How are companies handling tariffs? Exactly like we predicted
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Hey everybody, I'm Kyle Rizzo. Welcome back to Make Me Smart, where we make today make sense.

I'm Kimberly Adams. Thank you for joining us on this Monday, May the 5th. We've got news and smiles on deck today, starting with the news. Mr. Rizdal, what you got? So mine is, I saw this on the socials and it just, it crystallized really, well, it's not true. I already knew this was all true, but it sort of validated, I suppose. Anyway, a survey out from the Dallas Fed, Federal Reserve Bank of Dallas, a bunch of economists doing lots of good research there. And they put a survey out, uh,

about what firms are doing in response to higher tariffs. And the number one going away thing that firms are doing, manufacturing in particular, but also services sector firms, the number one thing they're doing, anyone? Anyone? Kimberly Adams? Anyone? Yeah.

Let me guess. Raising prices. Yes. Passing cost increases through to consumers. That is the number one answer. Now, the very bottom of the chart, though, and this is the really interesting thing. And oh, my God, I can't believe we still have to keep on doing this. The bottom answer, relocating production or services to the United States.

And that's the whole rationale for the president of the United States driving the economy into the ditch is we're going to get everybody to come back here, revitalize American manufacturing and create jobs. And in the Dallas Fed survey, ain't nobody doing that. That's not true. Three percent of services companies and 11 percent of manufacturing companies. So, I mean, come on.

So I was on WNYC's Brian Lehrer show this morning talking trade and tariffs. And they do a call-in where people can call in and, like, share their examples of, like, what's been going on. And there was a guy who called in who owns, like, a bow tie shop in—

in, I think, Brooklyn or something like that. And he told this story about how when he was starting up his business, he was looking for these particular clasps to use the bow tie, looked all over, couldn't find a U.S. manufacturer to work with him, found a company in Hong Kong, has had a really great working relationship with them for years.

Went to go pick up, get his shipment, which usually gets delivered to him. And they called him and told him to go pick it up at JFK. And it was like three times as expensive because it had come in after the tariffs had kicked in.

And he said that he was actually going to eat the cost, at least for the time being, rather than like pass it off to consumers. But it was such a good example because he was saying that the cost now is equivalent to what it would have been, what it would be to have a U.S. manufacturer make these things for him. But I wonder if, and we didn't have enough time to get into it,

Would he have started his business and would his product have been successful if he had had to pay those prices from the start? Right. Because every business thinks about like their startup costs and the cost of maintaining the business. And it's one thing for somebody to say, OK, I'm going to eat this cost for now. But is that sustainable for the business model that you've built? Right. Because it's one thing to pass on.

these higher prices to consumers, but then at one point, at what point does that make your product unappealing to consumers? Right. In which case you don't have a business anymore. Yep. Totally. Yeah. It's just, anyway, what do you got?

I have this story from the Department of Homeland Security, which has announced a new program to encourage people to self-deport. It includes a self-deport stipend of $1,000 plus travel assistance, which is like not specifically defined, to encourage people to self-deport. Now,

This was interesting to me for a variety of reasons. It is in this press release. It also highlights how much it's been costing the federal government to deport people and the price tag they put on it. The average cost to arrest, detain and remove an illegal alien is $17,121. Obviously, a cold hard number on something that's very emotional and often, as we've seen, being done illegally in many cases.

But this reminded me of a report that came out back in October from the American Immigration Council when Trump was still campaigning on mass deportations. And one of the things that they laid out was I'm just going to read this.

In total, we find that the cost of a one-time mass deportation operation aimed at both those populations, which are people who are long-term here illegally and also had come over recently, would cost an estimated total of at least $3.

$315 billion. This figure is a highly conservative estimate. It does not take into account the long-term costs of sustained mass deportation operations and the incalculable additional costs necessary to acquire the institutional capacity to remove over 13 million people in a short period of time. This plan has never been financially workable.

And we heard Trump in the Oval Office talking about, well, we can't have all of these people having, you know, trials, even though the Constitution requires it. But...

The rhetoric around this has never fully accounted for the cost. And, you know, they were talking at the beginning about sending people to Guantanamo Bay, and guess what? It was crazy expensive. And so they dialed it back. I will be interested to see how successful this program is. I think a lot of people are probably going to take advantage because the...

fear is so high and the consequences and the way that people are being kind of rounded up and disappeared and sent off places. I imagine a lot of folks will take advantage, but it just is wild that the financial costs were never seriously discussed by anybody in this administration until they needed it as a talking point in this press release. Wild, but not shocking, right?

Of course. All right. Okay. Of course. All right. Let's get some smiles, Jess. All right. What do you got?

I'm usually not a fan of like award shows. Like I'll watch the red carpet photos afterwards just to like see. But I am very excited about the Met Gala this year and the exhibition of black dandyism and the black style. But I saw this lovely story in the Associated Press that some of these designers that are being highlighted in the actual art exhibition that goes along with the gala is amazing.

are like up and coming designers and getting their first opportunity to have such a huge platform. And in an interesting little data point, um,

They said that the Met CEO, Max Holling, announced that the gala has raised a record $31 million. The first time the fundraiser for the museum's costume institute has crossed the $30 million mark and eclipsing last year's haul of more than $26 million. And I know that the fundraising part of it is an afterthought to sort of the celebrities and the dinner and the fashion and whatever, but I think

that's great that they're actually raising money and to highlight some cool designers. The Associated Press has some really

Great photos of some of the exhibits and a nice write-up about some of these designers. So that made me smile. Yeah, there was a great interview this morning, Michelle Martin and Ruth Carter on Morning Edition. Yes, who did the Black Panther costumes. Right, she's the first black woman to win the Oscar for, it's not costumes, it's like something, I forget what it's called. But that's, you know, that's the general subject matter. Yeah, it was really cool. It was a good interview. Good interview. Yeah, I enjoyed that. All right, so mine is, we all know the President of the United States wants to reopen Alcatraz, right? Yeah.

It is not unreasonable to believe that he got that idea because public television in South Florida last night was broadcasting Escape from Alcatraz with Clint Eastwood. No. Yeah. I understand the correlation is not causation, but those two things happened on the same night. WLRN shows that movie and the president of the United States, who was in South Florida last night, tweets it out. I'm just saying it's not outside the realm of possibility.

Oh, this is not my original idea. It was it's been on the socials this morning. But but holy cow. How about that? You just have to. I love that. I do. I do. But I don't. Right. Right. Right. Because it sort of lives here with the Hollywood 100 percent tariffs on movies like because you think there's freaking Betamax coming in on cargo ships and VHS tapes and all. Right. I mean, come on.

I mean, it's an interesting intellectual exercise about how you tariff services compared to how you tariff goods. But this ain't that. No, it's not. Yeah.

It's a stream of consciousness tariffs. Yeah. How about that? There you go. All right. That's it for today. Kai is going to be out tomorrow, but we're going to have Amy Scott. She's going to join me for a deep dive into the future of clean energy and the clean energy economy, particularly as the Trump administration tries to pull funding for climate programs and renewables. Obviously, Amy is the expert on this, doing how we survive. So you don't want to miss it. Hmm.

Make Me Smart is produced by Courtney Bergseeker. Our intern is Zoha Malik. Today's program was engineered by Jessen Doolin. Marissa Cabrera is our senior producer. Bridget Bodner is the director of podcast. And Francesca Levy is the executive director of digital. That's the first time a Make Me Smile has made me guffaw in a while. You were guffawing. That was a legit freaking ROFL, man.

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