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on manufactured anniversaries. The biggies? Five years? Ten years? Sure, absolutely. But one month? Not usually, unless that month has upended the global economy as we knew it. So that is the theme of this program today. And we start with Greg Ip at The Wall Street Journal, Anna Swanson at The New York Times. Hey, you two. Hey, Kai. Hi, Kai. Greg, let me start with you. You're the new guy on the block here for us anyway. You've
It's been a month. Do you think the U.S. economy has changed? Well, not if you look at what we call the hard data. I mean, we just got a report today. Employment grew 177,000 in the month of April, which is pretty good. Looks exactly like the prior year. The unemployment rate was stable.
The big differences that you see are what we call the soft data, the vibes, as we like to call it. We have a variety of indexes of consumer confidence and business confidence. Those are all down a lot. Now, if you look at the financial markets, there's another interesting story. Stock markets fell a lot in the week after the so-called Liberation Day announcement. They've almost entirely made that back up, partly because Trump has walked back a lot of those tariffs. What hasn't come back...
is the dollar. And I think that's very interesting because I think what's happened in the last month is that the rest of the world has taken a different view of the United States and now sees it as a less predictable situation.
less safe place to keep their money hold that thought honest once and i do want to get to you to address the idea of where things go from here because we were promised by the president united states the other day that he's made 200 deals his people as you know have been touting deals out the wazoo you uh wrote the other day in the paper of record it's not like you sit down and shake hands and these meetings are over in three hours they take months sometimes years to negotiate these trade deals
No, absolutely. And yeah, thanks for having me on on the one month anniversary of Tarapalooza. Definitely happy to jump in. So yeah, I mean, I think with the trade deals, the president has actually created an extraordinary amount of leverage with all of his tariff threats. It's just the question is, what can you do with that? And their timeline is so short. So I think the United States could come out of this with better terms of trade with a few countries.
but some administration officials have talked about doing 90 deals in 90 days. And some of that is just a bit like, you know, ludicrous, honestly. Um,
Usually trade deals take a year or more to negotiate, and that's focusing on one country. So the president had this revealing comment the other day in an interview with Time. He said, the deal is a deal that I choose. And so I think what you'll see is the president just deciding whether or not this deal meets muster. You could see a lot of agreements in principle on a few items or maybe promises to negotiate further rather than kind of
big traditional deals. Greg, let me ask you this. On the subject of the dollar and people investing in it, and as Ana was talking about these deals that may or may not get made, do you think the United States is a reliable partner now in trade negotiations?
Oh, I don't think so. And in fact, I'd say one of the most important events of the last month was the election in Canada, where the liberals who had basically been given up for dead because people were angry about inflation, just like they were here, they came back to actually win the election. And they won it because their new leader, Mark Carney, was campaigning on a program of saying, America cannot be relied on any longer. Canada has to basically carve its own path.
And that is a sentiment that you get all around the world. It was something that we heard a lot of at the recent meetings of the International Monetary Fund here in the United States. Now, I think that at the end of this process, as Ana was saying, the United States, thanks to the fact that as the largest economy, it has a lot of leverage, it will come to some deals. And it is in the interest of all those other countries, Japan, Canada, even China, to come to some kind of deal with the United States.
But having seen how profoundly the United States can basically turn away from the deals itself as negotiated, I don't think that they will trust in the endurance of those deals and they will effectively keep looking for alternatives, strengthening ties with each other and finding other trading arrangements to rely upon. Great story on that coming up from Sambree at the bottom of the program. But, Anand, let me ask you this about that thing Greg said about the end of this process. There ain't no end in sight right now.
No, no, this is just, you know, stretching on. So the president has paused his tariffs globally until about July 8th. But then, you know, who knows, could there be extensions beyond that? Because as I said, 90 deals in 90 days isn't isn't all that realistic.
Meanwhile, you have this really intense standoff with China where the president has skyrocketed tariffs to a minimum of 145%. You have a lot of trade just coming to a halt between those the countries. It's really remarkable. And so the Trump administration and the Chinese, I think, trying to
find a way out of that without either side seeming to back down. So, no, I think there's a lot of a lot more that we'll be covering here going forward. Yes, there will be. Greg, there is real economy stuff happening here, too. And it was manifested, I guess, yesterday by the president in that quote that everybody's heard by now.
So maybe there are two dolls on the shelf, not 30, and they cost a couple of bucks more. That's fewer goods for consumers at higher prices. And that is a decline in real income, which is just not good. I know it was not exactly the most robust defense of this program that the president has perhaps made in a while. But I think it actually perhaps inadvertently raises two important questions.
about what happens when you reduce trade. I mean, everybody focuses on, oh, well, those jobs will come back to America. People will get to go work in factories again. But what happens to the consumers of products? Well, one thing is that the products they buy will cost more either because they have tariffs on them or because they were made in American factories with more expensive American labor.
or there will be less to choose from. And that second factor, the lack of choice, I think is one that people are really going to start to notice in the next few months. As Ana was saying, there is a possible real slowdown in trade and imports from China waiting in the wings. And a lot of products that people assume that they can just buy at the click of a button are not going to be available because it's no longer possible to sell them profitably in the United States.
Last thing on it to you, and it's sort of a bigger question, so, you know, take a minute or two to answer. It's up to you. It seems to me that the Trump administration is not recognizing the way the global economy has changed. And I point to Howard Lutnick, the Secretary of Commerce, and his oft-repeated comment that he wants millions and millions of jobs in this country with people screwing tiny little screws into iPhones. And this is not my original thought, but this is a country in an economy that wants to buy iPhones, not make them. Mm-hmm.
Yeah, I think a lot of the Trump administration statements, I mean, they really think a lot about like sort of the China shock that the U.S. economy experienced a few decades ago. You know, I get the sense that it's all it's very backwards focused. You know, there's not much focus on the service sector, which is actually where most Americans are employed. Right.
You know, there's not much looking forward to the possible destruction of jobs by AI or a next wave of sort of China shock that people say is coming. So, you know, and I also think, you know, there's they talk a lot about restoring manufacturing, but a lot of manufacturers depend on employees.
imported inputs, and they sell to global markets. So I was talking to someone the other day who said that, you know, instead of importing my parts into the United States to make something to export to Canada, now I'm just going to make it in China and export it to Canada, bypassing the United States. So there are a lot of complications when you get into these tariff policies that are potentially unintended. Lots of unintended consequences. Lots of them. Ana Swanson at The New York Times on this Friday. Greg Ip at The Wall Street Journal. Great to have you two. Thanks a bunch.
Thanks for having us. Have a nice weekend. Wall Street today, tariff shmariff. It was the jobs report and maybe a glimmer of hope in the trade war that sent the major indices higher. Details, numbers, you all know the drill.
Hey, you remember how old it got during the pandemic, hearing supply chain story after supply chain story after supply chain story? I know. Me too. But the news is what the news is. And with the tariff rates between the United States and China being as high as they are, which I alluded to, that is to say high enough to be a de facto trade embargo, virtually every link in the supply chain has been disrupted. Marketplaces Kristen Schwab and Matt Levin take it from there.
On April 8th, Danny Muscat at footwear company Deerstags had a million dollars worth of inventory, around 100,000 pairs of men's boots and dress shoes sitting in a factory in China. We were just getting set to put a lot of our goods on the water for the back-to-school period. On April 9th, the import taxes on the shipment went from $60,000 to more than $1.5 million. It's not possible.
So the shoes are still sitting in China. And that's where they'll stay for a while. Muscat is hoping the tariff rate comes down. In the meantime, he's trying to figure out what he can pay for, how long the stock he already has will last him, and whether he's going to have to put manufacturing on pause. There are a lot of people who are trying to figure out what he can pay for.
There's a clock that's ticking and it's ticking fast. We're not talking 30 days. We're talking days. Behind the scenes, companies have been making drastic business decisions, but consumers haven't seen the full impact yet. Greg Collins, a professor of supply chain management at Arizona State, says many manufacturers and retailers stocked up on months of extra inventory to prepare.
And everyone wanted to get more product into the U.S. before the tariffs come through. Soon, that stock will run out. This will create havoc with our coffee makers, toothbrushes, shoelaces, toys.
Something like 80% of the toys Amy Saldana sells at Kitty Wampus, her toy store in Minnesota, come from China. She ordered enough from manufacturers to get through the summer, but has to order for the holidays now. And she doesn't want to buy too much in case shoppers see price increases and pull back on spending. It means that I'm saying no to a lot more new product that I would ordinarily like to take a chance on. So she's focusing on bestsellers, like...
Lego, Barbie, and Hot Wheels. Everything else is negotiable. We always know the price of the items we're purchasing. That's how I factor in my margin. That's how I decide if it's economically viable for me to have it at the store. She has a deal with her suppliers that if they raise prices more than 15% because of tariffs, they have to contact her to approve the order before it starts its journey to the U.S. Here's Matt with how all these changes in ordering are affecting the logistics.
So whether it's Hot Wheels or Barbies or pretty much anything that's supposed to come from China to the United States, it's mostly all getting here one way. Tom Goldsby teaches supply chain management at the University of Tennessee. I would say that it's about 99.8% of volume that's overseas is going to move via containerized freight. Containerized freight, a.k.a. container ships.
Those massive boats containing all those stacked 40-foot-long rectangles of brightly colored corrugated steel, like something out of Lego's Glittering Symbols of Global Commerce collector set.
Before April, there was an inexhaustible stream of container ships making a beeline from Shanghai and Shenzhen to the ports of Los Angeles and Long Beach. Now? Because the orders have been canceled and suspended in China, we're seeing blank sailings. That means that a sailing of an ocean ship was scheduled, but it's not going to happen. Forty-five percent of ships originally bound from China to the West Coast are now just outlandish.
idling mostly outside China, according to Project 44, a company that monitors global shipping trends. Project 44's Peter Doyle says while some companies may try to adjust supply chains outside China, that could take a while. There's not really an ability for an importer to quickly switch over all of their volumes from China to another facility in China.
One other thing to keep in mind, those 40-foot long containers, they're not just used on container ships. They're also used on rail cars and other modes of transport to ferry goods back and forth within the United States.
And guess where those containers are made? The vast majority of these containers are very ironically manufactured in China. Jason Miller is at Michigan State University. He says if you're an American freight company... You're certainly rethinking capital investment decisions right now, knowing that those containers are subject to substantial tariffs. Miller says it would be tough to build a domestic shipping container industry. China just does it a lot cheaper.
I'm Matt Levin. And I'm Kristen Schwab for Marketplace. Coming up. Trade is an enormous driver of productivity growth. So when trade goes down, growth goes, yeah. But first, let's do the numbers.
Dow Industrial is up 564 today, 1.4%, 41,317. The NASDAQ gained 266 points, 1.5%, 17,977.
S&P 500 racked up 82 points, 1.5%, 56 and 86. As I said, the jobs number and that hopeful, hopeful, hopeful moment perhaps in trade talks. Don't know. For the five days going by, the Dow up 3%, the Nasdaq lifted 3.4%. S&P 500 added 2.9% today. So how about some companies involved in getting goods from A to B since we're talking supply chain here? Mattson Incorporated handles shipping across the Pacific.
Up two and seven tenths percent today. FedEx, one of the biggest freight carriers in the U.S. Ob, soared 4.6 percent today. Bonds down, yield on the 10-year T-note rose 4.3 percent. You're listening to Marketplace. The adage says, it isn't what you say, it's how you say it. And when you lead with power, poise, and performance, you're making an impact from the start.
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Marketplace listeners get special access to one month of Gamma Pro free with promo code marketplace. Gamma, how good ideas get into the universe. This is Marketplace. I'm Kai Risdahl. All those containers that Matt and Kristen were talking about, once they come into port, they can't just sit there. Clearly, they have to go somewhere and someone has to take them there.
Weston Labar is one of those someones. He's the chief strategy officer at Waterfront Logistics. Mr. Labar, welcome to the program. It's good to have you on. Thanks for having me. Once a ship comes in and the containers get offloaded, then what happens? What does your company do?
Yeah, we're a complete end-to-end logistics company. So we have 85 acres, three miles from the port, and we have a fleet of over 100 trucks. We take those trucks down to the marine terminals where the containers are offloaded from the ships. We bring them back to our facility or directly to a customer's facility. We
We then store the containers or unload them and store them and warehouse them in our 600,000 square foot warehousing facilities and then deliver that to a customer's facility for final distribution to stores, e-commerce, etc.,
So if I can get down to brass tacks here, sir, if the cargo ain't moving, what's happening in your company? Yeah, we're fortunate in the sense that we have very diversified portfolio. So brake bulk, which we do a lot of, is up a little bit. That is stuff that's not containerized, right? Yeah. Yeah, coils of metal, pipes, lumber, things of that nature. But as you look at the containerized volume, it's...
it's heavy now because we anticipate a drop. And if there's a drop in containerized volume, which is the majority of the transactions going in and out of Los Angeles and Long Beach, we don't have as much business for drivers of trucks, for warehouse workers, for not just us, but for any trucking company, logistics company servicing the ports of LA Long Beach, where 70% roughly of their cargo is coming from China. Your perspective,
scrambling. You're probably laying people off. You may be getting rid of equipment. You may have to close up shop. And that that really is the unfortunate thing we see in these supply chain crises. If President Trump wakes up in the middle of the night and changes his mind again and and relaxes tariffs somehow or, you know, loosens things with that, fix it for you with the damage be done. What happens?
It all depends on how long the cargo recession, if you will, takes place. Because as we've saw during the pandemic, as we've seen so many different times really over the last decade, in order to have an efficient supply chain, you need to have a steady flow of goods.
What happens is the supply chain is so dependent on each link of it that whenever somebody goes dormant, if you will, all of a sudden you're scrambling to replace and you have to scale back up. So the longer and deeper the cut is, then the longer and harder it is to scale back up. And typically then you get the pent-up volume, which creates supply chain and port congestion, which is –
Again, you just look at the pandemic, look at the COVID effect and ask people how that felt. What's the group chat like between you and your fellow chief strategy officers at logistics companies? Well, I think we're all just sort of watching Twitter and waiting to see what happens from one day to the next. Because...
Typically, when there's a policy enacted, you see the roadmap, you understand what's coming, you can plan for it, and you can start to look at different ways to fill the gaps to keep your staff moving, to keep them paid so they don't go elsewhere. In this situation, you're kind of at the mercy of whatever is going on in the media. So there's a big sense of uneasiness. And so this is more difficult to me than COVID. It's one of the most difficult things I've dealt with because...
With COVID, it was a predictable situation. Once you kind of got the economy back to what's an essential business, who needs to be open, where do you have to have frontline workers, and how do you protect them, you could easily respond. You can't respond to something you don't know about, and we don't have a crystal ball that's very clear right now. How much of your day is spent dealing with this particular situation as opposed to strategizing how to grow your company?
Well, in one way, shape or form, almost 100% of my day, right? Because even when you're talking about growing your company, again, we are lucky that we were able to pivot into other areas of logistics to be able to get ahead of the curve when we saw this coming late last year. But many of my counterparts that I talk to, they're just hoping and praying that there's something that they can continue to have from their portfolio that's going to keep the lights on.
Wesson LaBar, Chief Strategy Officer at Waterfront Logistics in the Port of L.A. Mr. LaBar, thanks for your time, sir. I really appreciate it. Thanks for having me. Having spent now, what, the first 23-ish minutes of this program talking about what President Trump's tariffs are going to mean for this economy...
We're going to turn here to what they're going to mean for the rest of the world, because while the president and his advisers are doing all they can to seal the United States off from the global economy, it's not like global trade is just going to stop without us. Marketplace's Sabri Benishor has that one.
While the U.S. has been building new barriers to trade, other countries are tearing them down between each other. The world is going to keep spinning on its axis with or without the United States. Richard Weiner is senior counsel at law firm Sidley Austin.
The EU has a very extensive array of free trade agreements with many countries and regions in the world, and it's already working more deals to come. He says China is also moving aggressively. It is the top trading partner for 120 countries. The U.S. can perhaps decouple itself from China, but it can't readily decouple China from the rest of the world.
So what this means is other countries are negotiating discounts on trade between each other, while the U.S. is making things more expensive for itself. That is what tariffs do. It's true a lot of countries have said they want to negotiate U.S. tariffs down. I don't think we're likely to get many bilateral trade deals. Emily Blanchard is an economics professor at Dartmouth's Tuck School of Business. I think the United States just crafts its economy to be more insular, which will be expensive for the United States.
Expensive in direct ways. Canadians don't want U.S. wine anymore. China's choking off U.S. beef exports, ditching American soybeans for Brazilian ones. And expensive in indirect ways. 92% of the money earned from tariffs on China in the first Trump administration was spent compensating U.S. farmers for their losses. But the biggest loss to the U.S. economy would be slower and deeper. Trade is an enormous driver of productivity growth.
Nick Bloom is professor of economics at Stanford. Partly it generates new ideas and partly it generates competition. An economy insulated from global competition is an economy that starts to lose its edge. Bloom estimates new trade barriers would cut U.S. productivity growth in half. Simon Evenette is a professor of geopolitics and strategy at IMD Business School in Switzerland.
Firms facing less competitive pressure, slowdown in cost discipline and innovation. We probably won't notice immediately. It's accumulating over time, and you don't feel like you've jumped off a cliff and there's a massive drop in living standards. But he says over time it will become clear. The irony is that productivity and prosperity are the most existential costs of isolation, but also the ones we'll notice last.
In New York, I'm Sabree Beneshour for Marketplace. This final note on the way out today, a thought about the past month in this economy.
The Trump administration is making a bet, and it's pretty open about this, that it can undo four or five decades worth of globalization in a lot less time than that. We're in the middle of the biggest structural change in this economy in a century, an economy that for 80 years has been the biggest, most important, and most stable in the world. And if you listen to what people were telling Sabreen, that last piece that we ran, the rest of the world seems to be betting they can get whatever we offer somewhere else. And if that does come to pass...
It is going to cost this economy and it is going to cost the people in it. Our theme music was composed by B.J. Lederman. Marketplace's executive producer is Nancy Fargo. Donna Tam is the executive editor. Neil Scarborough is the vice president and general manager. And I'm Kyle Rizdahl. Have yourselves a great weekend, everybody. We will see you right back here on Monday, all right? This is APM. Hi, I'm Katie Drummond.
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