Is The U.S. Economy Beginning To Show The Effects Of Trump's Policies?

Speaker 1 Support for NPR and the following message come from Washington Wise. Decisions made in Washington can affect your portfolio every day.

Speaker 1 Washington Wise from Charles Schwab is an original podcast that unpacks the stories making news in Washington. Listen at schwab.com/slash WashingtonWise.

Speaker 2 Hi, this is Laura. I'm at the Baltimore Animal Rescue and Care Shelter on a walk with Gatsby, a one-and-a-half-year-old pity mix, so that we can work on his loose-leash walking skills.

Speaker 2 This podcast was recorded at 1.08 p.m.

Speaker 3 on Monday, August 25th, 2025.

Speaker 2 Things may have changed by the time you hear this, but Gatsby will hopefully be an expert loose leash walker and in his forever home. Okay, here's the show.

Speaker 3 Gatsby, come join the podcast.

Speaker 4 I love the panting.

Speaker 5 That's sweet. That's great work.

Speaker 3 No, that is. I love that so much.
Hey there, it's the NPR Politics Podcast. I'm Deepa Shivaram.
I cover the White House.

Speaker 5 And I'm Domenica Montenaro, Senior Political Editor and Correspondent.

Speaker 3 And we also have NPR Chief Economics Correspondent Scott Horsley with us today. Hey, Scott.

Speaker 4 Great to be with you with my rescue dog at my side. Oh, I love.

Speaker 3 Okay, so today on the show, is the U.S. economy starting to show the effects of President Trump's economic policies? So Scott, let's start with you.

Speaker 3 You know, tariffs are now in effect on a wide range of imports. What sort of effects from this are you seeing?

Speaker 4 I think we're seeing a loose leash effect. You know, we haven't, the tariffs have not pulled up tight, but we are definitely starting to see some effect of the tariffs.

Speaker 4 Inflation in July was a little bit hotter than it had been the month before, and you're seeing it in particular on some goods prices that we import a lot of, things like toys and furniture.

Speaker 4 But the full force of the tariffs has not yet made its way to the price that consumers see at the checkout stand.

Speaker 4 Importers are still absorbing some of the cost, and we expect more of those costs to make their way into the retail prices in the months to come.

Speaker 3 And we should point out that tariffs generally will increase costs for consumers, right?

Speaker 4 Yes. I mean, right now, the federal government is collecting something like $30 billion a month in tariffs.

Speaker 4 Some of that cost is being absorbed by foreign suppliers, but most of the cost is being paid by importers here in this country. And in some cases, they're passing that along to the end consumer.

Speaker 4 You know, the latest inflation figures we have are for July. That's before the most recent escalation in tariffs, where the sort of 10% worldwide tariffs were adjusted at the beginning of August.

Speaker 4 Now it's say 15% on goods coming from Europe. It's 20% on goods coming from Vietnam.
We're seeing 50% on goods coming from Brazil.

Speaker 4 So we're going to see higher tariffs already taking effect this month and that'll show up in the data in the months to come.

Speaker 3 And Dominico, what do we know about how voters feel about these tariffs?

Speaker 5 Well, you know, overall they've been pretty negative about the effects of tariffs and the potential effects of tariffs.

Speaker 5 The most recent survey I found specifically on it was the Pew Research Center, which found that 61% of people disapprove of increasing tariffs substantially, as Trump has on some places.

Speaker 5 68% of Republicans, though, approve of it.

Speaker 5 So apparently they're willing to give him some leash, though there still is a fairly significant number of Republicans there who are concerned, it appears, considering that he gets 85%.

Speaker 5 percent approval rating from Republicans overall for the job that he's doing. So you see a little bit of a gap there.

Speaker 5 And about 27% of Republicans said that they think that it's going to have an equally positive and equally negative impact on the country as a whole.

Speaker 5 So, you know, I think that there's a little bit of indecision among Republicans, a little bit of concern, but clearly wanting to give Trump a long leash here, while independents and Democrats are just very hotly opposed.

Speaker 3 Yeah. Well, Scott, you know, there's the voter side of this, but there's also, you know, consumer behavior.
How are people spending differently?

Speaker 3 And has there been any shifts since these tariff announcements have come out?

Speaker 4 Yeah, you're right. People vote every day with their spending decisions.
And we are seeing spending continues to grow, but it's growing much more slowly than it was, say, last year.

Speaker 4 In the second quarter, that is April, May, June, we saw consumer spending grow at about half the pace that it did last year. Some of that may be

Speaker 4 tariff-related, but it also just may be people feeling in general a little bit worn out. They're not getting government stimulus checks anymore.

Speaker 4 The pay raises that they were getting are not as big as they once were. Pay raises are still keeping pace with inflation, outrunning inflation a little bit, but not by a whole lot.

Speaker 4 And so people may be feeling a little bit more cautious. We had a number of big retailers reported earnings last week.

Speaker 4 And a number of them talked about consumers being more careful with what they spend, especially lower-income consumers.

Speaker 4 McDonald's reported earnings a couple of weeks ago and said that the fast food industry as a whole, which relies heavily on lower-income consumers, has seen a slowdown in foot traffic from those consumers, especially at breakfast time when people do have a choice.

Speaker 4 Are they going to maybe skip breakfast altogether or maybe just eat something at home? So they're seeing less breakfast business.

Speaker 4 Walmart says they've seen, especially lower-income consumers, being more cautious.

Speaker 4 They've also seen more higher-income customers coming to fast food chains and to places like Walmart looking for bargains. So

Speaker 4 everyone's looking to economize a little bit, but there is kind of a bifurcated market where lower income consumers are definitely dialing back.

Speaker 4 They're spending more and upper income consumers who might be feeling pretty good about their stock market returns, maybe feeling good about their housing values going up, they're still spending more freely.

Speaker 4 We should say tariffs, because they mostly apply to goods, do tend to hit lower income customers harder because lower income customers spend more of their budget on goods and higher income people spend more on services, experiences, travel, recreation, that kind of stuff.

Speaker 4 So tariffs are an aggressive tax that fall hardest on the lower income people. So that may be one factor in why they're dialing back their spending a little bit more.

Speaker 3 Interesting. All right, we're going to have to take a quick break here, but we'll be back in a moment.

Speaker 6 This message comes from NPR sponsor CNN. Stream Anthony Bourdain Parts Unknown Prime Cuts Now, exclusively on the CNN app.

Speaker 6 These rarely seen, never-before-streamed episodes dig deep into the Parts Unknown archives with personal insights from Anthony Bourdain and rare behind-the-scenes interviews about each season.

Speaker 6 Anthony Bourdain, Parts Unknown, Prime Cuts, now streaming exclusively on the CNN app. Subscribe now at CNN.com/slash all access, available in the U.S.
only.

Speaker 6 Support for NPR and the following message come from Hydro. Don't let the holidays derail your fitness.
Stay on track with Hydro.

Speaker 6 20 minutes rowing on a hydro targets 86% of your muscles as Olympians guide you from incredible locations worldwide. GQ named the Hydro Arc the best rower of 2025.

Speaker 6 And every hydro comes with free shipping, a 30-day trial, and warranty. Go to hydro.com, code NPR, save up to $600 on your next rower.
Hydro.com, code NPR.

Speaker 6 This message comes from Progressive Insurance. Do you ever find yourself playing the budgeting game?

Speaker 6 Well, with the Name Your Price tool from Progressive, you can find options that fit your budget and potentially potentially lower your bills.

Speaker 6 Try it at progressive.com, Progressive Casualty Insurance Company and Affiliates, Price and Coverage Match Limited by State Law, not available in all states.

Speaker 6 This message comes from Synchrony Bank, who can help you get your do-nothing savings off the couch and working hard. No more sleeping late and eating all the chips.

Speaker 6 Time to start earning your keep in a big way with their high-yield savings account that has a great rate, easy access to your funds, and no monthly fees or minimum balance requirements.

Speaker 6 Put your lazy savings to work. Go to synchrony.com/slash npr.
Member FDIC.

Speaker 3 And we're back. So, Domenico, how is the Trump administration responding to these shifting economic realities? I mean, are there indications that they are slowing down or backing off on tariff plans?

Speaker 5 Well, you know, I think that for Trump, what's most important when it comes to whether or not he adjusts anything is the stock market. And the stock market's proved fairly resilient.

Speaker 5 I mean, it's hit all-time highs. You know, when the Liberation Day announcement happened back in April, there were some big drops in the market and you saw Trump back off.

Speaker 5 But given a little bit of time and space, he feels like politically he's able to now kind of push these through with the economy at a fairly strong foundational base, it appears.

Speaker 5 Of course, he did get irritated with the Bureau of Labor Statistics, wind up firing the head because he didn't like the numbers that came out on the jobs report.

Speaker 5 So, you know, we're going to see this kind of stuff that Trump does with a little bit of a knee-jerk reaction, whether it's the stock market telling him which direction it thinks things should be going, or if he sees economic indicator numbers that he doesn't like, or if the chairman of the Federal Reserve, Jerome Powell, won't lower rates, which he wants him to do.

Speaker 3 Yeah. And remind us, you know, kind of big picture here.

Speaker 3 What is the president's goal with these tariffs? Like, what is the problem that he has been trying to solve?

Speaker 5 Aaron Powell, well, I mean, he ran on this right-wing populism, right? Which is something that we've seen a lot of people around the globe do.

Speaker 5 They blame immigrants for taking away jobs in economically depressed areas, which there's little evidence of, but it resonates with a strong population of voters who, you know, feel like they've been left behind or forgotten.

Speaker 5 And with that in mind, that's where Trump is trying to appeal to folks who could benefit from potential manufacturing jobs, kind of trying to turn the clock back to a 1950s, 1960s kind of culture where the world wasn't flat economically as it is today as much, and wanting people to be able to get those kinds of good-paying jobs where you don't necessarily need a college degree as the economy has changed.

Speaker 5 But, you know, the whole point of what Trump's trying to do is, you know, bring back manufacturing to the United States for this kind of right-wing populism that he's been able to use to propel him politically and appeal to this sort of blue-collar working-class base.

Speaker 5 But, you know, it's not likely to be something that happens anytime soon.

Speaker 5 I mean, think about the announcement from Sony that they're hiking prices on their PlayStation, where their consoles are going up from $500 to about $550.

Speaker 5 And it's not like Sony is going to be building factories in Ohio anytime soon.

Speaker 4 We have seen some companies announce plans to build manufacturing facilities here in the U.S.

Speaker 4 It's going to take us some time, I think, to figure out if those are plans that they probably would have done anyway or if this really is a response to the new tariff regime.

Speaker 4 But, you know, for the most part,

Speaker 4 we're not going to see the kind of

Speaker 4 labor-intensive manufacturing come back to the U.S. that would actually put a whole lot of people into manufacturing jobs.

Speaker 4 To the extent factories are operating here in the U.S., they have to be very efficient, and they're generally not going to require a whole lot of workers.

Speaker 4 That's when manufacturing in the United States makes sense. Now, getting manufacturing back was one of several goals that the president's talked about for tariffs.

Speaker 4 He also talked about using this as a bargaining chip to get other countries to open up their markets to U.S. exports.

Speaker 4 We haven't seen a whole lot of movement in that direction yet.

Speaker 4 We just saw some of the details of the trade pact with the European Union. And there is some opening there of European markets to say, lobster and bison exports, for example.

Speaker 4 And they're talking about buying more energy from the United States, which they might have done anyway.

Speaker 4 It doesn't look like they're going to be buying a whole lot more pork and chicken from the United States, however, or beef from the U.S.

Speaker 4 The other goal that the President talked about for these tariffs was just to generate revenue from the government, and that is happening.

Speaker 4 They are bringing in, as I said earlier, a lot of money for the government. Of course, that's mostly coming from U.S.
businesses and consumers.

Speaker 3 So, Scott, at this point, then, are there companies or specific people, you would say, who are benefiting from these tariffs then?

Speaker 4 Yes, there are definitely some domestic winners from tariffs. You know, there are businesses in the U.S.

Speaker 4 that compete with imports, and they may be getting more business or more market share now, or at a minimum, they're in a position now where they can probably raise their prices because their import competition is going to be more expensive as a result of tariffs.

Speaker 4 So domestic producers can raise prices. That's a win for them.
There are also, I've talked to some

Speaker 4 workers in the U.S. who felt like they were competing with overseas competition who feel like they will have more opportunities now as a result of this tariff.

Speaker 4 So we shouldn't say that these tariffs don't create any benefits for domestic businesses. It's just a question of whether those benefits outweigh the pretty severe costs.

Speaker 3 So to end on this, I mean, I want to ask both of you, besides from tariffs, are there other policies by the Trump administration?

Speaker 3 I'm thinking, you know, immigration policy, you know, Trump's big domestic bill that passed through Congress earlier this year, are any of those having significant effects on the economy?

Speaker 4 Oh, I think the immigration policies are absolutely having an impact, whether it's a drop in new immigrants coming into the country, either with or without authorization, or immigrants who are being deported or voluntarily leaving the country.

Speaker 4 You know, we had a forecast from researchers at the Brookings Institution and the American Enterprise Institute that we could have an actual net outflow of immigrants from this country in 2025 for the first time since at least 1960.

Speaker 4 So that's a huge economic story, and you can already see it in some of the labor force data that we get each month with the jobs report.

Speaker 4 We've seen, for example, much slower job growth.

Speaker 4 in May, June, and July than we were seeing, say, a year ago, but that's partly because businesses are demanding less work, but it's also because there's fewer workers available to take those jobs.

Speaker 4 We've seen a much slower growth in the labor force because of this sea change in immigration. So that's huge.
In terms of tax cuts, we won't really see the effects of that until next year,

Speaker 4 for the most part. And I think that impact will be pretty limited because, for the most part, the tax cuts were extending.
the tax cuts in the 2017 bill.

Speaker 4 So I don't think people are going to see a huge jump in their take-home pay.

Speaker 4 They won't see less take-home pay than they otherwise would have. So there will be some impact from the tax cuts.

Speaker 4 And then the other big thing that we could see some economic impact from is the deregulatory moves that the White House has made. Probably too soon to say what that's going to look like.

Speaker 5 Trevor Burrus: Yeah, and just politically, I think the big question is going to be when or if these tariffs actually have an impact on prices in a big way.

Speaker 5 Companies having stockpiled goods in shipments that came over in the first quarter into the second quarter.

Speaker 5 Those things things are going to wear out eventually. They're going to run out.
And, you know,

Speaker 5 Trump has been kind of lucky in the sense that the U.S. economy is strong foundationally, that wages have been outpacing

Speaker 5 inflation.

Speaker 5 But if that starts to change, if the labor market becomes weaker, if people have less money to spend, then all of a sudden when you start to see the pitchforks come out from people upset with how things are going with the government because they're not able to spend as much.

Speaker 5 And if all of this is going to take several months, that doesn't bode particularly well for Republicans in the 2026 midterms, if it is something that does wind up pinching people's pockets.

Speaker 3 Yeah, no, that's definitely something to keep an eye on. All right, we're going to leave it there for today.
Thank you for reporting, Scott, and for joining the plot today.

Speaker 4 Great to be with you.

Speaker 3 I'm Deepa Shivaram. I cover the White House.

Speaker 5 And I'm Domenico Montana, senior political editor and correspondent.

Speaker 3 And thank you for listening to the NPR Politics Podcast.

Speaker 1 This message comes from Schwab. Everyone has moments when they could have done better.
Same goes for where you invest. Level up and invest smarter with Schwab.

Speaker 1 Get market insights, education, and human help when you need it.

Speaker 6 This message comes from Vital Farms, who works with small American farms to bring you pasture-raised eggs. Farmer Tanner Pace describes what makes a pasture-raised egg unique.

Speaker 7 Before we first started with Vital Farms, I thought, you know, an egg's an egg, not a big deal, but it's hard for me to even eat an egg that's not a vital farm egg.

Speaker 7 Now, vital farms eggs are usually brown to lighter brown in color. And when you crack a pasture-raised egg,

Speaker 7 you have to hit it harder than what a person thinks just because the shell quality is so good.

Speaker 7 And basically, when that egg cracks in the skillet or bowl, that yolk is almost kind of an orange shade. And that is part of what I love about a vital egg is just the shade of yolk.

Speaker 7 I love pasteurised eggs because you can see the work and the pride that the farmers have and have put into these eggs.

Speaker 6 To learn more about how vital farms farmers care for their hens, visit vitalfarms.com. This message comes from Mint Mobile.
Starting at $15 a month, make the switch at mintmobile.com/slash switch.

Speaker 6 $45 upfront payment for three months. 5

Speaker 6 plan equivalent to $15 a month. Taxes and fees extra.
First three months only. See terms.