U.S. to talk trade with China
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All right, I'll be honest with you. We didn't plan to start with the Federal Reserve today. But then Chair Powell said this. As we noted in our statement, post-meeting statement, we've judged that the risks to higher employment and higher inflation have both risen. That, to be clear, is not great. From American Public Media, this is Marketplace.

In Los Angeles, I'm Kyle Rizdahl. It is Wednesday today, the 7th of May. Good as always to have you along, everybody. All right, quick, Chair Powell. Tell me you are worried about stagflation without telling me you are worried about stagflation. What looks likely, given the scope and scale of the tariffs, is that we will see

Certainly the risks to higher inflation, higher unemployment have have increased. And if that's what we do see, if the tariffs are ultimately put in place at those levels, which we don't know, then then we will see we won't see further progress toward our goals. That right there is the whole macroeconomic challenge right now in a reasonably tight 21 seconds from the Fed chair.

Higher inflation because of the tariffs and a slowing economy. That's higher unemployment, right? Because of the tariffs have the central bank between a rock and a very hard place because the policy prescription, the interest rate move to fix one of those scenarios is exactly the opposite of the fix for the other.

Two more points from the press conference today. One, he must have used the word uncertain or uncertainty a dozen times, maybe more. And point number two, if you're looking for the Fed to do something,

Hold your horses. We're in a good position to wait and see is the thing. We don't have to be in a hurry. The economy has been resilient and is doing fairly well. Our policy is well positioned. The costs of waiting to see further are fairly low, we think. Absent big tariff news, traders on Wall Street seemed OK with what Powell had to say. Today, we will have the details when we do the numbers.

Chirpal noted a time or two in his press conference that the Trump administration is starting negotiations over his tariffs, starting indeed.

Treasury Secretary Scott Besant's on his way to Geneva tomorrow, where he's going to meet with Chinese Vice Premier He Li-Fang. Besant said his primary goal in these meetings is to de-escalate things. But given the statement from Besant's boss this morning that he's not considering pulling back from his 145 percent tariffs, no, was the answer to the question. It is anybody's guess how these talks are going to go. So Marketplace is a pretty bit of shore. Talk to some people.

The U.S. has backed itself and China into a corner leading up to these talks. The level of tariffs we have right now are having real effects. Daniel Rosen is a partner at Rhodium Group. That's going to show up as empty shelves, higher prices, and that translates into political annoyance, to put it mildly.

On the Chinese side, this state of trade disruption is already leading to layoffs, to employment problems. So out of all the thorny issues between the U.S. and China, from IP theft to industrial policy, just walking back the tariffs on one another is going to be the top priority, says Yashen Huang, professor of economics at MIT Sloan School. You don't think about these long-term structural issues when your focus is on these short-term problems.

If history is a guide, anything substantial will take time. If you look at the first round of negotiations between U.S. and China back in 2018, it took almost two years to reach the first round deal.

That deal had China promising to buy a lot more U.S. goods, which it didn't end up doing. And the final agreement ended up skirting the most difficult issues. President Trump often complains about the U.S. trade deficit with China. But beyond that, it's unclear what the Trump administration's bottom line is. What do they really want from China? And secondly, what are they prepared to give?

Scott Kennedy is a senior advisor at the Center for Strategic and International Studies. Despite the uncertainty, Kennedy believes these talks have potential to find common ground on difficult issues in the long term. I think these are going to eventually be the most consequential trade negotiations that the world has seen in several decades.

Others are less optimistic. Jay Shambaugh is a professor of economics at George Washington University and a former undersecretary of international affairs for the Biden administration. It's more likely to be, frankly, a bit of a cosmetic deal that involves some purchase agreements that gives the U.S. the ability to say we got something and then stand down. Anything more is going to take longer than a week. In New York, I'm Sabree Beneshour for Marketplace.

The past five-ish years in this economy have been kind of upside down and all over the place. The pandemic, the inflation, the trade war, it's just been stressful for anybody. Now think about how challenging it might be for somebody fully entering the economy for the very first time.

That's the setup for this next story in our series, Lived Economies. Marketplace's Kristen Schwab following a bunch of people from different walks of life to see how they are navigating this economy. Natalie Pilrain is 19. She's a heavy equipment operator in Minnesota, and she is coming into this economy with a whole lot more responsibility than your average young adult. Here's Kristen.

Stillwater is a cute small town on the eastern edge of Minnesota, surrounded by fields and farms. Natalie Pilrain and I are on a highway stuck behind a tractor going 25 miles an hour. Yeah, in this area specifically, yeah, you definitely get that.

once in a while. Pilrain is 19 and lives with her dad. We're on our way to do some furniture shopping because she's about to move out on her own into a two-bedroom apartment for $1,800 a month. I actually just signed my lease officially last night. I mean, it's just me and my son, you know, um,

Being a single mom and trying to make your own living and move out on your own, it's not easy. Pilrain has a two-and-a-half-year-old son named Isaac. He's in the back seat watching cartoons. She had him when she was 17, during her senior year of high school. Isaac's dad is not involved, so Pilrain's dad babysits when he can. But part of the reason she's moving is to be closer to aunts and uncles who have more time to help.

She's saved $15,000 to move out and buy everything she needs. At the furniture store, Isaac is in heaven. The showroom is huge, like a giant playhouse. He's skipping around with a big smile, gently touching the shaggy rugs and soft couches.

It's an umbrella, Isaac. That's an umbrella. Pilrain, though, she's a bit intimidated. A sales guy comes over while she's looking at mattresses. Memory foam, traditional innerspring? Um...

Maybe either. I'm not really sure. Never bought a mattress before. She plops down on a few beds and glances at the price tags. The one she loves is over three grand. Like, I'm definitely, yeah, I'm willing to pay like a decent penny. But yeah, I don't think we'll be doing that. Pilrain needs a couch, dining chairs, a bookshelf. There is a lot to buy and a lot on her plate.

Maybe this doesn't need to be said, but Pilarain is not your average 19-year-old. She doesn't go to bars. She doesn't date. Like, listen to what she says when I ask her what's something she's splurged on. Two years ago, I bought myself a shark vacuum.

That was very exciting. I mean, I got it on sale, actually, so I think it was only, like, $200 or $250. I feel like you're 19, but that's the things that, like, people when they turn 30 joke about. Right? Yeah, I know, I know. It's my normal, you know? Yeah.

We're talking at Pilrain's dad's house now. Isaac is intensely eyeing my microphone, so I hand it over. Buses are Isaac's latest obsession. It's nap time, so Pilrain puts him down, and we keep talking from the living room couch. She says she never imagined having a kid so young, but doesn't think she would have accomplished everything she has without Isaac. I don't

I don't even know if I would have graduated high school or I know I wouldn't have gotten this job. Hillrain is apprenticing as a heavy equipment operator. She loves running the excavator. Most of her projects right now are building roads. She recently finished working on a bridge in St. Paul. Now, like driving by and seeing the buses driving on the bridge or the first time I drove my car over it, it's just like this crazy, like, wow, like I helped build this. Like, that's insane, you know? The job, though, is tough.

During the summer, she works 12 hours a day or more, which means Isaac needs full-time daycare and often a babysitter in the evenings. During the winter, she gets laid off for three or four months when Minnesota temperatures are too cold for construction.

That means at $28.95 an hour, she has to keep a strict budget. And that's why I was kind of surprised to hear her answer when I asked how she feels about the economy and inflation. It's kind of like blissful ignorance, almost. Like, I wasn't buying my own groceries as a teenager, you know? Like, when I was a teenager, I was buying my own groceries.

when things were a lot cheaper. So it just, it feels normal, you know, like things are expensive. Life is hard. You know, that's just the way things are. The more I think about it, the more this makes sense. Pilrain is just joining the economy years after inflation hit its peak of more than 9% in 2022. She doesn't know a time when daycare was more than 20% less and ground beef was around four bucks a pound instead of nearly six. And

nostalgia doesn't play into how she views the economy. As all these prices go up, wages go up too, or so it seems. So I feel like

In a way, like if you compare it by timeline, it almost kind of balances out. Data backs that up. Broadly speaking, over the last five years, wages have consistently outpaced inflation. It's why Pilrain is a little confused about why everyone on TikTok is complaining about the economy. Things are only going to get easier. And I have that security that things are only looking up from here. But it's going to take a couple of years before she really feels secure.

Pilrain has to finish her job training and transition Isaac from pricey daycare to school. Until then, it's just one day at a time. In Stillwater, Minnesota, I'm Kristen Schwab for Marketplace. Honestly, that's one of those stories you're going to want to listen to again. And you can do it on our podcast, Marketplace.org, or the platform of your choice. Just follow us there. Coming up... Not going to choke up.

It's all I could ever hope for. Building back your dream job. But first, let's do the numbers. Dow Industrials up 284 points today, 7 tenths percent, 41,113. The Nasdaq picked up 48 points, 3 tenths percent, 17,738. The S&P 500 added 24 points, 4 tenths percent, 56 and 31. Wall Street clearly not worried about that whole stagflation thing. Ford announced price hikes for vehicles built in Mexico. Ford.

Much to $2,000 starting this month, the automaker said it expects a $2.5 billion impact this year.

From tariffs, Ford shares decelerated 1.5%. Following the many, many, many people Elon Musk has fired or otherwise disposed of from the federal government, former government workers seem to be leaving Washington, D.C. in numbers. The number of house listings in the district jumped 25% year over year. That's according to Redfin. Bonds up, yields down. Tenures of 4.27%. You're listening to Marketplace.

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This is Marketplace. I'm Kai Risdahl. American companies, Justin Ho reported for us yesterday, are starting to inch back into the corporate bond market, despite all the uncertainty around basically everything in this economy. And in our news meeting this morning, Justin told us a couple of his sources had pointed out that companies haven't just been issuing bonds here in the United States. Alphabet, for instance, sold more than $7.5 billion worth of euro bonds.

So in today's Dispatch from the Wilds of the Global Bond Market, Justin reports that borrowing money in Europe is looking pretty attractive these days. American companies that issue bonds in Europe are typically big household names. Think T-Mobile, Alphabet, iBeans.

IBM. So they would have a large need for capital and be, you know, some notoriety or at least familiarity with European investors. That's Drew Pasquarella, who teaches finance at Cornell University. He says these companies typically have big operations in Europe, which means they rake in plenty of euros. Those companies could bring those euros back home, but they'd have to convert them to dollars and deal with a fluctuating exchange rate.

But if they issue euro bonds... You can use the European profits that are in euros to pay off the interest and principal on that European debt versus having to convert it back to U.S. dollars. Euro bonds are particularly attractive right now, thanks to the European Central Bank. The ECB has cut rates quite significantly. And by contrast, the Fed was cutting rates, and they've subsequently been on hold again.

That's Winnie Caesar, head of strategy at CreditSites. She says big American companies with good credit ratings? These companies are assessing, you know, where do I see the strongest ability to raise the amount of capital I need at the most

most attractive financing level possible. And right now, borrowing costs in Europe are almost two percentage points cheaper than in the U.S. That is a massive motivating factor right now. There can be some significant cost savings. One more factor motivating companies to issue bonds in Europe, the value of the dollar has been falling relative to the euro. One way you can hedge against that risk, of course, is borrowing in another currency. The euro is

Chris Lowe, the chief economist at FHN Financial, says companies probably want to have euros in the bank right now. Lowe says he expects the amount of euro bonds issued by American companies to hit a record within the next few months. I'm Justin Ho for Marketplace.

This is kind of none of my business, but how do you like to get your bad news? Are you a good news, bad news person? Maybe lessen the sting with something a little bit upbeat? Or do you like to get it straight, short and to the point? Or maybe instead with an explanation of why the news got so bad? I ask because businesses in this economy are trying to figure out how to give their customers some bad news that thanks to the president's tariffs, prices are going to be going up.

Marketplace's Matt Levin talked to some business owners about the art and science of tariff talk.

Your inbox over the past month has probably been filled with emails like these. To our up-a-baby family. They make strollers and car seats. As parents who care deeply about the future, we believe in being open and honest. Like many of you, we've been closely following the tariff news. Here's one from Room and Board. Hello. In recent weeks, we've heard questions from many of you about how and when tariffs might impact furniture prices.

Or this email from a small audio gear maker in Massachusetts that goes by the name Outlaw Audio. Let's cut to the chase. You've seen the headlines about companies preemptively increasing prices thanks to tariffs. We're here to remind you that we are not jacking up the price on gear that's already on our shelves. That's not the Outlaw way.

I've read dozens of messages like these, and to be honest, the heartfelt appeals from company founders, they sometimes fall flat. But it does help if the founder has a delightful Scottish accent. I want you to know we're not simply going to pass through these costs to you without a fight.

That's from a video Corrine Tomlinson made for her customers. She's founder of The Wooly Thistle, an online yarn shop based in New Hampshire that specializes in imported wool, mostly from Europe. Here's more from the video. We're being thoughtful and are trying to find where we can make savings to help soften the blow. When she tells customers her company and suppliers and distributors will eat as much of the tariff costs as they can, it's all very reassuring and calm.

which is not how she was feeling inside. I felt like I could cry, and I didn't. I think there was one point where my voice went a little bit, but I was feeling all the feels. I mean, you know, it's been hard. I mean, it's just been hard. Tomlinson didn't want her tariff video to be the source of any stress. Her customers had enough of that.

Knitting and, you know, being with your friends from knitting, you know, you don't necessarily want to be talking about politics there all the time or the price of yarn or anything. You want to go and take a break from real life. If you're a business that relies on Chinese imports, though, it's hard to avoid politics. OK, so here's a mean one. Jacob Sandowski is co-founder of Super Cubes. They make accessories for freezing leftovers.

You should quit making your products in China. He's reading a response to the email he sent out about raising prices. Don't whine about tariffs when it's your fault for making your crap in China. It's disgusting and I will never buy your product ever. Losers.

Sandowski says the positive responses far outnumbered the mean ones. Supercube sales were four times higher the day the company's email went out compared to the day before. And that's without any tariffs are coming by now subject line or tariff 2025 discount code promotion. While other companies have gone that route, Sandowski says he didn't really think about imploring customers to buy his non-tariffed inventory. I don't know. It just kind of felt icky to me.

You know, our goal is to ride it out and see maybe the tariffs going to go down. If the tariffs remain where they're at, Sandowski says the price of a SuperCube tray may go up from 20 bucks to 25 bucks. That'll hurt sales, but most customers can probably swallow it. Matthew Hassett at the sleep tech company Lofty knows most of his customers won't be able to suppress their gag reflex.

So we just raised the price on our lofty lamp from $275 to $450.

It's a big jump. The lofty lamp is made in China. It emits customizable colors and sounds that are supposed to help your circadian rhythm. Aside from telling customers they probably should buy before the tariffs kick in, he's given up on trying to make the price hike palatable. I'm resigned to just not selling a lot of lamps during this time. He's planning on adding a sign-up option for customers to be notified if and when the tariffs are reduced and he can bring down the price of the lamp.

Although he feels like that news will travel pretty quickly anyway. I'm Matt Levin for Marketplace.

A little more than seven months ago, Hurricane Helene swept through much of the southeast, hitting western North Carolina particularly hard. We've been talking to a couple of business owners there in the time since as they start to build back. And that recovery has taken a long time. But when things finally do start to happen, they are something to talk about. Here's our latest update from Hannah Berniske. She owns Cold Mountain Art Collective. That's a pottery studio and art gallery in Canton, North Carolina.

We officially reopened on April 19th. That morning I got here, opened the doors, turned the lights on, and it felt so comfortable and familiar like I'd never left.

I posted flood marking plaques on the outside of the building for the four floods that we know this building has had. That way people could really visually see and recognize what this building has been through and what we had to go through just to reopen. It was a record day of sales. Better than any holiday shopping event.

better than anything and it was just so exciting to be able to tell artists what pieces of theirs sold and like watch their joy and their triumph as well it was just wonderful

So there's a few minor details that I'm still working on. I'm still getting supplies for the studio since our major supplier that was local officially closed and won't be returning. They got damaged during the flood also. So we're kind of trying to resource some materials for the studio. But for the most part, I would say we're like 95% done. It's just little small things here and there. As a ceramic artist sitting down for the first time at my pottery wheel and throwing it around

It's a feeling I'll never take for granted again. It was just the best knowing that I could finally create again after seven months of not being able to. And so creating my own wares and what I make is a large portion of our sales. And so finally getting to do that feels like a huge weight and like I can breathe again. I mean, this is just my dream business. There's

There's no other place I want to be. And so actually being able to be here again, I'm not going to choke up. It's all I could ever hope for. She didn't choke up. I did a little bit. Do what you love, gang. Had Mernisky, owner of Cold Mountain Art Collective in Canton, North Carolina.

This final note on the way out today in which you can actually see the economic slowdown coming. As port officials here in Los Angeles predicted last month, the number of docked vessels this week down in the ports off 44 percent from the same week a year ago. And you don't have to be an economist to understand that what happens in California ain't going to stay in California.

Our media production team includes Brian Allison, Jake Cherry, Jessen Duller, Drew Jostat, Gary O'Keefe, Charlton Thorpe, Juan Calasurado, and Becca Weinman. Jeff Peters is the manager of media production. And I'm Kyle Risdahl. We will see you tomorrow, everybody. This is APM. Hi, this is Julie from Centennial, Colorado. I listen to Marketplace on my drive home from all my three to midnight ER shifts. Kai and the gang keep me awake and interested for my 30-minute drive.

For someone not in the financial field, it's a fantastic synopsis of all things business and economics. I love the commitment to showcasing a steady stream of brilliant and articulate women who are experts in their field. Join me in supporting Marketplace with a gift today. Go to marketplace.org slash donate.