Who will tariffs hurt the most?

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Speaker 2 Another rotten day in the markets, and we're still talking tariffs. From American public media, this is Marketplace.

Speaker 2 In Washington, D.C., I'm Kimberly Adams in Terkei Rizdahl. It's Friday, April 4th.
Thank you for joining us. Well, that was a week.

Speaker 2 And while the headline econ number of the day is the the 228,000 jobs added to the economy in March, that monthly jobs report comes with quite the shadow cast over it because of the sheer wave of tariff news we got this week.

Speaker 2 So much to discuss, so little time. We have Catherine Rampell at the Washington Post and Sadi Peretti at Politico.
Hey, you two. How's your week been? Hi.

Speaker 6 Hi, Kimberly.

Speaker 7 I survived it.

Speaker 2 So I'd love to hear from the both of you because with the disclaimer that the stock market is not the economy and all, you cannot ignore the market reaction to these tariffs.

Speaker 2 We're seeing drops like we haven't seen since the start of the pandemic. So what does that say to you, Catherine?

Speaker 7 It says that markets did not adequately prepare for the fact that Trump is the tariff man. He told us he was going to do something along these lines.
And for whatever reason, those,

Speaker 7 I don't know, red flags were ignored. And now we're dealing with the consequences.
Although, to be fair, I think the tariffs were even worse than even he had televised on the campaign trail, right?

Speaker 7 He said 10% tariffs globally. Now he's saying 10% minimum tariffs globally with them being a lot higher on some of our biggest trading partners.
So,

Speaker 7 yeah,

Speaker 7 markets are digesting the news and getting very ill.

Speaker 2 But I mean, Sadib, you're on the same White House press distribution list that I am, and they're saying nothing but that it's been wins.

Speaker 6 Yeah, that does not really work.

Speaker 6 There's obviously a messaging game here to try to have everybody avert their eyes. We are living through a truly historic moment.

Speaker 6 In the 75 years we've had the SP 500

Speaker 6 trading in this fashion five days a week, there have been only four times the stock market has dropped this much in two days. One of them was these four.

Speaker 6 The others were the 1987 stock market crash and the global financial crisis in 2008 and the COVID crash in 2020. This is a remarkable thing to happen

Speaker 6 in what is essentially a self-owned,

Speaker 6 to have

Speaker 6 a moment where you're deliberately doing this and crashing the economy. There was no outside force that was making this happen.

Speaker 6 This was a deliberate decision to come up with tariffs that were obviously calculated in a somewhat bizarre way that threw everybody off course.

Speaker 6 And when you do that, you're deliberately setting a marker for what comes next. And people are naturally reacting to it and reacting to the uncertainty that's coming from economic policy right now.

Speaker 2 Well, what can we sort of pin down in terms of these tariffs, Catherine, in terms of when these price increases related to them will actually start showing up for regular folks?

Speaker 7 Assuming that tariffs are actually implemented, and in the past, Trump has found some sort of off-ramp to at least delay or suspend tariffs, some of the tariffs.

Speaker 7 Assuming they are implemented, which it looks like they will be within the next week, I think the first things we would probably see,

Speaker 7 you know, in terms of price increases flowing through to consumers, would be perishables. So basically, fruits and vegetables.
We saw a lot of front-loading of durable goods,

Speaker 7 things like cars,

Speaker 7 appliances, furniture, things that companies could stock up on in anticipation of the potential tariffs. So we'll have a little while before companies work through that inventory.

Speaker 7 And we'll probably see some increase because they're thinking ahead to the cost of replacing those goods. But for things like

Speaker 7 fruit, vegetables, we get a lot of fruit from Latin American countries, berries, things like that.

Speaker 7 For now, it looks like maybe Mexico has been spared. Again, those tariffs may may be coming, but we get a lot of avocados, tomatoes, other produce from Mexico.

Speaker 7 If those tariffs ultimately materialize, one should expect that given for those products, first of all, they're very low margin products,

Speaker 7 you know, the kinds of fruits and vegetables you buy at the grocery store, so it'll be harder for the suppliers to eat those tariffs, but also because they couldn't prepare in advance because the fruit would rot.

Speaker 7 So I think that would be where I would look first.

Speaker 2 I want to turn to the jobs numbers, which would normally be at the top of the show. Sadip, what did you take from this report?

Speaker 6 It was really quite remarkable to me to see a strong jobs report in a week like this, because it shows a clear line of demarcation.

Speaker 6 There has been a lot of telegraphing that liberation day is coming, tariffs are on the way.

Speaker 6 And a lot of

Speaker 6 businesses and consumers, like the entire economy, kind of shrugged this off and said,

Speaker 6 I'll wait and see what actually happens. The fact that employers were still hiring the last couple of months, despite all of those threats,

Speaker 6 the fact that actual core consumer spending has continued to stay strong, that's a really good sign about the economy's ability to look through what could have been noise.

Speaker 6 And if it were just noise, we would have probably continued on just fine. But this is the marker now, and we will see.
It probably won't happen immediately.

Speaker 6 It takes time for businesses to adjust, but they'll start feeling the pain in their supply chains within days. And that will lead to the slow bleed of cuts in certain sectors.

Speaker 6 And the inflationary dynamic, we've lived through this with egg prices, with bacon, with all sorts of things over the last few years.

Speaker 6 This will stick in people's minds if you're suddenly paying more for your groceries, even before you think about the cars and the TVs and everything else you're buying. from overseas.

Speaker 2 So Fed Chair Jerome Powell spoke today at a conference for business journalists just across the river from D.C. in Arlington, Virginia.

Speaker 2 And among the things he said was, we face a highly uncertain outlook with elevated risks of both higher unemployment and higher inflation, aka stagflation.

Speaker 2 This is the two parts of the Fed's dual mandate, but they're kind of not working so nicely together. It puts the Fed in a bind, no, Catherine?

Speaker 7 Exactly. Stagflation, besides, you know, sucking on its own because nobody wants high inflation, nobody wants a recession or slow growth or

Speaker 7 big increases in unemployment. Those things are bad on their own.

Speaker 7 The even worse feature of stagflation, which is what the Fed is potentially confronting, is that they don't really have a tool that attacks both of those problems and achieves both halves of their dual mandate at once.

Speaker 7 If they're dealing with higher inflation, the remedy for that is generally raising interest rates. If they're dealing with higher unemployment and a recession, the remedy for that is the opposite.

Speaker 7 It's cutting interest rates. So they're in this bind where no matter what they do, they are potentially failing one half of

Speaker 7 their two biggest duties.

Speaker 7 And

Speaker 7 there isn't really a lot of tools. There aren't a lot of tools available other than

Speaker 7 the obvious fiscal policies, trade policies, undoing all of the stuff that

Speaker 7 Trump has done, but that doesn't seem likely

Speaker 7 in the immediate future, anyway.

Speaker 2 What? We need Congress to do something?

Speaker 2 Anyway, Catherine Rampell is at the Washington Post, Sidiep Ready at Politico. Thank you both so much.

Speaker 6 Thanks, Kiberalis.

Speaker 2 Wall Street today,

Speaker 2 oof, we'll have the details when we do the numbers.

Speaker 2 So, like we were just saying, 228,000 jobs added in March, generally more than economists expected.

Speaker 2 Labor force participation rate up a bit, and the unemployment rate didn't actually move that much, ticked up to 4.2%.

Speaker 2 All signs of a fairly resilient labor market. But, like we said, that data was collected in mid-March, and now it's April, with new broad tariffs expected to take effect over the next week.

Speaker 2 Marketplace's Stephanie Hughes looked at how our changing trade policy could affect employment moving forward.

Speaker 9 That saying past performance is no guarantee of future results, it could apply to this jobs report.

Speaker 10 Things were good in mid-March, but what do they look like in mid-September?

Speaker 9 Economist Guy Bergers with the Burning Glass Institute. Tariffs on imports will mean higher prices for, let's say, imported hoodies and headphones and whiskey.

Speaker 10 And if demand for all that falls, less stuff is going to be going through that chain to the end consumer.

Speaker 9 Which means we're going to need fewer people to transport, store, and sell that stuff.

Speaker 10 Less of it's going to go into retail's hands.

Speaker 11 You probably need less salespeople.

Speaker 9 Manufacturing jobs here could be hit too, particularly in the short term. UBS economist Jonathan Pingle says, take automakers who will be paying more for imported car parts.

Speaker 13 If the price goes up a lot because the production costs have gone up a lot, the demand for those cars is probably going to fall. And that probably means less workers to produce those cars.

Speaker 9 Pingle says if tariffs stay in place, manufacturing could move back to the U.S., but that could take, in some cases, a year, in other years plural.

Speaker 9 Also, not every manufacturing job abroad equals a new job for a person here. It could equal a job for a robot.

Speaker 3 You can imagine 10 people overseas becomes three U.S.

Speaker 13 workers plus the other seven people's jobs being done by technology paired with the U.S. worker.

Speaker 9 Jobs in some industries will be less affected. LinkedIn economist Corey Kantanga says, think services that are created and used here.
One that's especially needed by an aging population is healthcare.

Speaker 14 We're going to need workers to take care of our elderly, to take care of us.

Speaker 9 But overall, UBS's Jonathan Pingle says these tariffs are going to hurt economic growth, hurt our national wealth, and ultimately hurt demand for workers. I'm Stephanie Hughes from Architect.

Speaker 2 Texas is one of the fastest growing states in the country, but the population boom there also means an increase in the demand for water.

Speaker 2 Take West Odessa, where many residents don't have running water. And this is in a region where the multi-billion dollar oil industry is thriving.

Speaker 2 But figuring out how to pay for new infrastructure to get water lines where they need to be is a big problem. Marfa Public Radio's Mitch Borden has the story.

Speaker 11 As Katerina Tavares drives me around a West Odessa neighborhood, there are bulky water tanks alongside most of the homes and RVs.

Speaker 5 There's a black tank right here.

Speaker 5 They've got a green tank back there. RV plays with three tanks.

Speaker 11 Residents store water in these large containers because otherwise they don't have a reliable source. West Odessa is an unincorporated community that local leaders believe has around 50,000 residents.

Speaker 11 And in recent years, the West Texas community has been growing fast. Many people came here for cheap land and few regulations.

Speaker 11 You might see a small ranch in the middle of a residential neighborhood, workyards filled with oil drilling equipment, or mobile homes packed tightly on a single lot.

Speaker 5 This is West Odessa. I mean, look,

Speaker 5 you'll have a beautiful home and then you have random mobile homes falling apart.

Speaker 11 And as more people have moved here, the community has expanded beyond existing water lines, hence the tanks, which can take a ton of time and money to fill with thousands of gallons of water.

Speaker 11 Tavares pulls up to her neighbor's house and tells me how they do it.

Speaker 5 They'll have their flatbed, they'll have different kinds of tanks, they go out wherever it is that they can't either find it less expensive.

Speaker 5 And she told me it takes her about two to three hours per week to haul water.

Speaker 11 Tavares is part of a group called the West Odessa Water Warriors, which is trying to get more residents connected to the water utility.

Speaker 11 Patty Kapoff, who founded the group last year, says it's not been easy.

Speaker 5 You'd think prolific oil fields, right?

Speaker 2 We would have money, but we don't.

Speaker 2 And,

Speaker 2 you know, this population just got out of control.

Speaker 11 A big part of the problem is some parts of West Odessa have access to running water, while large swaths just don't.

Speaker 11 The local water system is run by the Echter County Utility District, which doesn't have the millions of dollars needed to run water lines to the far corners of West Odessa.

Speaker 4 The main issue is 99% of the people that are asking for water are outside the district, so there is no infrastructure out there whatsoever.

Speaker 11 Daryl Pondo was recently elected to the utility district's board of directors. Lots more people would have to pay into the system for this to work, which has sparked some difficult conversations.

Speaker 4 One citizen told me, Dar, you mean to tell me that I probably won't be alive by the time you get me water?

Speaker 4 I said, I might not even be alive. I said, it might not be my kids.
It might be my grandkids that are finishing this up.

Speaker 11 He says there are some projects in the works that will expand access to clean and running water, but nothing that will fix the problems at the scale that is necessary.

Speaker 11 In fact, across Texas, communities are worried about running out of water as more people move in.

Speaker 11 Lawmakers are talking about investing more in water projects, but people out here in West Odessa, like Katarina Tavares, feel abandoned.

Speaker 5 It's not an issue for them, it's not a priority for them.

Speaker 11 And it's not always about expanding lines to new developments. In some cases, old water wells have dried up, which is what happened to Tavares.

Speaker 2 This is a basic need.

Speaker 5 Running water is a basic need that we all have. I mean,

Speaker 5 this should not be a problem right now.

Speaker 9 It should have been fixed years ago.

Speaker 16 Years ago.

Speaker 11 For now, she and her neighbors will keep filling their water containers wherever they can to keep their faucets running. In West Odessa, Texas, I'm Mitch Borden for Marketplace.

Speaker 17 Coming up, you get to something that starts to almost look and feel like a universal system.

Speaker 2 The state that's subsidizing childcare. But first, grit your teeth and let's do the numbers.

Speaker 2 Well, the Dow Jones Industrial Average fell 2,231 points, 5.5%,

Speaker 2 to close at 38,314. The NASDAQ dropped 962 points, 5.8 tenths percent, to finish at 15,587.
And the SP 500 lost 322 points, 6%, to end at 50,074.

Speaker 2 For the very rough week it was, the Dow lost 7.9 tenths percent.

Speaker 2 The NASDAQ lost 10% entering bear market territory, meaning a drop of 20 percent or more from its peak, and the SP lost nine and a tenth percent.

Speaker 2 Bank stocks took a hit today, along with consumers and investors.

Speaker 2 Citigroup fell seven and eight tenths percent, Bank of America was down seven and six tenths percent, bonds rose, the yield on the 10-year T-note fell to 4.00%,

Speaker 2 and you're listening to Marketplace.

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Speaker 2 This is Marketplace. I'm Kimberly Adams.
Like we said earlier, this trade war is going to hit everybody's wallet.

Speaker 2 The Yale Budget Lab estimated fresh produce prices will go up 4%, clothing prices up 17%.

Speaker 2 That kind of inflation hits people with the lowest incomes hardest. The Yale Budget Lab figures Trump's tariffs will slash disposable income in the poorest households by at least $1,700 a year.

Speaker 2 Marketplace's Kayleigh Wells explains.

Speaker 8 Simply put, the lowest-income households spend more money on necessities. Steve Blitz with Global Data TS Lombard says the category that'll hit them hardest is apparel.

Speaker 20 That's really where they're going to feel it the most because they buy clothes like everybody else.

Speaker 8 He says, yes, you can hold on to clothes longer, mend tears, but everybody needs new underwear and shirts sometimes. Sheng Liu teaches fashion and apparel studies at the University of Delaware.

Speaker 20 The current reciprocal tariff structure especially leads to a price hike for products targeting the value market.

Speaker 8 Meaning the cheapest clothes, which come from Bangladesh, Cambodia, Sri Lanka, countries that face some of the highest tariffs. Liu says that puts low-income buyers in a tough position.

Speaker 20 They already have more limited choices compared to more affluent consumers.

Speaker 8 Because if you're already buying your underwear from the most affordable brands, there's nothing cheaper to switch to. You just have to pay the higher price.

Speaker 8 That's a problem people with lower incomes face at the grocery store too, says Tim Richards, who teaches agribusiness at Arizona State University.

Speaker 20 The top half of income earners, they spend about 10% of their income on food. But if you look at the lowest 20% of income earners, they spend 30% of their income on food.

Speaker 8 Richards says those higher-income shoppers can also trade down from, say, the organic vegetables to the cheaper ones.

Speaker 20 That's one of the real harmful things about tariffs is that the people that are less able to substitute away end up paying the bigger hit.

Speaker 8 And Richard says that has health impacts because healthier foods tend to be more expensive. And if you can't afford the cheapest vegetables, then you don't buy any.

Speaker 8 I'm Kayleigh Wells from Marketplace.

Speaker 2 Childcare in the United States is a classic example of a failing market.

Speaker 2 Daycare prices are already about as high as families can bear, and that constraint makes it hard for child care centers to offer enough slots to meet demand or the quality of care that we know is good for kids.

Speaker 2 The pandemic really highlighted this problem, and since then, a couple of state governments have been trying to bring things into balance by helping more households afford care, including one state that's offering to foot the daycare bill, not just for low-income families, but many in the middle class as well.

Speaker 2 Marketplace's Savannah Peters brings us this story from New Mexico.

Speaker 16 At Christina Kent Early Childhood Center in downtown Albuquerque, the kids guide the curriculum.

Speaker 16 And right now, the two and three-year-olds in the bunny classroom are guiding it in a Jurassic Park kind of direction.

Speaker 21 Do you know the names of any of these dinosaurs?

Speaker 1 Yankee dinosaur boys.

Speaker 16 The bunnies are digging into a basket of toy triceratops and brachiosauri with their teacher Danielle Reinertson, who has a few weeks of dino activities planned.

Speaker 21 And if they want to move on to something else, yeah, we'll probably move on to something else.

Speaker 16 Something else like making family portraits or watching real caterpillars transform into painted lady butterflies. Reinertson and two other teachers lead this class of 18 toddlers.

Speaker 16 That's a low grown-up to kid ratio. And one reason why this center earns a five-star quality rating from the state of New Mexico, but also what makes running it so expensive.

Speaker 15 Our margins are fairly narrow, says director Sandra Carpenter. Consistently, for a number of years in a row, the center was running in the red.

Speaker 16 And walking this sort of tightrope, where the center was barely charging enough to cover payroll and keep the lights on. But still, lots of families struggled to make tuition payments.

Speaker 15 You always have a certain amount of families that you, do we send them to collections? Do we take it as a loss for the year?

Speaker 16 But then, in 2021, New Mexico made some big investments that changed that dynamic.

Speaker 16 It dramatically expanded eligibility for child care assistance and boosted the reimbursement rate centers receive for accepting child care vouchers.

Speaker 16 Now, Carpenter says New Mexico pays the entire tuition bill for 60% of families at her center.

Speaker 15 It's allowed child care programs to really focus where we want to focus, which is on the kids.

Speaker 16 The money for this expansion comes from a couple of state investment funds fed mostly by oil and gas revenue.

Speaker 17 You can make choices about what's important, and New Mexico has really decided to go big on early childhood.

Speaker 16 Haley Hines studies childcare policy at the University of New Mexico. She says a New Mexican family of four making up to $124,000 a year can now send their kids to daycare for free.

Speaker 16 That's twice the state's median income.

Speaker 17 You get to something that starts to almost look and feel like a universal system.

Speaker 16 The goal is also to change the business calculus for childcare providers and help them get off that tightrope Sandra Carpenter was describing.

Speaker 17 Could we transform the system that way? Could we make it higher quality? Could we incentivize providers to open new rooms because they know they're going to have this reliable higher revenue source?

Speaker 16 New Mexico's play, Heinz says, is to inject lots of public money into this broken market to try and make it work better for everybody. Easy, right?

Speaker 22 Right. I was going to say, if every state could have oil money, maybe we could solve the child care crisis.

Speaker 16 Jessica Brown is an economist at the University of South Carolina studying childcare markets.

Speaker 16 She says the investment funds that pay for New Mexico's program are unique, but other states should be taking notes.

Speaker 22 Childcare serves this dual purpose in facilitating labor force participation of parents, but also being really important for the child development.

Speaker 16 If New Mexico can get more kids into high-quality care, Brown says there's research showing those kids will make more money and need less government help down the road.

Speaker 16 For now, researchers at the University of New Mexico say the expanded subsidy is helping providers invest in higher teacher salaries, better facilities, and in some cases, expanding.

Speaker 16 Across the street from the original Christina Kent Early Childhood Center is a building that will house five new infant, toddler, and pre-K classrooms.

Speaker 16 Director Sandra Carpenter knows the center can fill those classrooms now that more families can afford care.

Speaker 15 Has that set the stage and the foundation for us to be able to say, yes, let's take on a loan. It has.

Speaker 15 I don't think the school 10 years ago was in a financial position to make that kind of decision.

Speaker 16 Now that its profit margins are just a little wider, it can take the leap. In Albuquerque, I'm Savannah Peters, Furmarket Place.

Speaker 2 This final note on the way out today. As we've been saying, the effect of these tariffs will hit harder in some areas than in others.
For example, in gaming.

Speaker 2 Polygon is reporting that the tabletop gaming industry is in full panic with the tariff news, since things like specialty dice and wooden and plastic components almost all come from China and could be subject to a 54% tariff.

Speaker 2 Digital gamers aren't much better off.

Speaker 2 CNBC has news that Nintendo is delaying pre-orders for the highly anticipated Switch 2 to, quote, assess the potential impact of tariffs and evolving market conditions.

Speaker 2 Our theme music was composed by BJ Lederman. Marketplace's executive producer is Nancy Fargali.
Donna Tam is the executive editor. Neil Scarborough is the vice president and general manager.

Speaker 2 And I'm Kimberly Adams. Have a great weekend.
We will be back on Monday.

Speaker 2 This is APM.

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