificial intelligence to speak for their brands. In fact, the industry is getting closer to the day when proponents of AI say the technology will develop, produce, and even approve entire campaigns with little or no human intervention. But as Patrick Coffey, a reporter for the Wall Street Journal's CMO Today, told our Tech News Briefing podcast, brands aren't waiting for perfection.

[Ryan Babazzine]

Essentially, marketers have a constant demand to produce more content. One of the main reasons is that a big part of marketing strategy now is to personalize everything, going from addressing each customer by name to using the data that they've collected to customize whatever you're showing them based on where they're located, what they buy, the interest they've expressed through their online behaviors and things like that. So marketers are increasingly turning to generative AI tools, and they do everything from creating websites to straight up generating ideas for campaigns and now making videos.

[Pierre Bienname]

You can hear Patrick's full interview on today's episode of Tech News Briefing. And that's what's news for this week. Tomorrow you can look out for our weekly markets wrap up what's News in Markets. Then on Sunday, we'll be looking at how the Trump administration's moves could force US Universities to recalculate their bottom lines. That's in what's News Sunday. And we'll be back with our regular show on Monday morning. Today's show was produced by Anthony Banci with supervising producer Michael Kosmides. Michael Lavalle wrote our theme music, Aisha Al Muslim is our development producer, Scott Salloway and Chris Sinsley are our deputy editors, and Falana Patterson is the Wall Street Journal's head of news audio. I'm Pierre Bienname. Thanks for listening.