Who pays when tariffs make things more expensive?
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Who pays when tariffs make things more expensive to buy? I'm David Brancaccio in Los Angeles. The Trump administration hopes tariffs encourage made in America. Tariffs might also raise money for the U.S. Treasury to help offset planned tax cuts. Among the costs, people pay more for things, some more than others. Marketplace's Nancy Marshall-Genzer reports.

President Trump's tariffs are meant to boost manufacturing and create jobs in the U.S., but economists say importers will pass the cost of import taxes on to consumers. The Institute on Taxation and Economic Policy, a progressive think tank, looked at what would happen next year if

current tariffs were still in effect. That is, an across-the-board tax of 10% on products from most countries, a 25% tariff on specific goods from many countries, and a 145% tax on most imports from China.

The report found the poorest Americans with incomes of less than $29,000 a year would have to spend around 6% more of their incomes because of higher prices from the tariffs. Middle-income consumers would pay out 5% more, but the richest Americans would only spend 1.7% more. This is because low-income consumers spend a higher proportion of their paychecks on necessities than wealthy families do.

I'm Nancy Marshall-Genzer for Marketplace. By one analysis now, the economy of the state of California is the fourth largest in the world, bigger than the country of Japan. California's Governor Gavin Newsom is touting this. Biggest state for agriculture, California. Biggest state for tech, entertainment. But overall, California, is it really fourth or is it fifth and does that matter? Here's Marketplace's Nova Safo.

When it comes to global economies, there are two powerhouses. The U.S. economy is worth nearly $30 trillion, China around $19 trillion. And then there's everyone else. And in that context, yes, California did edge out Japan for all of 2024 with a gross domestic product of $4.1 trillion, slightly above Japan's $4 trillion. Those totals don't account for inflation, so take them with a grain of salt.

Nevertheless, the point California's governor is making is that the state is a giant economy. And it's a point he made last week when the state sued the Trump administration over tariffs, arguing they hurt all sorts of industries within its borders, from manufacturing to agricultural products it exports overseas.

By the way, according to the same measure California used to calculate its fourth-place global ranking, it's possible the state has already slipped back to fifth place, as Japan's latest economic projections are looking a bit stronger. I'm Novosafo for Marketplace.

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America's central bank, the Federal Reserve, is set up to be independent from politicians. But last week and early this week, President Trump suggested he wanted to oust Fed Chair Jerome Powell, something Powell says would be illegal. The president wants interest rates lower, which can stimulate the economy but can also spark inflation if done wrong. When financial markets recoiled, Trump said he would not fire Powell but has kept at him.

Other parts of the government are also thought to have some insulation from the White House. The Supreme Court has allowed for now Trump's firing of two high-ranking people from the National Labor Relations Board. The firings mean there's not a quorum to make decisions. For more about executive power, starting with that labor board, let's turn to Elizabeth Wilkins, president and CEO of the Roosevelt Institute, a liberal-leaning think tank. Welcome. Elizabeth Wilkins

Pleasure to be here. So this is not a slam dunk for the administration. I mean, typically they can appoint and de-appoint in many cases parts of the executive branch. NLRB is different. It's independent in a sense. That's right. There is a 90-year-old legal president called Humphrey's executor that says, no, the president may not fire one of these commissioners for any reason that they want. They have to have cause.

The administration is very focused on testing that precedent. Now, President Trump got a lot of support from members of labor unions and styles himself as pro-labor. But as you view the administration's stance toward the NLRB, you would see it differently. That is absolutely correct. I think one of the things we have to think about is whether we are seeing those promises being kept or broken.

And here we have the administration both stripping the commission of some of its most enthusiastic enforcers on the commission and also entertaining arguments. We just saw a coalition of employers filing a petition with Attorney General Pam Bondi to roll back sanctions.

16 decisions that protect workers' rights to unionize. So I think we are watching in real time the administration walk back on its promises. And it's not just those four letters, NLRB. There's a lot of other letters where you're seeing the administration try to test the boundaries of how much control they can exert. That's exactly right. We saw the same playbook with the Federal Trade Commission a few weeks ago,

The administration illegally fired the two Democratic commissioners, Commissioner Bedoya and Commissioner Slaughter. Same move. The Federal Trade Commission protects workers, small businesses, and consumers when they can't protect themselves from concentrated corporate power. And here we are again watching the administration make sure that they can exercise unwielding power over the Federal Trade Commission in the way that it regulates the economy.

Another three-year SEC, Securities and Exchange Commission, certainly very focused on the great titans of industry working on Wall Street. But also there is a consumer element to the SEC's work. That's exactly right. I would say we are watching a very concerted effort to deregulate core pieces of the economy. I just want to point out one other entity that would be affected by a decision, the Federal Reserve Commission.

If we watch the Supreme Court side with the administration in the NLRB case or the Federal Trade Commission case, I think we will really see the independence of the Federal Reserve questioned as well. And that's a really scary prospect. Elizabeth Wilkins is president and CEO of the Roosevelt Institute. It's a nonpartisan nonprofit that focuses on the economy and democracy. Ms. Wilkins, thank you so much. Thank you. And in Los Angeles, I'm David Brancaccio. This is the Marketplace Morning Report.

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