Tariff pain and retaliation

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slash disclosures. One word, one guess, people.
What do you got? From American Public Media,

this is Marketplace. In Los Angeles, I'm Kyle Rizdahl.
It is Tuesday. It's day March the 4th.
Good as

always to have you along, everybody. Should you be wondering whether we are in a trade war?

Yes. 25% on Canada, 25% on Mexico, another 10% on China, on top of the 10% already imposed.
Retaliatory tariffs, because this is the way things go in a trade war, have already started. Canada's going to hit alcohol, clothing, and appliances.
China's doing chicken, wheat, and other things agricultural. Mexico says it is going to.
Exact list, as yet, TBD. And look, this is a dynamic policy environment, right? Changes are possible by the very hour, as we've seen since the inauguration.
But spare a thought in this moment for the business owners stuck in the middle. Marketplace's Kristen Schwab made some calls.
Paul Weissman at Healthy Avocado imports more than a million boxes of avocados a year.

And he says the industry has been a little touch and go lately, even before tariffs.

Supply from Mexico has been down because of bad weather.

The prices for Super Bowl were twice what they were last year.

Which impacted sales.

It makes him wonder if people have already reached the price threshold for guacamole.

Will consumers pay $3 or $4 each for an avocado? I don't think so.

Mexico is the biggest supplier of avocados, so all he can do is wait to see how tariffs impact prices and wait to see if farmers adjust to compensate. Erica York at the Tax Foundation says the cost of tariffs is a big factor for businesses and consumers.

But a perhaps bigger consequence for the economy says the cost of tariffs is a big factor for businesses and consumers.

But a perhaps bigger consequence for the economy is the uncertainty of trade policy.

That itself has a negative impact on business investment, on business activity.

If you're a business trying to plan a long-term investment, you're going to sit on your hands.

York says even if a trade war doesn't emerge, and even if, say, Trump reversed these tariffs, they've created friction for companies across borders. These are business relationships that have developed over years.
We don't really see them snap back into place overnight. This is the main worry for Chip McElroy at McElroy Manufacturing in Tulsa.
Many of the components he uses to make construction equipment come from Canada and Mexico. That's also where most of the finished equipment he exports ends up.
He thinks retaliatory tariffs might make his customers look elsewhere. There is an influx of Chinese equipment that is substandard to what we provide, but is, well, let's just say Chinese priced.
While he waits to see how it all shakes out, he'll be doing some component pricing. Job one is to gain some clarity on what actual impact these tariffs are going to have.
So he can quantify the new cost of thousands of components that go into one piece of construction equipment. I'm Kristen Schwab for Marketplace.
One of the realities of tariffs is that they hit differently depending on, among other things, where you are. Henry Epp did a story for us the other day about New England and New York, perhaps having to pay more for electricity than it gets from Canada.
Sure enough, today, Doug Ford, the premier of Ontario, said that province is going to impose a 25 percent tariff on power it sends to a million and a half homes in Minnesota, Michigan and New York. Texas, meanwhile, has what amounts to a roughly 300 billion dollar trade relationship with Mexico all on its own.
So after 30 years of free trade, Marketplace's Elizabeth Troval takes us to the state where everything is bigger, including the effects of tariffs. New tariffs could raise the price of what Texans eat and drink.
It's beer, it's liquor, produce, agave, sugar, coffee, chocolate. And where they sleep.
Softwood lumber, which is like your frame lumber, gypsum board, which is your drywall. All those are largely sourced in Canada and Mexico.
These tariffs on the building materials would drive up the cost to build a home. That was Emily Williams-Knight with the Texas Restaurant Association and Houston-area homebuilder Matthew Reibenstein.
Out in West Texas, oil producers who get pipes from Canada and Mexico could feel the squeeze, says Carr Ingham with the Texas Alliance of Energy Producers. There's a lot of steel that is deployed in the business of drilling for and producing and transporting crude oil and natural gas.
In the trucking industry, which has boomed under free trade, John Esparza with the Texas Trucking Association says he worries tariffs will increase the cost of semi-trucks and decrease demand for trucking. That could mean less business and at a higher cost.
Many trucks operate out of Laredo, which is particularly exposed to tariffs, says Daniel Covarrubias with Texas A&M International University. On a 30-mile radius here, cross-border, you have upwards of 1,500 logistics companies, transportation companies, customs brokers, or logistics warehouses.
These firms grew out of decades of free trade. But economist Ray Perryman says now with tariffs,

you really rip up an entire supply chain that we spent the last 50, 60 years building. It really

begins to impact employment in a significant way because of the inflation. Consumers have less

money to spend. He says if tariffs are sustained, all states will feel it, but especially Texas,

because its economy is so integrated with Mexico's.

I'm Elizabeth Troval for Marketplace.

On Wall Street today, well, let's just say the major indices closed off their lows,

shall we? We'll have the details when we do the numbers. So Walgreens has been a publicly traded company for nearly a century.
And according to the Wall Street Journal, it might be about to be taken private. The retailer, which also owns the Boots chain over in the UK, is said to be in talks to sell to the private equity firm Sycamore for about $10 billion.
Truth is, though, that Walgreens has been struggling for about a decade now, and it is not the only drugstore chain out there that's been having a hard time. Rite Aid has filed for and come out of bankruptcy protection.
CVS is in trouble. And all three chains have been closing stores by the score.
Marketplace's Samantha Fields has more now on what's going on with the retail pharmacy industry. Walking into a big pharmacy these days can be kind of depressing.
Empty shelves, locked up products, long lines to pick up prescriptions. If your stores aren't very good, then why would people bother to go in there? Neil Saunders at Global Data says chain pharmacies were designed to be convenient.
The place you can quickly pop to if you need a pint of milk or you need to buy replacement skincare or something like that. For years, he says pharmacies figured people would just keep coming in no matter what because of that convenience factor.
They became very lazy. They just don't bother with retail.
And with so many other convenient options now, including speedy online delivery, Saunders says customers have drifted away from pharmacies and sales have fallen. On top of that, Dima Kato at USC's School of Pharmacy says drugstores aren't making nearly as much as they used to filling prescriptions either.
Reimbursement for prescription drugs has declined and that's really the source of profit for pharmacies. So that's made it worse and more challenging for pharmacies to stay operational.
The main reason they're making less on prescriptions has to do with the consolidation of pharmacy benefit managers, or PDMs, the companies that negotiate drug reimbursement rates with insurers, manufacturers, and pharmacies. George Hill at Deutsche Bank says today about 80% of prescriptions go through just three PDMs.
They just have incredible negotiating power and incredible leverage and have done a great job of forcing retail pharmacies to compete against each other, which has led to dramatic erosion in pharmacy payments and pharmacy reimbursement. Couple that with the decline in the in-store experience, and Hill says big pharmacy chains have found themselves in a downward spiral.

The customer experience isn't good,

so fewer customers want to go there,

so the stores make less money,

so they have less money to invest in the customer experience,

which means fewer people want to go there,

which means earnings continue to erode.

And on and on.

It's a tough cycle to break.

I'm Samantha Fields for Marketplace. We're past the dismal days of all that supply chain agita we went through the pandemic.
But what happened supply-wise back then is still playing out in where companies store their stuff. Warehouses, specifically how many of them retailers need, how big and where they should be.
And the warehouse business just ain't keeping up. Liz Young wrote in the Wall Street Journal the other day about the warehouse market and which sizes of it are currently out of stock.
Liz, thanks for coming on. Thanks so much for having me.
Let's get a little ground truth here. When we talk small or smaller warehouses, what are regular warehouses and then how big are smaller warehouses? So warehouses can obviously run the gamut in terms of size.
They can be quite small. I mean, a thousand square feet.
They can be the million plus square foot buildings that we see on the side of highways. So I looked and set the definition of a small warehouse as anything under a hundred thousand square feet.
Now, of course, that's still quite large. But compared to the whole gamut of what's happening with warehousing, those are considered quite small.
Okay. Now let's talk vacancy rates.
What's the difference between, you know, above and under 100,000 square feet? So the overall nationwide vacancy rate in the fourth quarter was 6.7 percent, which has been climbing quarter over quarter. And what I found was that the vacancy rate for U.S.
warehouses under 100,000 square feet was 3.9%, while buildings that are more than 100,000 square feet had a 10.1% vacancy rate. Okay, how come? So the reason is a few different things.
There's a lot of demand for smaller spaces, especially as companies get more careful about their leasing decisions. There's general economic uncertainty.
A ton of companies expanded quite a lot during the pandemic. And so companies have since kind of dialed that back.
So if they've taken on more space, they've looked to take on smaller spaces. At the same time, that kind of frenzied pace of expansion during the pandemic prompted a lot of real estate developers to say, hey, we want to get in on this.
And they started building warehouses. But almost all of those have been concentrated in that large category, if you will.
Yeah. I mean, you can go, and we did during the pandemic, we did stories out there.
You go 35 miles east from LA, 40-ish, whatever, you get out to the Inland Empire in Riverside County, and there's warehouses all over the place, and they're huge. And now they want smaller ones that I'm going to guess are closer in, right? It's that whole last mile thing.
Absolutely. Yeah.
So a lot of these properties, when they're smaller, are closer to cities. So they might be in urban areas themselves.
They might be in suburban areas. And that means space is tight and land is expensive.
So talk to me about the retailers who want these smaller spaces. You talked about in this piece Half Price Books.
So Half Price Books is a discount secondhand books retailer. They have stores across the country.
They have kind of localized so that mostly they fulfill orders out of their stores, but they like to have a little bit of warehouse space, especially in certain markets, to have extra stock on hand. So one example of where they've run into this problem with a shortage of small warehouses is that they've been looking for a new warehouse in the Twin Cities region of Minnesota for more than a year and haven't been able to find anything.
So what are they doing? I mean, it's not like they can go to one of those, you know, maybe they can, one of those self-storage places and rent like a storage garage? Yeah, they are, in fact, using temporary storage units for the time being. I was kidding.
Sorry. Yeah.
And they also are just doing what we all do with our homes, right? If you run out of space, you start to go through and think, OK, what can I get rid of? What about the biggies? Because the biggies have that whole, you know, we'll get it to you in three hours thing. And it's not like they're driving from Riverside County to my house in L.A.
in three hours, even on a good day, you know? Yeah, absolutely. So a lot of the big companies, of course, are the ones driving up demand for this space.
There's also companies that specialize in renting out.

You know, if a company has an extra 100,000 square feet in their own warehouse, but they're not using it, there are companies that then come in and connect, you know, somebody who wants that space with the company that has it. So as the person on this call who specializes in supply chains and logistics, what's your sense of how companies are feeling now, given the economic agita that is out there and seems to be on the horizon and what these companies are feeling in terms of their supply chains and logistics and how they're going to be able to do business? Yeah, absolutely.
I think that this is creating a stressor. I think they need the space.
There's uncertainty about when construction will pick up in this category and they don't know what

they'll do without it. So I'm sure that some of them will have to think differently about their

supply chains and organize things in a different manner because they're unable to get the space

that they feel they need. Liz Young at the Wall Street Journal.
Liz, thanks a bunch.

Thanks so much for having me.

so

so

coming up so we grew up watching manchester Coming up.

So we grew up watching Manchester United play.

So I think soccer has just always been around me.

Turning that into a business.

But first, let's do the numbers.

Dow Industrial is down 670 points today.

One and a half percent closed at 42,520. The Nasdaq slipped 65 points.
That's about a third of 1%, 18,285. The S&P 500 subtracted 71 points, 1.2%, 57 and 78.
Best Buy beat fourth quarter expectations, but the outlook was mixed. CEOs said price increases are likely due to China and Mexico tariffs.
Wherever you heard that before, Best Buy down 13.3% today. Target shares dwindled 3%.
After that, retailer also warned tariffs could drag down profits. Target said price increases could take effect in stores as early as, get this, the next couple days.
Samantha Fields was telling us about Walgreen Boots Alliance, going private maybe.

For now, still publicly traded. Shares elevated 5.6%.
Today, competitor CVS Health ticked down about one and a tenth percent. Bond prices fell as well.
The yield on the 10-year T-note thus rose 4.25%. You're listening to Marketplace.
I'm Kai Rizdahl. Here's your semi-regular reminder that just one in five federal employees live in or near Washington, D.C.
The flip side of that coin, of course, is that four out of five, 80 percent don't, including most of the 2000 Forest Service workers who've been sacked by Elon Musk and his operatives. And in a lot of places, those public lands agencies like the Forest Service are major employers.
Places like McCall, Idaho, population about 3,700. The Mountain West News Bureau's Murphy Woodhouse has more.
It's a postcard snowy day in a charming lakeside town of McCall, but it's warm inside the Flying M Cafe where Forest Service workers are preparing for a protest. One of them is Emily Kaharski.
She got laid off from Idaho's Payette National Forest on Valentine's day. It felt pretty horrible.
Kaharski was a trail crew lead, and in a memo, she was told she had not shown that her continued employment would, quote, be in the public interest. I mean, the main part of my job in the winter is safety.
I ride out on snowmobiles. I check avalanche reports.
I disseminate information to the public. Kaharski was a probationary employee.
She liked her work and did it well. In her most recent performance review, she was deemed to be, quote, fully successful.
Garski is here for the protest, but she also brought her resume. I want to work.
I want to find a job. I'm going to pass out my resume and tell people what has happened to me and ask for help.
A union steward with the National Federation of Federal Employees said that 45 Forest Service employees on the payette have been laid off recently.

New Agriculture Secretary Brooke Rollins supports the administration's efforts to, quote,

eliminate inefficiencies and strengthen USDA's many services to the American people,

according to a statement. Last week, a federal judge found that the layoffs of probationary

employees were likely illegal.

The firings have spurred protests across the West.

Some 50 people, including the Forest Service workers from the Flying M,

are gathered at a small park near snow-covered Payette Lake.

Bryce Spare takes the mic.

He's a now former backcountry ranger and was also a probationary employee.

He was also told that his continued employment was not in taxpayers' interest. I take a real great offense to that.
Spare's job included patrolling trails and keeping bathrooms clean. Like many in the Forest Service, he started his career as a seasonal worker before getting a permanent position.
Spare's supervisor was disturbed by his termination, and she provided Spare with a letter calling the notion that his work did not serve the public a farce. Spare says he and other laid-off colleagues represent decades of on-the-ground experience.
There's a ton of knowledge that's being lost right now. By early afternoon, nearly 150 protesters line McCall's main drag.
Chants and the honks of supportive motorists fill the air. Bethany Thomas works at a local bookstore.
Her sign reads, Valley County stands with our federal workers. You know, our neighbors, our friends, our kids' soccer coaches are federal employees, and without their income, our community doesn't have money coming into it.
County data show that the Forest Service is the area's third largest employer ahead of a school district, the local hospital, and a major ski resort. And I have huge concerns over what this means for our forests and our communities in the coming fire seasons.
While Forest Service fire personnel are exempt from the layoffs, many non-fire staff play key roles in preventing or responding to wildfires.

A lot of us are in support positions.

That's Brad LaPlante, the Payette Union steward.

Even though he works in forest health, he is regularly deployed on fires.

It helps come July and August when fire season is really ramped up.

LaPlante still has his job, but he's worried about whether he and the other workers who remain can fulfill the Forest Service's missions,

like caring for the land and keeping communities safe from fire. In McCall, Idaho, I'm Murphy Woodhouse for soccer fans.

The English Premier League is on, Europe's Champions League, MLS here in the States is going, and the NWSL starts next week, its season. And then in the summer of 2026, the center of the soccer universe comes to the United States, Canada, and Mexico for the World Cup.
In the meanwhile, soccer in the U.S. is booming.
Participation from 2018 to 2023 up 28%, and more players means more customers, which brings us to today's installment of our series, My Economy. I'm Ben Shehabar.
I'm the founder of a new soccer shoe brand called Eleven, and I'm based in Washington, D.C. I grew up in a household that was really all about soccer.
I have two older brothers. They all played soccer.

My dad was our coach.

My mom is from Manchester, England,

so we grew up watching Manchester United play.

So I think soccer's just always been around me. And then I've always also enjoyed

building physical products

and building a soccer shoe brand

really was combining those two passions

of soccer and engineering. Nike, Adidas, and Puma have certainly dominated the market for a really long time, but we're seeing in other spaces like running or trail running or cycling where there are a number of indie or startup brands

that are really starting to break through.

And there really hasn't been a brand in soccer.

And so I really think there's a big opportunity to do this for that market.

One of the biggest learnings of starting the shoe company

has really been about building the physical product itself.

We spent the first couple months really on the digital design

and of starting the shoe company has really been about building the physical product itself.

We spent the first couple months really on the digital design,

but then you have to take that design,

however detailed it is, and you have to actually make it in real life.

That translation step has really been the hardest,

the most tedious, also fulfilling part of it.

Our first sample that we got,

I got the first pictures of it on Thanksgiving Day and it was awful.

Before we got our first sample,

we had provided to the factory very detailed.

They're called tech packs,

but it's essentially a blueprint

of this is what the shoe should look like.

And when we got the first samples back,

the shape of the shoe was wrong. A lot of those construction details were wrong.
And I remember being like, can I actually do this? Am I actually going to be able to make the shoe that I would want to wear? And what we really had to do is first we pushed back and said, hey, here are all the things that you need to do. And when it was clear that they didn't want to put in that effort, we ended up switching factories and we've made a ton of progress since and it's all worked out.
2025 is upon us. Our goal is to be launched this summer, so probably July or August, and then really get as many players as possible exposed to our product through a lot of in-person demos at tournaments and other events in the lead up to the World Cup, which I think is going to be huge in 2026 for our brand.
Ben Shehabar, founder of the soccer startup Eleven. Manchester United shares by the way it is publicly traded ticker symbol M-A-N-U

off 17% the past six months

which is coincidentally perhaps shares, by the way, it is publicly traded, ticker symbol MANU, off 17% the past six months,

which is, coincidentally, perhaps, or not, when the Premier League season started, might have something to do with Manchester United sitting 14th in a 20-team league. this final note on the way out today, should you be in need of 1,779,349 square feet of office space in the nation's capital, Elon Musk and his operatives have just what you're looking for.
The J. Edgar Hoover building, the, I guess, soon to be former headquarters of the FBI, is on the General Services Administration's disposal list.
Here I quote the GSA, we are identifying buildings and facilities that are not core to government operations. Our digital and on-demand team includes Carrie Barber, Jordan Mangy, Dylan Miettinen, Jenna Wynn, Olga Oxman, Ellen Rolfes, Virginia K.
Smith, and Tony Wagner.

Francesca Levy is the Executive Director of Digital and On Demand.

I'm Kai Rizdal. We will see you tomorrow, everybody.

This is APM.