The Real Story Behind These New Tariffs
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Our economy just gave us two big surprises that shape how we will do business and invest in twenty twenty five because we are going through some economic transition right now. Our job market is going through some big changes. We've added new jobs, but our unemployment rate has also climbed and people are leaving. The workforce will be talking about that today.

And then we will also deep dive into terrifying, what are turfs? What are the pros? Are the are the consequences? Let's take a deep, informed, research based, analytical look at the world of terrace and what this might mean.

Welcome to the afford anything podcast, the show that understands you can afford anything, but not everything. The show that is obsessed with opportunity costs and trade off. We cover five pillars, financial psychology, increasing your income, investing real state and entrepreneur.

Ship is double. I fire. I'm your host polar pant. I trained an economic reporting at columbia, and on the first friday of the month, I bring you a monthly economic update, a synapses of what's been happening in our economy over the past month.

So welcome to the december twenty twenty four, first friday economic update. Let's begin by talking about the big economic news that dropped this morning, which is the november jobs report. The economy added two hundred and twenty seven thousand new jobs in november.

Now that beat analyst expectations and IT beat what we've recently been doing. Job growth has average one hundred and seventy two thousand per months over the past three months. And remember, in october, IT got particularly beat up because of the hurricanes and the bowling strike.

Analysts were expecting that in november, we would add two hundred thousand new jobs. So at two hundred and twenty seven thousand, we have beat those expectations. But what makes this more interesting is the context.

The bur of labor statistics revised the reports from september in october. October had an initial estimate of twelve thousand new jobs gained due to, of course, the hurricanes and the boeing strikes. That revision actually pushed the job growth in november up to thirty six thousand.

Now on top of that, the september report also got a boost of an additional thirty two thousand jobs that were previously not reported. So septembers numbers, the revised numbers are two hundred and fifty five thousand. So what that means is across september and october, the U.

S. Created an additional fifty six thousand jobs that we didn't know about before. That's the equivalent of a small city's worth of jobs that were initially missed in the initial count.

So we have good news on the job creation front, but we can't be satisfied with just one number because here's where things get interesting. The unemployment rate is holding at four point two percent. And while that sounds great at first gLance, remember that a year ago, unemployment was at three point seven percent.

So we've been seeing a gradual optic unemployment, which tells us that something is shifting in our labor market. How do we make sense of that? How do we make sense of the fact that we are creating new jobs at an average rate of one hundred and seventy two thousand jobs per month over the last three months? So we're creating these new jobs, yet unemployment is taking up.

How do we make sense of those two seemingly contradictory pieces of information? Well, the answer can be found by looking at the difference between the establishment survey and the household survey. So the bureau of labor statistics actually conducts two different surveys every month.

And those two surveys tell slightly different stories about our job market. This headline number of two hundred and twenty seven thousand new jobs that were created in november. That comes from something that's called the establishment survey and that's where the bls surveys businesses to count new payroll positions.

But there's also a different survey and it's called the household survey that is used to calculate the unemployment rate. And that shows something very different that shows buckle your seat, bell told onto your heads, because this is gonna shock you. The household survey shows a decline of three hundred and fifty five thousand jobs in november.

What do what? How does that make sense? Well, the answer comes from the fact that the household survey also tells us that the labor force, which means people who are either working or are actively looking for work, the labor force contracted by one hundred and ninety three thousand people in november, which means that our labor force participation rate is down slightly to sixty two point five percent.

Remember when we talk about employment or unemployment, we're not talking about jobs relative to the entire population of human beings. We're talking about jobs relative to people who want jobs. In other words, the yardstick for good employment is if you want a job, you can find a job.

The yardstick is not if you exist, you have a job. So labor force participation is down. And so this seemingly contradictory data helps explain why we're seeing the unemployment rate take up to four point two percent even as businesses report adding jobs.

So when we look at both surveys together, we get a more complete picture, which is that wild businesses are creating new positions in certain sectors. We're going to talk about sectors in a moment while businesses are creating those new positions. We're also seeing some people stabbed back from the labor force entirely.

And this type of detail matters because that helps us understand the full dynamics of our job market. The labor market is really complex and IT can be captured in a single number. So more jobs are being created while fewer people are working.

I want to emphasize that these are not huge shifts. These are incremental numbers, and that's why we watch this month after month because over the long term, we began to see trends. And one of the things that we're noticing is that the type of a long term shift that is happening right now is the type that often happens during economic transitions.

We are in a time of transition, and i'm going to add third number that will really round out this picture. And it's the long term unemployment situation, which is defined as people who are jobless, people who want jobs, who are jobless for twenty seven weeks or more. And that is holding steady at one point seven million people, which is up significantly from one point two million people a year ago.

That also a crucial metric because the long term unemployment can have huge, huge ravine on both individuals and on the broader economy. Think about how much IT was suck to want a job and not be able to find one for twenty seven weeks or more. And so what this all means when you tile of these numbers togethers that we're seeing a labor market that's still growing, but it's becoming more selective, and that's how jobs can simulate evensen be more abundant, but also harder to get.

Now how harder is to get a job is gna depend on what industry are in because there's a lot of variation in where the jobs are being created. The powerhouse of job creation is healthy care, which added fifty four thousand new positions in november. If you're wondering specifically what elements of health care we saw twenty two thousand new jobs in ambulatory y care, sixteen thousand new jobs and home health care, ninety thousand new jobs in hospitals and twelve thousand in nursing facilities.

The leisure and hospitality sector also showed enormous strength. They added fifty three thousand new jobs this past months, about twenty nine thousand of which came from restaurants and bars. This sector, by the way, has been consistently adding about twenty one thousand new jobs per month over the last year.

So the report out of november shows that growth here is actually accelerating. There is a hunger for travel, for face to face interaction. We were all cooped up in twenty, twenty and twenty twenty one.

And I think we're still feeling the effects of the pendulum swing, given not only how strong the sectors but how IT continues to grow stronger. Government employment grew by thirty three thousand new positions, with the bulk of that coming from state governments. And this is also a steady trend that we've seen throughout the year.

Government job growth has averaged about forty one thousand per month over the past year, and most of that has been at the state and municipal level. So those are the big winning sectors. Next, let's talk about the warning signs.

What's not doing well? Retail, retail trade lost twenty thousand jobs right as we entered the holiday season, and general merchandise stores took the biggest hit. They dropped fifteen thousand jobs.

Now there are some analysts who think that this might be due to the later timing of thanksgiving this year. Remember, thanksgiving moves it's date each year. It's always on the last thursday of the month this year.

The last thursday of the month was pretty late into the month. So that might have had an adverse effect on holiday shopping and retail, but it's unlikely that would have accounted for all of the job loss in the sector. So retail is something to watch closely in the coming months.

Technically, manufacturing saw a boost of thirty two thousand jobs, but this is actually a one time factor. This mainly reflects workers that were returning from strikes rather than new job creation on paper were seeing a figure that is technically classified as growth, but it's actually just a one time step up of a return to the norm. Now we've been talking about jobs, but wages overall are up quite a bit.

Average early earnings rose by forty basis points in november, so that's almost half a percentage point. It's four tens of a percentage point, and that might not sound like much, but that was just for the month. If we look at the year, wages are up four percent compared to last year.

Now the reason why this matters is that both the monthly and yearly numbers came in ten basis points higher, the economists expected. Now for workers, this is great because this continued wage growth is helping workers maintain purchasing power and keep pace with inflation. In fact, over the past twelve months, that wage growth has actually exceeded the inflation rate over the trAiling twelve months.

But but IT is not distributed evenly because if we break this down further, there is a distinction between production versus non supervisory employees. So basically, if you think about front line workers rather than managers, front line workers saw their hourly earnings rise by thirty basis points in the past months rather than forty basis points. And if we look at the early trend, we also see depressed increase earnings for front line workers as supposed to managers.

People in manager erik positions on an average over the past twelve months have wage growth that has kept up with, if not exceeded, the last twelve months of inflation, but front line workers and lower paid workers aren't seeing those same gains. So we have some by vacation here. We have a case shape recovery.

These types of wage trends can give us some really important clues about both consumer confidence as well as the potential pressure on Prices. Because when we see wages that are consistently rising, IT typically means that consumers have more spending power. And in the U.

S. Economy, which particularly is very largely driven by consumer spending. That is significant for our broader economic outlook.

That means that we're likely to see strong economic growth. That means that we are likely to continue to see high levels of employment, flash low unemployment. But here's the thing.

Robust consumer spending also has huge inflation implications, and this is where things get really interesting for market watchers. The jobs report has significantly shifted expectations for fed policy. Financial markets are now pricing in an eighty nine percent chance of a rate cut at the fed's december meeting.

That's up from a seventy two percent chance, which was what the market had Priced in before this morning's report came out. In other words, get rid the numbers and summarized this. The probability that the fed is going to cut rates at decembers meeting just got bigger.

It's more likely now than IT was yesterday that the fed is going to cut rates at their december meeting. why? What's the thinking? Well, there was a bit of an uptick unemployment and there was some softening in the labor force participation rate.

And that combination of those two things gives the fed room and reason to start easing. Let's recap all of this. What we saw was the in november, job creation accelerated, but the labor force contracted.

Two hundred and twenty seven thousand new jobs were created, but the labor force contracted by one hundred and ninety three thousand people. This suggests that we are entering a period of transition and the said looks like it's ready to continue rate cutting and that could reshape the employment landscape. In twenty five, markets are already pricing in two or three rate cuts next year with treasury yields falling.

Based on this morning's job report, what we see is that our job market is showing a lot of resilience while simultaneously signaling and cooling. It's got enough strength to support consumer spending and economic growth, but I also has enough weakness to potentially trigger a shift in monetary policy. Now I know some of you might thinking like a weakness might be a strong word for that.

Aren't we just talking about the fed bringing interest strates back down to what they that is recency bias at work rates. Where they are right now is rates are historically Normal. The fed doesn't bring down rates to get IT to some type of idealized Normal, which is another way of saying the fed doesn't have a target interest rate.

The fed has a target inflationary, but IT doesn't have a target interest rate. So if the fed lowers interest strates, it's not because IT has a goal of bringing interest rates down. It's because IT sees some softening in the economy and wants to spur the economy through that rate cut.

And so those are all of the takeaway from the november jobs report, which came out this morning, the first friday of december. We're going to take a moment to hear from the sponsors who make the show possible. And when we return, we're going to talk about terrorist.

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Welcome back, we turn our attention to terrace. We will answer the question, what are terrifying? What are some of both the benefits and the drawbacks of instituting terrify?

What statements have been made directly by president elect trump related to his plans to impose turfs in the upcoming year? What effect might this have on U. S.

Consumers and U. S. workers? And how clearly can we distinguish between knowledge and speculation?

Let's start by answering the question. What are terrorists? A terrific attacks imposed by one country on goods imported from another country? Terri s are an important tool in the regulation of foreign trade. Let's walk through an example.

Let's say hypothetically, that there is a blanket twenty five percent across the board tariff on all goods that are imported from mexico. Who pays that? The importing company that is based here in the united states, the company that is bringing those goods from mexico into the united states, will pay that twenty five percent tariff.

That money would go to the U. S. treasury.

That contains a variety of consequences. Number one, IT increases revenue for the U. S. treasury. Number two, IT incentivises, the importing company to turn to domestic production and domestic manufacturing as an alternative whenever possible.

For example, if you run a clothing company and a peril company and you are currently having that clothing made in mexico or in canada or in china, then from your point of view, as the owner of that important company is a simple math equation to decide if that terf is sufficiently high enough, if it's ownerless enough for you to stop using the services of the overseas company and instead start using a domestic manufacturer. And if you crunch the numbers in the spread sheet, says, yes, it's worth paying that add tacks, it's worth paying that add terris, that's your choice as a company owner and the U. S.

Treasury collects that added revenue. But by contrast, if you, as the U. S, based a perl company owner, decide what that tarifa makes IT cost prohibitive.

IT would be cheaper for me to use a domestic A U. S, based manufactured. Well, then that terrace has had the effect of spurring job creation inside of the united states.

So that is the advantage of terrify. IT can bring a boost to U. S.

Production, and I can bring a boost to those homegrown made in the U. S. A. goods. The disadvantage, however, is that if the important company is paying those terror, then that means higher Prices for those companies, for those importing companies, which leads to higher Prices for U. S.

Consumers, because if imports are more expensive and therefore the cost of imported goods are higher than those Prices have to get passed onto the tumor, the important company can take some of the hit, but they only have so much margin that they can eat. Remember, their employees are expecting wage growth, and their own costs of everything from software to the rent on their warehouses has gone up. So at a certain point, there is just no more profit that they can lead.

And the only way for them to be able to stay in business would be by raising those Prices. So terrorists can have a positive effect in that they spur job creation domestically. And they can also have a negative effect in that they lead higher Prices for consumers.

Now you recall when we talked about the november jobs report, as you remember, manufacturing didn't see any new job growth in november. The thirty two thousand jobs that IT reported mainly reflected workers that were returning from strikes rather than a new job creation teacher intended to address that issue. Teaser intended to boost domestic manufacturing.

And that's precisely why the leaders of many foreign nations are quite concerned about this. As importers are intensified to turn to domestic production to avoid paying higher costs, exporters that are based in china or based in mexico are based in canada might cut their Prices in order to stay in business. In other words, those exporters will take a hit to their profits in order to stay alive.

And this would harm the economies of the exporting countries. IT could significantly harm the economies of mexico or canada. And that's one of the reasons why Justin trudeau, the prime minister of canada, made a trip to morale guo a few days ago to plead with president like trump not to impose these blanket terrify.

Trudeau was the first four I N G seven leader to meet with president elect trump since the election, turning attention for a moment back to the U. S, we will talk more about a mexico and canada and china in a moment, and there's a reason that I am highlighting those three nations. But turning our attention back to the U.

S, we have spoken so far about tera s in a monolithic manner. But all conversations about the economy are sector specific or industry specific. And there are some industries that benefit from tariff s more than others, steel and aluminum, for example, sugar producers and the auto industry. These historically have benefit quite a bit from terrace.

What's interesting about the proposals for how terrorists would be implemented in twenty twenty five? What makes them a little unique in a historical context? Because terf ff have been around in two thousand, nine th century terriers have often been assessed in an industry specific man or historically, meaning that certain industries were targeted with terrifying in order to selectively protect specific types of domestic producers.

Now what's notable about president electronics proposals is that he is proposing across the board terrace in which the variation is based on source country rather than industry. And there are a few particular countries that he has singled out, i'm going to quote directly from a couple of posts on truth social president elect trump route quote on january. Funniest, as one of my many first executive orders, I will sign all necessary documents to charge mexico in canada a twenty five percent tariff ff on all products coming into the united states and its ridiculous open borders.

This terrible will remain in effect until such time as drugs, in particular federal and all illegal a liens, stop this invasion of our country. Both mexico and canada have the absolute right and power to easily solve this long simmering problem we hear by demand that they use this power. And until such time as they do, IT is time for them to pay a very big Price.

And quote, so that was what he said about specifically mexican canada, our neighbors. And IT has illicit a strong response, both from trudeau, who we just talked about, as well as mexican president clodia shine bomb, who issued a rather skating or a bottle. But in addition to mexico and canada, president elect trump is also targeting the other major world power, china.

I will quote him directly. He wrote on truth social quote, I have had many talks with china about the massive amount of drugs, in particular federal, being sent into the united states, but to no avail. Representatives of china told me they would institute their maximum penalty, that of death, for any drug dealers caught doing this, but unfortunately, they never followed through.

And drugs are pouring into our country, mostly through mexico, at levels never seen before. Until such time as they stop, we will be charging at china and additional ten percent tariffs above any additional terms s on all of their many products coming into the united states of america. Thank you for your attention to this matter.

And quote now, after he said that, he issued another warning. And I I won't quote this one directly, simply because I don't have IT in front of me at the moment, but IT pertains to the bricks country's B R I C S, which is brazil, russia, india, china, south africa, china, of course, which he had previously stated that he would charge them an additional ten percent. Tarif h china was included in this grouping of five countries, the bricks countries, in a follow up statement in which president electron p stated that if the bricks countries is continue across border payment rail system, then he would impose a one hundred percent tarriff on all five of those nations.

Now, if you listen to last months, first friday episode, we talked about this. And if you listened to our interview with totty on a cosine, we talked about this met episode as well. Cross border payment rails are networks that allow for the transfer of digital money between countries and between continent, so they connect financial institutions and serve as the underlying infrastructure for international payment methods.

Now the reason that the bricks countries are trying to develop the system is because they want to develop a method payment that is a competitor to the U. S. dollar.

The U. S. Dollar is currently the worlders are of currency, and they are trying to compete with that. They're trying to develop an alternative world reserve currency. If you listened to the last first friday episode a month ago, we discussed this entire attempt and I I gave my take on IT, which is that I don't think they're be successful in doing so. And now with this newest development, which is the president elect, trump is threatning one hundred percent turfs on the bricks nations.

If they continue to even attempt to do so, they are hugely disenchanted from making an attempt that I think many, myself included, would characterize as a hail mary attempt. What's interesting about the idea of U. S.

Turfs on the bricks nations is that, generally speaking, the tech sector historically has not really been impacted by terrorists, not in any major way. The impact of terrorists can be very sector specific. And tech, which of course realized heavily on digital products and services, has generally been pretty inflated.

So if you think of software, cloud services, digital platforms, these elements of the tech industry typically aren't subject to traditional terror regulations. But there are segments of the tech industry that heavily depend on physical components. We're talking hardware manufacturers, said my conductor, producers, electronics makers.

This is where we might see some tech sector impact because malaysia has warned that any U. S. Turfs on bricks nations could impact semi ductor supply.

Malaysia, I should add, has applied to be part of the brick block, but that application has not yet been accepted. The brick block is attempting to chAllenge the world order that is dominated by western economies. That's a big part of the reason why they are attempting this d dollars ation effort.

I should also add, and I want to give a little bit of broader context, the whole conversation that we've had, he even my definition of terrify, has been rooted in what is happening today. So we've been talking entirely about import tariff s just to be absolutely clear from a not that this applies to what's currently going on, but just from an academic perspective, there are different types of terriers. There are import terf.

S, there are export. There are revenue terrorists where the goal is simply for the treasury to make more money. There are protective terrorists. S, so there's all kinds. But what we're talking about in this context are not exporter.

If there is no discussion of that and there's no discussion of revenue terrify, the goal is not for the treasury to make money. The goal is to influence the behaviour of other nations and to bolster domestic production. So these terms of the ones that we're talking about, the terrace that are likely to go into effect in some former fashion to some export, another in twenty twenty five.

Will these terribles benefit those of us who live inside of the united states as consumers? no. But as workers? yes. In certain industries, as long as there are no retaliatory turfs, which we will talk about in a moment, as consumers across the board, there are no benefit atis, and there are often drawbacks.

The non partisan Peterson institute for international economics estimates that a twenty percent across the board terf and the sixty percent terrifying china would cost the typical U. S. Household, one that is in middle of the income distribution.

That household would face additional costs of more than twenty six hundred dollars per year. Another study that was done by the budget lab at yale estimates that terriers would raise consumer Prices by somewhere between nineteen hundred dollars to seventy six hundred dollars per household. Now most of this would be at the grocery store because much of our produce is imported, sixty percent of fruit and almost forty percent of vegetables.

But outside of the grocery store, we would also see higher Prices on items like clothing and furnishings. The U. S. International trade commission found that in twenty twenty one, the terrifying that we've had in place, and actually, I will talk about that in just a second, but the turfs that we've had in place increased Prices between one point seven percent to seven point one percent in the ten most effective sectors, and those sectors include a perl, car parts, furniture and computer equipment.

Now when we talk about the turfs that we've already had in place, we are referring to turfs that were instituted during president trumps first term, which were then held in place by president biden, who kept or increased the majority of president trumps terrify, particularly on china. Going back to the core question, right, the question are terms, quote, quote, good or bad is not really an applicable question. Because as people who live in the united states, we are both consumers and workers.

There is widespread agreement that herria ffs, result in higher Prices for consumers that's been unequivocally demonstrated, but no pain, no gain in exchange for that burden of higher Prices. We also, as workers get more jobs, there's a bigger boost to manufacturing. We revive more industries and communities.

We reduce trade deficits. We also, in many economists, point the cell. We reassure our supply chains and that could enhance domestic safety, particularly specific key industries where there is a national security interest in maintaining a domestic supply production.

So we arguably mayor, may not have greater national security as IT released to the supply chain. Our discussion so far has not really covered the topic of retaliatory turfs and that that's where we really start playing three d chess woo. That's where things get interesting.

So so far, what we've talked about is what happens if we raise taxes on imports that come into the country. What we've covered in the last one fifteen, twenty minutes, however, along this has been what we've covered, are the effects of that, just that which, as you can see, and here that alone is quite nuanced, complex and wide ranging. But what happens downstream, what happens when our partner trading nations impose their own retaliatory tythes? We're going to take one final break to hear a word from the people who make the show possible.

And when we come back, let's unpack that because that's where things get really fascinating. Well, for me and my family, our holiday season is over. We celebrate diwali and thus I, which is in october.

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Welcome back. Let's talk retaliatory tariff s because this is where we go from playing checkers to playing chess. One thing I should clarify, before we get started, earlier I talked about the bricks nations, which I defined as brazil, russia, india, china, south africa, which is what B R I C S.

Thanks for, but that I mentioned that malaysia had applied to join. And I realized that probably created a question in many of your minds, because you are probably going way to second, how could malaysia join? What would that be? brick? bricks? No, actually, great question, graduates.

Bricks is actually a block of nine countries back in the day. You really want the history of this back in the day. Bricks was brick singular.

IT was brazil, russia, india, china. And IT was this group of four emerging markets. And if you are emerging markets investor, you could buy a brick etf and call IT a day.

Over time, more countries joined that block, so south africa joined, and they went from brick singular to bricks plural. And now the brilliance also includes egypt, ethiopia, a iran and the U. A.

E, those are the nine countries that have been accepted into the bricks alliance, but there are in addition of malaysia, there are a total of about three dozen countries that have applied to join in southeast asia in addition of malaysia, thailand, vietnam, a indonesia and moving in the south. Ja, even blazes have expressed interest joining. Bangladesh, by the way, has a thriving economy.

Pay attention to how much of your clothing says made in bangladesh? Sh, just start paying attention. They are facing some big, big chAllenges right now.

Their currency got absolutely hammer after their former prime minister store a bunch of money from the central banks and then fled the country. That the whole other saga for a whole different day, when you wonder why people put so much faith and trust in the U. S.

Dollar in in the U. S. Central banks, it's because some of the stuff that happens elsewhere is just unemployable.

There's this concept, psychology is called your assumptive world that refers to these core beliefs, the core ideas that you have a the way the world Operates. That's the difference in the type of assumptive world that we live in here in the U. S, versus the type of assumptive world the others live in.

And that's the reason why they're so much faith and trust in the U. S. dollar. right? I will get off of my bangladesh tangent. We can talk about that on a different day because it's an incredible, tragic, fascinating, morbid, heart watching story. I insert adjective here, but all of that that's happening in bangladesh now came on the heels of decades of incredible economic growth in south asia. They grew to be the second largest economy in south asia.

After india, of course, their economy has grown at an annual average of six point two five percent for the last twenty years, and they cut their poverty rate by more than half over the span of a dozen years between twenty ten and twenty twenty two. Both of those stats come from the CIA world fact book. So being from nepaul, a country that's also in south asia that's not doing nearly as well as mongolian, it's been amazing to watch their story.

One one can only hope that one day in appalled do as well as them. But anyway, thank you for indulging me as I went off on that tension. Back to the bricks countries, the, I guess, one that there is a good example of countries that are doing relatively well in their home region bonder lish, indonesia, malaysia, vietnam, thailand and then heading east from their turkey, algeria, nigeria.

These are all nations that have applied to join the brick block. There are also many countries that have been invited to join, but either have not responded yet, such as saudi arabia, or that have declined the invite, such as argentina. And if you want some really interesting listening, listen to harvie mili, the president of argentina.

Listen to his interview on the next freeman podcast. Fascinating stuff. And that's also a different topic for a different day.

We could do a whole podcast episode just unpacking the economic story of argentina. But let's get back to the episode of today, which is terrace. And we are now in the section we were talking about, the impact of retaliatory ory terrify.

The U. S. Department of agriculture, the U. S. D. A. Conducted a big report on the economic impacts of relator terrorist in january twenty twenty two.

Specifically, of course, the report was about its impact on U. S. agriculture. But as we previously stated, much of the impact that U. S.

Consumers are going to feel on import refs will be felt at the grocery store. And what we've seen in the past is that many of the relator types have also had a disproportionate effect on food producers. So pork, for example, was quite specifically targeted by retaliatory tvs passed by china.

I'm getting head of myself in twenty eighteen, the U. S. Imposed terrify on steel and aluminum imports, and we also imposed terrace on a much broader range of imports from china.

In response to these, a group of countries, including china, canada, india, mexico, turkey and E. U. Imposed rotatory turfs on many U.

S. exports. And specifically, those retaliatory tests targeted a pretty big range of both agricultural and food product. The impact on individual product lines ranged anywhere from two percent to a hundred and forty percent that a, that is a wide range. So two percent to one hundred and forty percent was the range.

And these relator turves increased the Price of agricultural exports in the home markets of those countries relative to other alternatives that were either produced domestically or that we're imported from other international sources. And by the way, that is important to note because if the U. S.

Does impose hundred percent tariffs on china, for example, it's entirely possible that many of those producers will route their goods through other nations. So there are really two things that happen. One is that high terf s imposed on certain countries simply make exports from other countries more attractive.

High tiffs imposed on mexico, china, canada and the nine block of bricks nations will make imports from any country that isn't one of the ones that I just named more attractive by comparison. So IT offers a competitive advantage to, let's say, imports that come from chi or perou. Now to be clear, president like trump has suggested ten percent across the board heros on all imports coming from any country.

But given that there are specific countries that are being targeted with higher refs, IT makes those particular nations less competitive. Vent, by contrast, other nations more competitive. So even though the the ten percent across the board is still be there, nations that typically don't, may not yet trade as much with us would have a stronger shot.

And by contrast, if those retaliatory tariffs imposed on the U. S, what that means is that from the point of view of a company owner in canada or in china, if those terms are applied on U. S.

Exports, IT means that either domestic production in their own home country or exports from some other nation that doesn't have either any terrify or as severe of terrify, those would become, relatively speaking, more attractive. Now, what this report from the U. S.

D. A. Found was the as of october of twenty twenty one, many relator herbs were still in effect, with a few exceptions.

Canada and mexico's retaliatory turfs were removed in may twenty nineteen, and china announced tariff exemptions for some products after the U. S. China faces one economic and trade agreement was signed in january.

And then in october of twenty twenty one, the U. S. And the E, U. Made arrangements as well in which the U. S.

Lifted its terrify on steel and aluminum imports that replaced IT with a terrify ie. quota. And in return the eu. Lifted its rta atti terrifying.

And so the effective of all of that is that those retaliatory tariff LED to a significant reduction i'm quoting directly here, retaliatory terrace LED to a significant reduction in the U. S. Agricultural exports to retaliating partners.

And quote now on its face, that sounds like precisely what you'd expect. The question is by how much and the report found the food exporters suffered losses totalling more than twenty seven billion from the time period of twenty eighteen through the end of twenty nineteen. Now the bulk of these losses, ninety five percent, was due to china's retta terrace.

China accounted for ninety five percent of losses, in part because there are such a major trading partner, particularly again, in the agricultural rm, which is what this report covers. But again, I highlight this report because agriculture and food is where we expect to see the bulk of the impact. So the damage was twenty seven billion.

Most of IT was china. The report has some break outs of how that breaks down in terms of soybeans verses pork, which I won't go into. But this is what's interesting. At the state level, losses were primarily concentrated in the midwest. Iva suffered the most losses at one point for six billion in annualize losses, followed by illinois at one point for one billion and kansas at nine hundred and fifty five million. A quote, again, quote, the state level losses were uneven and not directly proportional to the size of state level exports.

States that produced more of the commodities most severely targeted by retaliation, soybeans, soga pork and cotton experiences higher losses and quote, and so this is a component of the tariff discussion that is often not talked about in the mainstream media, which is that not only will terrify impact households differently based on their households income, and not only will terf impact industries differently, and we've spoken at linked about sectoral specificity, but in addition, all of that terriers are going to impact states differently. And so while we can't predict the future, we know what has happened in the past, and specifically in the recent past twenty, twenty and twenty nine. And we know that that was the middle stern states in particular that got hit the hardest.

What we know, at least from the past, is, as I mentioned earlier, technology and software is an industry that byan large is less affected by Terry fs. Health care and pharmaceuticals is generally shielded by domestic production. Many medical devices and pharmaceuticals are manufactured in the U.

S. Or they are inside of trade agreements that protect them from heavy turfs retail and e commerce. There's mixed impacts. There are retailers that depend on a lot of foreign made goods, such as clothing, electronics, various other consumer goods. Those retailers do face higher costs because of terrace.

But as e commerce grows, a lot of companies are able to adapt by sourcing products from companies located in countries that are either outside of the scope of terrify or that have the lowest tier of severity of terrifying, the cheapest tariffs. Historically, it's been manufacturing and agriculture where we really felt the impact. Farmers, soybean farmers in particular, really rely pretty heavily on exports to china and history ally, they saw a drastic, drastic reduction in sales due to italia ory.

terrifying. So will we see that again, time hotel. But that is the landscape that we are heading into as the new year approaches.

We will pause here. We will wrap today's episode in our end of the year episode, our new year's eve episode. We will resume this discussion and build on IT.

We'll take a look back at the economic landscape of twenty twenty four, at what has happened in the financial markets, in the trading markets. And we will look ahead to twenty twenty five and get a sense of what's there. So we're going to have at the end of this year a double head.

There are new year's eve episode as well as our first friday, january episode, where we are going to really ground ourselves in research driven, fact based knowledge about the economic landscape of our times. Thank you for listening. Thank you for being part of the afford anything community.

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