The price of limiting trade with China
China's exports to the U.S. are down a third year over year. That’s a significant drop, reflective of President Trump’s punishing tariff agenda. Although China’s overall export growth has slowed, it still rose 4.5% in August — thanks, in part, to strategic redirection to new markets. In this episode, what the U.S. stands to lose by cutting off China as a trade partner. Plus: Luxury brands remain mostly insulated from economic uncertainty and fintech firm Robinhood prepares to join the S&P 500.
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Choose your own adventure on the program today, economic data and America's place in the economic world,
or a trip to a country club and some chocolate.
From American public media, this is Marketplace.
In Los Angeles, I'm Kyle Risdahl.
It is Monday today.
This one is the 8th of September.
Good as always to have you along, everybody.
We're going to get a bunch of economic data this week, about which more in just a minute or two.
But we are going to start globally, America's place in it, economically speaking.
And our reference point is Chinese exports.
Beijing released monthly trade data today.
Insert here my obligatory warning about the reliability of specific Chinese data points.
But context is what we're after.
China's exports were up about 4.5% in August, but, and this is the context part, shipments to the United States are down fully a third since this time last year.
The why of this is not in question, as we all know, President Trump's tariffs.
But China also reports shipments to other countries have been picking up.
So, marketplace Adustin Ho spent his day looking at how China is using this moment to strengthen its economic relationships with other countries and what that is going to mean for us.
China is basically taking a shotgun approach to where it's exporting right now.
It's sending more goods to sub-Saharan Africa, India, and Vietnam, even Europe.
I mean, one of the big issues facing China right now is that it has loads of manufacturing capacity and that needs to go somewhere.
That's Leah Fahi, China economist at Capital Economics.
She says that shotgun approach applies to what China is exporting to.
Everything from toys and textiles to semiconductors, solar panels, and EVs.
It's in China's best interest to have manufacturers and consumers across the world reliant on both its finished products, but also its intermediary products to go into their final goods.
That means manufacturers in countries all around the world have a flood of cheap inputs at their disposal.
Katie Russ, an economics professor at UC Davis, says that'll give them a competitive advantage over American manufacturers who are stuck paying the cost of tariffs.
That means that U.S.
producers, when they're trying to export abroad, they're going to suffer from this cost disadvantage.
China has also been pouring billions of dollars into research and development.
Think AI models and chip manufacturing.
Russ says if the U.S.
continues to distance itself from China, countries outside the United States may end up having access to new Chinese technologies that the United States does not.
And that's going to put U.S.
companies at a disadvantage.
Emily Blanchard, a professor at Dartmouth, says innovation depends on access to the global economy.
Where you can take the best ideas and the best suppliers and find the best customer who's willing to pay the most for your product.
Blanchard says the relationships that are being built right now between exporters in China and importers in other countries are here to stay.
And so that's a strengthening of the economic fabric and fiber that does not include the United States.
And that's not great news for U.S.
firms.
It's not great news for U.S.
dynamism.
And she says it could have consequences for U.S.
economic growth.
I'm Justin Hoe for Marketplace.
Come Wednesday and Thursday of this week, week, we're going to get two key inflation numbers.
First, the producer price index, wholesale inflation, that's Wednesday.
Then Thursday, the consumer price index.
Those will be the headlines, of course, but as you know, economic headlines don't really matter compared with how businesses and people are feeling it in their everyday.
So we've called some of our retail regulars to hear how they are seeing prices change in real time and what it means for their businesses.
First up, Todd Adams.
He's the president of Sanitube.
It's a stainless steel tube, valve, and fitting manufacturer.
Business has fortunately stabilized.
Costs have stabilized, but we're still facing the higher costs that we have incurred since the beginning of the year.
And now we've shifted to focusing on
how that affects pricing going forward for our customers.
We try to
hold prices as steady as possible, but the reality is we are facing a higher cost environment.
Some products have increased significantly.
Some have remained the same.
And we've, you know, looked at margins.
We're able to absorb the increases on some products, but others we do have to pass along those increases.
There is a, I've always said there's a natural sort of industry margin for all of our products.
And there could be temporary deviations, but at the end of the day, all of our, us and our competitors, we will settle on the natural margin.
That's the catch in this whole tariff thing, right?
Margins.
How thin are companies going to be able to slice them?
How much of the tariff price increase can they eat?
And how much are consumers and customers going to have to take?
That was Todd Adams there.
He runs a company called Sanitube.
They do stainless steel tubes and valves and fittings imported mostly.
A couple other retail regulars coming up in just a bit.
On Wall Street to start this week, traders were in a moderately good mood.
We will have the details when we do the numbers.
We took a drive last week from Marketplace World headquarters up to Altadena, the Altadena town and country club specifically, which burned in the Eaton fire back in January.
We've been following the rebuilding of a couple of businesses up there since.
And when Craig Sloan, he's the club's general manager, called us to let us know he had some big news, we knew we had to go see you for ourselves.
It's good to see you again.
You too.
Welcome back.
Thank you.
Got to hold the mic up.
That's the way radio works.
Yes.
It looks a little different, got to tell you.
Gotta tell you.
It looks a lot different.
Yeah, it was just a big old pile of debris before.
But barely even that.
I mean, it was just burned out husk of a whatever.
This is going to sound trite, I know, but it is amazing what a difference four or maybe five months can make.
So here we are, top of the stairs coming down into the sort of main plaza area where we were last time.
Oh look at that off to the right.
So the whole old building is gone.
Yes, that was our three and a half story building, 28,000 square feet, all, you know, down to the studs, down to the dirt right now.
Literally all the sluts are the concrete walls.
Yes, a few retaining walls to keep the street on the north side or on the west side of the building up, yes.
How long did it take you to get everything, all the debris cleared out?
It was probably a six-week process from the time we started to the time they finished.
And when did you start?
Because when we were here in what, March-ish, April-ish, you were not hopeful.
Yeah, we completed the process in mid to late June.
All right, so that's not bad.
And now I'm sure you've got architects and contractors and you're working that whole thing?
We are in the process of hiring an architect.
We're also working with a strategic planning firm, a club-based strategic planning firm to help us with the programming, which will determine what the club will be when we return, how many square feet for a ballroom, how many many square feet for a wellness center, et cetera.
And in other news, there are club consultants.
There are many club consultants.
We're working with one of the leaders, a company called McMahon Group.
You had a big party this past weekend.
Hello, you didn't even invite me.
I believe you were out of town this weekend.
That's true, I was.
But yeah, we had a grand opening celebration on Sunday, had about 800 members and family members, kids.
It was a perfect day, a little warm.
Lots of food, lots of beverage, lots of laughter, a bit of crying.
Oh yeah, actually, I bet there was some crying.
I saw in the, and I can see now, we're going to stroll down there.
Saw in the pictures in the LA Times, the pool is open.
The pool is open.
It's a warm 83 to 84 degrees, crystal clear.
Been completely remediated.
Wow, look at that.
You'd never know, actually.
If you stood with your back to the construction site, or what will soon be a construction site, you would never know anything happened.
Correct.
We kind of keep our focus, our gaze towards the mountains, the beautiful mountains here.
Yeah.
Wow.
Let's talk a little nuts and bolts here.
So you had hundreds of people back for the thing.
How many staff members have you been able to bring back?
So we had our core six.
We brought in another four staff who were here permanently and then we're bringing on staff as we need.
So if we have a food event or if we have a children's event, I think we had probably between 25 and 30 staff here for the party on Sunday.
The great thing thing was many of our former employees, those that we have placed at other clubs, took the day off from their other employer to be here and be back here and visit with our members again.
And it was great to see so many of our former staff here to help out.
And we had a whole conversation last time about the members you had lost, folks who had moved away, who you thought weren't coming back.
You had 800 members here.
What's your net loss going to be, do you think?
So, hard to tell at this point.
The club made a decision to extend the due suspension through the end of the year.
So, because there's no dues, there's no reason for anybody to officially leave.
So, it's hard to tell until we actually place some dues on them for them to determine whether or not there's the value.
And I think the party is going to show that, yeah, there is great value here.
And I don't think we're going to lose.
I think our net's going to be very small.
While the board gets to decide, of course, you're the guy who's responsible for balancing the books.
So, how much of a whack is it for you that you don't have any real revenue?
It's going to be a continued whack for quite some time.
But we have business interruption insurance that's helping out with some of those expenses.
And we have a little bit of programming and a little bit of sales.
But generally speaking, it's going to be our business interruption insurance that's going to cover most of the proposed losses.
What kinds of programming can you do sort of consistently?
Obviously the pool.
So the pool, we have our swim program.
We had our swim program run this summer, although we couldn't run it here at the pool.
We were running it at one of the local high schools.
Wait, these were the ones who won like 31 championships in a row or something, right?
You have a good memory.
How'd they do?
32.
Go Dolphins.
That's right.
So we were able to run, and we have an after-school swim program.
We're kicking off next week with our after-school tennis programs.
We've got some plans for October events and some holiday events.
So we'll continue, even though we're limited on our facilities and in terms of indoor space currently.
We hope to have a kids' area up and running over the next few months that will be an indoor, tented, temperature-controlled area.
Let's turn our gaze here, literally 180, put the pool at our backs and look to what used to be the clubhouse.
How much is it going to cost you?
You know, hard to say exactly because we don't know exactly how big of a clubhouse we're going to build, but if I had to venture a guess, I'd say somewhere between 25 and 35 million.
Of which how much is insured?
Not enough.
Really?
Yeah.
Unfortunately.
You're starting collecting those dues, man.
You got bills to pay.
Yeah, but unfortunately, we've had to jump into the Southern California Edison lawsuit and hoping that they'll help make us whole so we'll be able to build our clubhouse back to what it was before.
Big picture.
You're going to build it back, but it's going to be different, right, Craig?
It's going to be different.
I think it's going to be, I think it's going to have the same views of the mountains.
We're going to create more indoor-outdoor feel.
Our building itself will be more efficient.
We were running a 2025 business out of a 1911 building.
So I think we're going to build it back much better than it was before, much more efficient than it was before.
And by doing that, maybe we can reduce some of the square footage that we needed previously.
So hopefully
we'll be landing on that, hopefully by December.
How long do you think until you're up and running?
2029.
Really?
Yeah, probably another.
I was expecting like 27-ish.
You know, a lot of it will depend on how quickly they can process our plans and provide permits.
We built into our timeframe somewhere between 12 and 18 months.
If they can do that quicker, then we can shorten the time and we're certainly going to encourage them to do that quicker.
Last time we were here, the golf course was being used, I guess, by the county for
dumping is too harsh, but refuse and all of that.
It's clear, right?
And you can get back over there?
The golf course has been cleared of all the debris.
I'll have to say the Army Corps of Engineers were heroes in Altadena.
They did a tremendous job of clearing the homes.
They did a great job clearing the golf course and getting all that out of there in a timely fashion.
Their original schedule was to be completed by January of 2026.
And as they were moving forward and as we were seeing how quickly they were moving, we actually pushed our timeline for opening up the club from what would have been January to the Labor Day weekend.
My club president and I sat down and thought we could do it and set that as a goal.
And sure enough, here we are right now.
It's good to be ambitious.
There's a mood question I have to ask you.
And
we should frame this by saying last time we were here, it was March.
Literally the burned building was still there.
It was cloudy and cold.
Here we are on a spectacular day with the pool to our left looking pristine and the debris having been cleaned up.
You feel, I don't know if this is going to come across in the audio, you feel more optimistic.
Absolutely.
Optimistic, excited,
just lots and lots of hope for the future.
I couldn't have asked for a better weekend.
And moving forward, I think the club is hopefully going to be a representation of what's going to happen all throughout Altadena.
And we're starting to see that happen.
Loma Alta Park got up and running over the last couple of months.
The Bob Lucas Library, a new restaurant, Betsy just opened up.
So we're starting to see little glimmers of hope here in Altadena, and hopefully, the residents and the local Pasadena folks will be coming up here, supporting the Altadena community, and continue to do so over the next few years until this community gets rebuilt.
It's a short drive up the hill.
Craig, thanks a lot.
I appreciate you time.
Thank you.
Good to have you guys back.
Here's another retail lesson that you're not necessarily going to read in the headlines.
Pricing challenges come in many, many forms.
Kalina Bruce owns Noir Lux Candle Bar up in Seattle.
Costs have definitely gone up.
Everything from, you know, our basic materials, supplies, our wax, our vessels, shipping has increased.
And so I would say while tariffs haven't hit us directly, the ripple effect of the supply chain issues has definitely made materials more expensive.
Luckily, we haven't had to change our prices.
Although I would, you know, think that some may feel that it would be wise for us to change our prices given these incremental increases that we're seeing.
But for the time being, we're hopeful that we can remain at the current price point.
There's a couple of areas where we could use additional support around like sales, marketing, social media.
So we're considering bringing on an intern that can kind of help in that market.
But I think just in general, being a business owner and feeling like I have so much on my plate, and then also just trying to balance that like work-life self-care aspect that that tends to be a continuous challenge.
It is indeed Kalina Bruce, Norlocks, Candler Barr, Seattle, Washington.
One more dispatch coming up later in the program.
Coming up.
We've stocked up enough to at least get us through the end of the year and hopefully beyond Valentine's Day.
Turns out the chocolate supply chain maybe ain't so sweet.
But first, let's do the numbers.
Dow Industrial is up 114 points.
Today, about a quarter percent, 45,514.
The NASDAQ added 98 points.
Just shy of a half percent, 21,798.
The SP 500 gained 13 points, 2 tenths percent, 64 and 95.
Last month, EchoStar sold more than $20 billion worth of Spectrum licenses to ATT.
Now it's selling another $17 billion worth of SpaceX.
Half of that's going to be cash, half shares in the rocket company.
Elon Musk's company will also cover a couple of billion dollars worth of EchoStars interest payments.
Nice deal.
EchoStar shut up just under 20% today.
The deal was bad news for legacy wireless carriers, though.
The aforementioned ATT ⁇ T dialed down 2.3%.
Verizon slipped about 2.4%.
Bonds up yield on the 10-year T-note 4.04%.
You're listening to Marketplace.
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This is Marketplace.
I'm Kai Rizdahl.
The memeification of stock trading is going legit in a way.
Robin Hood, the no-commission trading app, has been around since 2013, went public in 2021, and on September the 22nd is going to join the SP 500.
It is a milestone for the company and maybe,
just maybe a turning point for FinTech, financial technology that is, from the fringes of finance to being a pillar of the markets.
Marketplace's Megan McCarty-Carino explains.
Robin Hood first made a splash as the platform of choice for Reddit traders looking to cause havoc among traditional investors by pumping up shares in companies like GameStop, AMC, and BlackBerry.
Robin Hood was all over financial media.
Retail investor participation in the markets reaching new heights and euphoria in some cases.
GameStop shares tanking today.
Robin Hood and other brokers making it tougher to trade the stock.
Robinhood was the subject of congressional hearings and regulatory scrutiny for the way it gamifies investment.
Now it's joining the list of the most important publicly traded companies in the U.S., says Ben Johnson, a market strategist for Morningstar.
Part of it is just indicative of success, and part of it means that there's, in all likelihood, going to be a lot of new investors taking a fresh look at your stocks.
Index funds, the most vanilla passive investments, will soon include a platform built on high-risk trades, not just meme stocks, but crypto and other exotic instruments.
Though analyst Dan DeLev at Mizuho points out, Robinhood has gotten more vanilla itself in recent years.
They've grown a lot, right?
Like they've become like a real responsible management company.
He says the introduction of retirement accounts, credit cards, and wealth management services have helped Robinhood take increasing market share from traditional online brokerages.
But it's not just that Robinhood has grown up, says Tyler Galash at the nonprofit Healthy Markets Association.
It's that Wall Street has gotten comfy with fintech brands that aren't so buttoned up.
Is it gambling?
Is it gaming?
Is it investing?
Whether or not you think the investment products that many people buy and sell on there are good investments or bad investments, that's an entirely separate question of whether or not the company is a good investment or a bad one.
And at least right now, markets seem to think it's a good one.
I'm Megan McCarty, Carino for Marketplace.
If you live in New York City and you've been hankering for a smoothie that's a blend of almond milk, organic strawberries, bananas, avocado, dates, maple syrup, collagen peptides, hyaluronic acid, sea moss gel, and coconut cream.
Have we got good news for you?
Erwan, the LA grocery store famous for its above-described $20
Haley Bieber Strawberry Glaze Skin Smoothie, is opening an outpost back east.
Like any industry that relies on consumer spending, luxury retail is worried about tariffs and inflation and consumer sentiment, sure, but money to brands are going to do what money brands are going to do.
Erwan's expanding.
Louis Vuitton has dropped its first makeup collection, which includes a $160 tube of lipstick.
The Simon Property Group is turning more of its malls into luxury shopping spaces.
Marketplace of Kristen Schwab has more on the ever-increasing appetite for high-end.
There's always been a market for designer clothing, fine dining, and fancy cars.
But these days, you can find Lux Everything everywhere.
Catherine Milk-Youre Your Rey is a marketing professor at UC Berkeley.
With everyone buying so much online and working from home, people are still craving experience.
The experience of shopping with a glass of champagne or belonging to a gym that also feels like a spa.
For some consumers, luxury is no longer a special treat, but a lifestyle.
And more companies see that as an opportunity.
Because here's the thing: the people who are spending money for $19 $19
melons don't care.
Yes, luxury fruit exists too, because a dollar is a dollar is a dollar.
Unless you make so many dollars that your perception of value is skewed.
The number of upper-income households in the U.S.
has nearly doubled in the last 50 years.
Gregory Carpenter is a marketing professor at Northwestern.
And the rising wealth in much of the world, in China and the U.S., doesn't show any signs of diminishing.
And those high earners are also on a spending spree.
Households with the top 10% of incomes now account for nearly half of all consumer spending in the U.S., despite inflation.
Aaron Charis, who heads e-commerce at Bain ⁇ Company, says luxury brands are often more insulated during times of economic stress because their customers are more insulated too.
Why do I focus on the higher-end consumer?
It's where the money is.
Charis says increasingly, the money is either in Swiss watches and Hermes bags or in affordable everyday stuff at Walmart and TJ Maxx.
Because if you're a company at the high or low end, I can say I'm the best at something.
I'm cheapest, I'm like coolest, I'm fanciest.
But it's harder to say you're the best at anything when you're selling products and services to a shrinking middle class.
I'm Kristen Schwab for Marketplace.
There are, as of today, just 159 days until Valentine's Day, which I mentioned because chocolate ain't getting no cheaper.
Kristen Talheimer Bingham's the co-owner of Dean Suites in Portland, Maine.
The big bad news is that the cost of chocolate has gone up again, 42% for dark chocolate since April, and 50% for milk chocolate.
We've been watching the costs climb over the years, and actually, this last spike was quite a shock.
We did not see it coming.
Tariffs account for about 10% of the overall cost.
The rest of it is due to stress on the cocoa industry as a whole.
We will need to increase our prices.
We wish we didn't have to, but there really aren't any other choices for us to make the math work and to continue to do business.
Besides the price increases, our next biggest challenge is, once again, an iffy supply chain.
We have excellent suppliers, but they tell us that they're having trouble getting chocolate from their usual sources.
We've stocked up enough to at least get us through the end of the year and hopefully be on Valentine's Day.
But down the line, availability may matter more than pricing.
Kirsten Talheimer Bingham making chocolate as best she can at Dean Suites in Portland, Maine.
This final note on the way out today, in which I got some good news and I got some bad news.
Both of them come to us from the Federal Reserve Bank of New York, which reported in its monthly survey of consumer expectations today that our medium and long-term inflation expectations are holding pretty steady.
That's the good news because if we think inflation's coming, that can change our behavior and actually make inflation happen.
The bad news is that we are feeling way worse about our chances of finding a new job.
Should we lose the one we have?
The labor market right now is kind of everything.
I'm Rip Babawa, Caitlin S., John Gordon on your car, Amanda Petron, Stephanie Seeker, the marketplace editing staff.
Kelly Silvera is the news director.
I'm Kyle Rizdahl.
See you tomorrow, everybody.
This is 8 p.m.
America is changing, and so is the world.
But what's happening in America isn't just a cause of global upheaval.
It's also a symptom of disruption that's happening everywhere.
I'm Asmakhaled in Washington, D.C.
I'm Tristan Redman in London, and this is the Global Story.
Every weekday, we'll bring you a story from this intersection, where the world and America meet.
Listen on BBC.com or wherever you get your podcasts.