Shipping costs are up. Thank Trump's seesawing trade policy.
When President Trump slapped sky-high tariffs on goods from China, exporters rerouted ships elsewhere. Now that those tariffs are on pause, shipping costs aren’t magically coming down — the cargo is spread all over the world. In this episode, we explain this unintended effect of Trump’s inconsistent trade policy. Plus: One woman makes it her mission to provide free student loan advice, Georgia shrimpers struggle to compete with foreign suppliers, and a florist navigates price changes.
Every story has an economic angle. Want some in your inbox? Subscribe to our daily or weekly newsletter.
Marketplace is more than a radio show. Check out our original reporting and financial literacy content at marketplace.org — and consider making an investment in our future.
Listen and follow along
Transcript
KFC presents a tale in the obsessive pursuit of flavor.
Colonel Sanders spent decades perfecting his spicy wings and his fluffy potato wedges, but as soon as all of America fell in love with them, we took them off the menu.
Yeah, it doesn't make much sense to us either.
The Colonel lived so we could chicken.
Backed by Obsessive Demand, the bold flavor of KFC's spicy wings and fluffy potato wedges.
Come and get them.
Prices and participation may vary, only available while supplies last.
This podcast is supported by Odoo.
Some say Odo business management software is like fertilizer for businesses because the simple, efficient software promotes growth.
Others say Odoo is like a magic beanstalk because it scales with you and is magically affordable.
And some describe Odo's programs for manufacturing, accounting, and more as building blocks for creating a custom software suite.
So Odoo is fertilizer, magic beanstock building blocks for business.
Odoo, exactly what businesses need.
Sign up at odoo.com.
That's odoo.com.
Well, this has been a week, huh?
From American Public Media.
This is Marketplace
in Los Angeles.
I'm Kyle Risdolph, Friday, 13 June.
Today, good as always to have you along, everybody.
The marketplace macroeconomic phrase of the day today is exogenous shock.
You have seen the news from the Middle East, I am sure.
We're going to talk about that.
And we're going to talk about what's going on here, too, in the next seven or so minutes.
David Gurr is at Bloomberg.
Catherine Rappel is at the Washington Post and on MSNBC.
Hey, too.
Hey, Kai.
Hey, Kai.
So, Catherine Rappel, let me start with you.
We'll get the sort of domestic stuff done first.
I will point out that CPI and PPI, inflation at the consumer and wholesale level, came in this week.
Pretty, pretty nice, pretty okay.
Consumer sentiment this morning, nice little bump.
People are still a little cranky, but not as cranky as they were.
Given everything, let's take the win, right?
Things are pretty good right now.
The numbers were certainly better than expected, and I think that may partly reflect the fact that tariffs were both anticipated to raise prices and to bum out consumers, you know, that and tariffs have been delayed and rolled back, and who knows.
So it's good news for now, but it's a little bit unclear what happens in the months ahead, particularly since we don't know where these trade negotiations are going.
Like Donald Trump today or the administration today
announced that they were going to have 50% tariffs on appliances made out of steel.
So refrigerators, dishwashers, washing machines, et cetera, as an expansion of the existing steel tariffs.
So that will presumably show up in consumer prices, at least for those goods, next month,
if, in fact, any of this materializes.
So there are a lot of big ifs here.
Well, David, let's keep going with the ifs because people
in my social circles know what I do for a living and they're like, hey, man, we were like promised tariff price hikes and they never showed up.
What are you people talking about?
What do I say?
You know, I think I just want to hit on something that Catherine mentioned a moment ago, which is there have been so many pauses and reductions.
And we've seen companies in many cases shouldering price increases already, trying to boost inventory in advance of these tariffs coming into effect.
So, you know, I think it gets to this larger story of for so many months now, sentiment and survey data telling this story of anxiety and concern and worry about where all of this is headed.
And then the hard data, which is like mostly backward looking, not reflecting that yet.
So again, picking up on what Catherine said a moment ago, I think we're at this kind of point where maybe those soft and hard data are going to marry one another and we're going to start to see it reflected in the hard data, but we just haven't seen it yet.
And that's in large part because
what's been promised or what's been telegraphed, these higher tariffs in many cases haven't come into effect yet.
Right.
And there have been the pull forwards on inventories and all of those things.
All right, Catherine, let's go global here.
Obviously, the news out of the Middle East is,
well, it's, you know, you got your geopolitics.
I want to talk geoeconomics here.
Exogenous shock, of course, I'm thinking oil up eight-something percent today.
I imagine Jay Powell's looking at that going, what does a guy have to do?
Because not only does he have now tariffs here, but he's going to have this oil price shock as well, complicating the stagflation picture here in the United States.
Aaron Powell, absolutely.
So normally you might expect that the Federal Reserve would look through a shock like this and say, hey, this is temporary.
Maybe this shouldn't influence our monetary policy.
And in fact, when the Fed is assessing whether inflation is on track or on target, they usually strip out what's happening with energy prices because it's so volatile.
This time around, it's a little bit unclear because you know, energy isn't input into a lot of other things that get made and produced and shipped around the world.
And we don't know how long this will last.
Inflation expectations in recent months have been higher.
They've cooled some.
That's sort of what we were just talking about.
But, you know,
it's not clear.
This doesn't help their case in any event if they really want to be cutting rates or at least as Donald Trump wants them to be doing.
We're going to to get to that in a minute.
Yeah, so yeah, so
it's just another reason that they may want to hold off on moving rates really in either direction at this point, because
they may want to wait and see what happens to energy prices and whether that feeds through into the rest of the economy.
I do want to point out here, Catherine, just super quickly, energy prices, not in the headline, in the headline number rather, have been tending to drag inflation down because they've been falling.
Oh, that's true.
That's true, yes.
So, if anything, again, if you're looking at the overall, the headline number, if anything, they have been contributing to cooler than expected inflation.
And now, obviously, the opposite.
All right.
So, David, here's the second half of the exogenous shock story.
Usually, what happens when things in the world go haywire is that investors rush for what we all like to call safe havens, right?
They rush for the U.S.
dollar, they rush for American bonds.
Not only did bonds not move
much really in the past 18 hours,
but also the dollar has been selling off and it is a little continuation of this.
Is America really the safe haven asset anymore?
I think there are a lot of signs that it's not.
Now, there isn't kind of a clear rival to the U.S.
yet, but you've seen investors kind of moving their money outside of the U.S.
in a way that they hadn't before.
And a lot of investors talk about this kind of broad policy uncertainty.
So, yes, you have this exogenous shock, what's happening in the Middle East, but there's also this sense that U.S.
debt isn't as sure a thing as it was in the past.
It's not as safe to put your money in treasuries as it might be.
And that's for all manner of reasons.
It has to do with trade, like we've been talking about, has to do with the way that the U.S.
is approaching its deficit, all manner of things.
So that notion of the U.S.
as a safe haven is starting to lose its shine, I guess we could say.
And it's manifesting itself, yes, in the bond market, yes, in the currency markets as well.
And I was struck, Mohamed El Arian, the famous investor, was talking about this, and he said, you know, you're seeing kind kind of a gradual fragmentation of the global order, is I think how he put it.
So it's something radically different from what we've seen before.
But I think it just has to do with what you talked about at the top, which is just this sense of uncertainty, unease about sort of where things are and where they're headed.
That will be a recurring theme through the program today.
David, I want to touch really quickly on the podcast you did, I guess, yesterday, Bloomberg, the Big Take, it's called, talking about Chair Powell and who might come in behind him and the noise that the president apparently was making this week about naming somebody to replace Chair Powell pretty soon, even though his term doesn't expire until May the 26th.
What do you make of that?
And what would the effect be if some brand newbie is, oh, here, I'm going to be the Fed chair in a year?
So, yeah, my colleagues reported that Scott Besant, the Treasury Secretary, is somebody that the President is considering.
And it gets back to this idea that the President could name effectively a shadow chair of the Federal Reserve.
So maybe not even nominate that person yet, but designate that person as the heir apparent to Jay Powell.
And if that individual, Scott Besant or whomever, were to opine about what he would or wouldn't do do when he's in the role, it could have a huge effect just on how investors see the economy, how the world sees the economy.
It's something that Scott Besant proposed and then walked back, but it does seem like the president is close to naming somebody, so he says.
And we'll see how all that shakes up.
But as you rightly point out, there's still almost a year left in Jay Powell's tenure as Fed chair, so it would be a markedly early decision.
Markedly, indeed.
David Ngura at Bloomberg, Catherine Rempel via MSNBC and The Washington Post.
Thanks, you two.
Thanks, Kai.
Thanks, Kai.
Have a nice weekend.
Wall Street today,
well, kind of did what you might think it would do on a day like today.
Details, numbers, when we get there.
You know what we haven't done in a while?
A supply chain story is what we haven't done in a while.
But we're going to fix that right now because the Trump administration's mercurial trade policy has done a number on supply chains, manifested most prominently in shipping costs.
Container rates between Shanghai and Los Angeles have nearly doubled since this time a month ago.
That's according to the research company Drewery.
Marketplace Justin Ho reports.
Back in April, when the Trump administration administration slapped a 145% tariff on Chinese imports, trade between the U.S.
and China basically halted.
Megan Schoenberger, senior economist at KPMG, says when shipping freezes up like that, shipping companies have to move their ships somewhere else.
To Atlantic shipping routes, to inter-region routes.
So think about shipping within the Asian region or within the Americas or within Europe.
But a month later, the Trump administration lowered that tariff on Chinese Chinese goods, and importers decided to load up.
Problem is, Schoenberger says, container ships can't just meet that demand that quickly, especially if those ships are off floating in the Atlantic.
You can't pick up your ship and move it over a few thousand miles.
It takes a very long time to move.
As in more than a week.
And when you couple that surge in demand with a lack of available ships, the predictable outcome was that there was a spike in rates.
Simon Heaney is senior manager of container research with Drury, which tracks shipping prices.
He says container rates have started to ease off in the last few days.
That's because many shipping companies have been scrambling to take advantage of those high prices.
High freight rates are like a magnet for shipping capacity, so that capacity that moved away from the Trans-Pacific is now coming back.
But there are plenty of reasons why those elevated shipping costs could stick around.
Heaney says the conflict in the Middle East could push up oil and insurance prices, and by extension, shipping shipping costs.
And Megan Schoenberger at KPMG says we still don't know what will happen with tariffs this summer, because if they ramp up, shipping capacity could drop off once again.
So it's the off and on that really causes the supply chain disruptions more than anything.
Schoenberger says that's a concern for the broader economy, because just like tariffs themselves, those higher shipping costs will eventually cause consumer prices to rise.
I'm Justin Ho for Marketplace.
The Georgia shrimping season opened this week, Tuesday, in case you missed it, which I mentioned because things have been a little dicey for shrimpers in the southeast for a good long while now.
Wild-caught Georgia shrimp can go for more than $15 a pound.
Imported, five bucks or less.
So this, like so much else in this economy, has become a tariff story.
Emily Jones from Grist and WABE has the story.
Shrimp are the quintessential Georgia seafood.
But even though they're ubiquitous on coastal menus, those shrimp often aren't from Georgia.
You got pictures of shrimp boats on the wall, and you're serving Indian shrimp.
Somewhat consumer consumer fraud, in my opinion.
Jesse Petrie is a Republican state representative from Savannah.
Recent genetic testing on the shrimp at 44 Savannah restaurants revealed that 34 of them were actually serving foreign shrimp.
And Petrie says that's not okay.
Now, some people would say, well, but they're cheap.
But at what cost?
Fewer than 200 shrimp boats are working the Georgia coast these days, down from around 1,500 in the early 2000s.
That's according to Mark Frischer, who studies the shrimping industry at the University of Georgia.
Even though the shrimp are doing very well, the shrimp industry in Georgia is not.
It's really declining.
We're actually at risk of losing it.
American shrimpers catch wild shrimp in the Atlantic Ocean from Florida to Virginia and in the Gulf of Mexico.
Imported shrimp are typically farm-raised.
That can have serious environmental impacts from habitat destruction to waste and antibiotics leaking into the surrounding water.
Farmed shrimp are also available in much larger quantities, which drives down their price.
Frischer says local shrimpers are forced to sell their wild catch for less.
They're really not the same product, but the shrimpers at this point are getting the same
price.
At the same time, American shrimpers still have to pay U.S.
costs for everything else.
Fuel, upkeep on their boats, insurance.
Former shrimper Charlie Phillips serves shrimp, only the locally caught kind, at his seafood restaurant perched on the edge of one of Georgia's coastal marshes.
He says foreign competition is making shrimping untenable for Georgians.
A lot of the shrimpers are losing dock access.
They don't have a place to unload.
That's because packing houses, the warehouse-like operations that process shrimp, often own the docks, and they are shutting down.
Phillips owns one of those packing houses next door to the restaurant, and even he doesn't handle shrimp anymore.
Prices were going down, expenses were going up,
and it was just getting harder and harder to make it work.
And it's still hard to make it work.
Fishermen and industry groups are hoping that the Trump administration's new tariffs will help level out prices so Georgia shrimpers can compete.
The highest tariff proposed for a major shrimp-supplying country is 46% for Vietnam.
But here's the thing.
Even with that tax, imported shrimp would still be a few dollars less per pound than the wild-caught local kind.
That's why Phillips is skeptical.
It's still going to be cheaper than domestic.
And for the most part, the customers are going to pay the price.
For his part, Phillips says he's determined to keep serving local seafood, to support the local economy, and to keep people invested in the coastal environment where the shrimp live.
In Townsend, Georgia, I'm Emily Jones for Marketplace.
Coming up.
Everyone, please send in your RCP to the wedding you're going to.
It's important.
You guys, the florist needs a good headcount.
But first, let's do the numbers.
Yeah, here you go.
Dow Industrial is off 769 points today, 1.8 tenths percent, 42,197.
The NASDAQ down 255, that's 1.3%, closed at 19,406.
The S ⁇ P 500 gave up 68 points, about 1.10%, 59, and 76 there.
For the five days gone by, Dow off 1.3rd percent, the NASDAQ declined 6 tenths percent.
S p 500 4 tenths percent to the downside.
Defense firms, as you might imagine, saw their stocks shoot up today as the Israel-Iran conflict worsened.
Lockheed Martin up 3.7%.
RTX Corporation up 3.3%.
Northrop Grumman up almost 4% today.
A combination of that war in the Middle East and the thaw in U.S.-China trade conflict.
Thaw, not a complete healing.
Sent the stock of shipping companies higher.
Justin was talking about this.
The expectation is that the news will make tanker rates more expensive.
Stock in the Danish shipping giant Maersk up 4.10% today.
Bonds fell yield on the 10-year T-note.
Pretty close to where it was earlier, 4.40%.
You're listening to Marketplace.
Is it time to reimagine your future?
The right business skills may make a difference in your career.
At Capella University, we offer a relevant education that's designed to focus on what you need to know in the business world.
We'll teach professional skills to help you pursue your goals, like business management, strategic planning, and effective communication.
And you can apply these skills right away.
A different future is closer than you think with Capella University.
Learn more at capella.edu.
Did you know 39% of teen drivers admit to texting while driving?
Even scarier, those who text are more likely to speed and run red lights.
Shockingly, 94% know it's dangerous, but do it anyway.
As a parent, you can't always be in the car, but you can stay connected to their safety with Greenlight Infinity's driving reports.
Monitor their driving habits, see if they're using their phone, speeding, and more.
These reports provide real data for meaningful conversations about safety.
Plus, with weekly updates, you can track their progress over time.
Help keep your teens safe.
Sign up for Greenlight Infinity at greenlight.com slash podcast.
This is Marketplace.
I'm Kai Rizdahl.
To all the recent college graduates out there and all the brand new masters and PhD holders, congratulations and condolences because student loan statements are going to start showing up any day now.
Navigating the loan repayment system can be confusing, especially since the pandemic and the constantly changing rules and requirements.
Turns out though that every year one woman gets thousands of emails from complete strangers asking for advice and she answers them.
for free.
Marketplace's Samantha Fields has that one.
Last year, more than 12,000 12,000 people emailed Betsy Mayott asking for advice about their student loans.
She and a few coworkers and volunteers at her nonprofit, the Institute of Student Loan Advisors, wrote back to all of them for free.
We answer 95% of the questions we get within a business day.
And we do that because we understand that there's often a lot of anxiety around student loans and we don't want to leave people hanging.
This is Mayott's full-time job.
She founded Tisla about eight years ago and gets funding through grants, donations, and partnerships.
Some emails only take a few minutes to answer, others might take an hour or more.
We get everything from people that email us and say, Can you help me with my student loans?
And that's all they say.
And I'm like, well, maybe.
We need a little bit more information.
She gets those kinds of emails, and she also gets people who send her pages of details.
They tell me their entire higher education history and loan history, and they attach 10 screenshots, and I get everything in between.
Mayotte is a human encyclopedia when it comes to student loans.
She's been working in the field for more than two decades in compliance and advocacy.
Student loans are my superpower.
It's my only superpower, which makes me really boring at parties.
But helpful to those who are confused or stressed out about their loans and feel they have nowhere else to turn.
Which, judging by the volume of emails she gets, is a whole lot of people, most of whom find her through Google, Reddit, or word of mouth.
Okay,
so right now I have 33 in my queue.
Mayotte is talking me through her inbox to give me a sense of the kinds of questions she gets.
She's not showing it to me to protect borrowers' personal information.
So this first one, this person has six figures in parent-plus loan debt.
They can't afford their payments, and they want to know what their options are.
It's common for her to get questions like this from parents about loans they've taken out to pay for their kids to go to college.
Now, what's missing for me here to be able to answer this question fully is I need to know how what the income is of that borrower.
Because that will determine what kind of repayment plans they might be eligible for.
Next up in the inbox.
Let's see.
So this is someone we responded to already this week and they have some follow-up questions, which is not uncommon.
In the original email, Mayotte says this person told her they hadn't made any payments on their loans or paid much attention to them since the pandemic began.
And they're trying to figure out how to get back on track.
They sent us some screenshots, and it looks like at least some of their loans may have been in default.
So we counseled them on how to get those loans out of default.
Mayad has started getting a lot more questions lately from people who are behind on their payments.
That's because the Trump administration just started sending people who've defaulted on their loans to collections again, and in some cases, garnishing their wages.
There was a lot of panicked people that had just been reported as 90 days delinquent on their loans, and they thought that they were going to have their wages garnished.
But she says there's a difference between being delinquent, which means you're maybe a few months behind on your loans, and being in default, which usually means you've missed at least nine months of payments.
A defaulted loan's not eligible for, say, any of the income-driven plans.
It's not eligible for deferment or forbearance.
And delinquent loans are still eligible for those things.
Mayott is spending a lot of time lately explaining that difference and people's options.
Also in the inbox today, questions about income-based repayment plans, public service loan forgiveness, and private loans.
Mayotte has answers for all of them.
This work is not a solution to the bigger issue, which she says is the ever-rising cost of higher education.
Until we solve that, there is always going to be a student debt problem.
And until then, this is her way of helping people by trying to make navigating the system a little clearer.
I'm Samantha Fields for Marketplace.
Do you know why we talk about uncertainty so much and how businesses just hate it, especially small businesses that don't have much of a buffer?
We talk about it so much because, especially in a chaotic environment like this, where tariffs are on and then they're off and then they're on, there is no guarantee that yesterday's costs to businesses and thus prices for consumers are going to be today's, let alone tomorrow's.
Here's the next installment of our series, My Economy.
My name is Jackie Roach.
I am one of the owners of Crybaby Floral in New Orleans.
We are wedding an event florists.
Weddings are a whole different world.
You're working with a lot of time constraints and super high expectations.
Like they used to say like 15% of your budget towards flowers.
But that was before people had Pinterest.
We're kind of in this weird period where we're getting emails every day from wholesalers saying place your orders now if you can to try and avoid additional costs.
But everything kind of comes down to the floor plan, which depends on RSVPs.
So everyone please send in your RSVP to the wedding you're going to.
It's important.
We can't send in our flower order until we know how many tables there are.
People have to finalize their color schemes, like all of that has to be finalized before we can order.
We try to do that as soon as possible.
So our ideal ordering period is about 30 days before the wedding.
But one of the wholesalers we work with, they sent out probably like five or six emails telling us to get our future orders in before the tariffs, which we can only do.
Yeah, we can only do so much.
Roses, which come from South America, they used to cost maybe around $1.50 a piece.
Now I'm looking around and they're like $1.75, $2 a stem, which doesn't seem like much when it's small quantities, but we're buying hundreds of them.
And so it really starts to add up.
We're deciding like, do we put something in our contract about tariffs?
Do we say if the tariffs increase X amount, then we're able to go in and adjust your contract.
It's risky because there's so many amazing florists in New Orleans.
If we are the first florist that puts a clause in our contract about raising prices due to tariffs, we might not get the business.
A year to six months is probably the average time frame that people secure their florist.
And so it's hard to know what everything's going to be like pricing-wise a year later.
Jackie Roach, New Orleans, Louisiana.
This series needs the stories of what is going on with you.
So let us know, would you?
Marketplace.org slash my economy.
This final note on the way out today: a quick safe haven marker, those places people put their money in times like these.
David and Catherine and I talked about that a little bit.
The OG Safe Haven, gold today, its 25th record high of this year: $3,452.80
per Troy ounce.
Our theme music was composed by B.J.
Ledeman.
Marketplace's executive producer is Nancy Fargali.
Donna Tam is the executive editor.
Neil Scarborough is the vice president and general manager.
And I'm Kai Risdahl.
Have yourselves a great weekend, everybody.
We will see you back here on Monday, all right?
This is APM.
The Trump administration is making deep cuts to education research.
The cancellation notices started coming.
When the contract is cut, the study just dies.
It's all happening just as schools are trying to make use of research to improve reading instruction.
There would not have been a science of reading without the federal funding.
It wouldn't have happened.
I'm Emily Hanford on our new episode of Soul to Story: What the Trump Cuts Mean for the Science of Reading.
Go to your podcast app and follow Soul to Story.