Marketplace - Reminder: Tariffs are taxes.

Episode Date: April 3, 2025

Uncertainty about tariffs and trade policy has been top of mind since President Donald Trump’s election in November. We finally know how high those tariffs will be (between 10% and 54%) and to which countries they’ll apply (almost all of them). Now, a key question is: How much will prices rise? In this episode, business owners prep for the costs and some economists predict an economic downturn. Plus: The administration wants the IRS to share undocumented immigrants’ protected information with Homeland Security.

Just a reminder, tariffs are taxes. And if the markets today were any indication, this round is going to show up all over the economy. From American Public Media, this is Marketplace. In Washington, D.C., I'm Kimberly Adams in for Kai Rizdal. It's Thursday, April 3rd. Good to have you with us. We now have a pretty good idea of what President Trump's latest round of tariffs look like. And the rates are much higher than many on Wall Street were expecting, leading to a massive

sell-off today. Tariffs of 10% across the board on most imports, and then much higher than that depending on the country shipping stuff to us. Now, just a year ago, the average import tax for goods coming into the U.S. was 2.5%. Now, it's up to 22.5%, according to Fitch Ratings, the highest in more than 100 years. So now that we have these numbers, what does that mean for all of us? Marketplace's Sabri Benashour has that one. For some businesses, tariffs were already hitting. Eugene Jen is a partner at Genesis Group, a family-owned home builder in New York.

We placed an order for specialty stainless steel from the time that we first quoted the job back in February to now. My vendor told me they increased the price to 277%. I actually did the math. Homebuilders expect construction prices to go up by more than $9,000 per single-family home, according to the National Association of Homebuilders. Robert Dietz is chief economist there.

It's due to tariffs on building materials like nails and screws that come from Asia, as well as appliances. But the latest tariffs are so broad-based, they're going to show up way beyond just home prices. John Gold is with the National Retail Federation. These tariffs apply to pretty much everything that you see in a retail store. Goods from several Asian countries got the highest tariffs, 54% in some cases, and that's where we'll get the most sticker shock, says Kylie Coyue, a vice president at Jeffries Bank.

Consumer electronics, those are definitely exposed. Footwear as well as apparel is highly exposed. Anything kind of with a textile, as well as toys and games, and even some parts of furniture. Coyue says retailers will try to convince suppliers to help eat some of the cost, but a lot of the goods arriving now were ordered up to a year ago. Negotiation time is long gone, leaving retailers holding the bag and less able to shield consumers. Again, John Gold with the National Retail Federation.

Now companies are going to have to scramble to come up with the cash and folks don't have time right now to react and shift their supply chains and sourcing if they're even able to. UBS economists now predict inflation will soar to 4.4% this year and stay above 4% the following year. Deutsche Bank economists now say real GDP growth could fall below 1% this year, at which point the economy tips perilously close to recession. The unemployment rate, they predict, will rise to up to 5% just this year. In New York, I'm Sabrie Benishur for Marketplace.

SABRIE So given what we know about the tariffs, businesses are just starting to attempt to figure out what all this means for them. So Marketplace's Justin Ho called up a couple of small businesses to find out what they're thinking right now. Justin Ho Over the past 24 hours or so, Pat Whalen, president of the grocery store Sahadees in Brooklyn, says he's been feeling a tad regretful that he didn't do more to get ahead of the tariffs. Maybe I should have pre-ordered some product and stocked up on inventory and got some stuff in here

before the shoe dropped. But Whalen says on the other hand, there's not much he could have done. After all, imported food has a shelf life. Take olive oil, for example. Once you press it, the clock starts ticking. So you want to turn that stuff. You don't want it to be sitting in the warehouse for nine months and oxidizing and degrading. Waylon says it's hard to make any plans right now because he still doesn't know how his products will be affected.

All right. So you have some clarity on what the tariffs are. Does that mean it's going to change in two months? I don't know. In South Carolina, Katherine Reynolds, who handles imports for Palmetto tile distributors, says she's expecting to learn how her products will be affected in the coming days. Currently, I have three containers about to hit port. So I'm waiting to see what happens there if I see a jump in my duty fees or anything like

that. Whatever happens, Reynolds says she already has a game plan. She'll simply tack on a tariff surcharge to her prices, just like she did during the pandemic when supply chains were congested. I just keep changing what we're calling it. It's like, okay, this is the increase for now and this is just the label we're going to put on it. Reynolds says over the last few years, her customers have been willing to pay up.

I'm Justin Ho for Marketplace. Wall Street today, well, let's just say the markets did not take the tariff news particularly well. We'll have the details when we do down our current addresses, our income, our employer, the names of our children, and we send all that information to the federal government, trusting, with good reason, that the information we give to the government won't be used against us, at least for non-tax purposes. And for now, the laws in this country

and the courts that uphold those laws protect the privacy of that data, even if you're an undocumented immigrant. But the Trump administration is looking to change that, challenging a decades-long firewall around taxpayer data. And a couple of weeks ago, the Washington Post reported on a plan to share IRS data with immigration officials to carry out deportations. Marketplace's Elizabeth Troval looked at what this means for immigrant taxpayers and the firewall that protects all of our tax data.

It's here at the roller rink in Discovery Green Park in downtown Houston, where Frida Adame would help her mom earn some cash in the winter time when the outdoor rink was for ice skating. My mom used to stand in that corner right over there selling trinket lights. So I used to stand right in that corner and sing lights, lights, $5, I'm not kidding. That was 12 years ago. And so I started to be around the rink so often

that the operations manager was like, Frida, you're always here. Why don't you just work? Of course, he didn't know that I didn't have a legal documentation to work. Adame was eligible for DACA, so a security guard at the rink gave her the money to pay for her application fee. She got a work permit and temporary protection

from deportation under the program. I started to get my new job with my social because I do get a social security through DACA. I started filing my own taxes. She worked her way up at the rink, from skate attendant to now project manager for the company that runs this rink and many others across the country.

This year, I believe I had to pay back $2,500 back. To the IRS. That's in addition to what was taken out of her paycheck. These are taxes she pays even though she's not eligible for benefits like federally funded Medicaid or Social Security. Millions of undocumented immigrants pay taxes every year, including DACA recipients like Adame. And the confidentiality of the addresses and other personal data submitted to the IRS by all taxpayers, including undocumented immigrants, is protected by Section 6103 of U.S. Code, says UC Davis Law Professor Shaiak Sarkar. And that allows for people to now provide the IRS detailed information on their income

and on themselves without concern that it will be shared with other people, agencies, congressional committees, except under the narrowest of circumstances. But even though taxpayer privacy provisions are strong... As with other unprecedented actions, it's going to require the courts to assert the importance of Congress's will in the statute. The historic firewall around tax data has encouraged anxious immigrant families to comply with their legal obligation to file taxes.

Jackie Vimo with Montclair State University has helped those families for decades. I have told people to their faces, told their families, in presence of their children and their spouses, that their information is absolutely safe. VIMO's not making the same assurances this year. Frankly, I can't in good conscience, you know, advise people that it's safe to file their taxes anymore. It's a catch-22, says Ana Guajardo, executive director at the Centro de Trabajadores Unidos Worker Center in Illinois, a plaintiff in a lawsuit filed last month to prevent the IRS from sharing data about undocumented immigrants. You're trying to force people to be in a situation where they're not obeying the laws that they're

trying to follow, and then later you want to find ways that you're going to deport them through not following them. She expects any move to share data with the Department of Homeland Security will discourage immigrants from filing taxes. And the Cato Institute's Alex Narasta says it's a puzzling move if you consider the fiscal implications. Reducing the amount of taxpayers paying into those programs who are not going to receive benefits is a really foolish thing to do. And Frida Adame, who first filed taxes at the Houston ice rink, thinks most immigrants will continue to file their taxes anyway. We're not looking for a free ride. We're looking to do things right. The IRS and DHS did not respond to requests

for comment on this story. I'm Elizabeth Tro costs for small businesses. But for some retailers, costs are already high. Take record stores, for example. An analysis from Billboard found that from 2017 to 2023, vinyl inflation outpaced overall inflation. That leads me to the latest from one of our retail regulars, Philip Rollins, who runs the record and comic book shop

Offbeat in Jackson, Mississippi. He gave us this update. Things are going surprisingly smooth for me. And it's almost scary to a point. Last year I started implementing more comics. So I got more single issues than I've ever had. And I have regulars. So I have about, I have almost 40 people that just described to comic books here

at the shop and those 40 people buy comics every month. I just checked last week on my sales and last week comics barely beat out sales for records. So it's like a balance now in the shop. Prices have just gone up so high and one album is like $10 or $15 more than it was five years ago. And it's going to go up even more due to the tariffs because most of the paper stuff comes from Canada. So I'm kind of harkening on a lot of the pre-love stuff more so than the newer records because

I can sell them at a lower price point. If they're in good condition, they're just as good. Since December, I've just been buying collections, so people have been bringing them in, in collections. So I was like, okay, I need to have as much as possible. Now I'm at the point where it's like, I have so much, I'm doing the one thing I said I wasn't going to do, but I'm doing it now just to do it. And I have a dollar bands and people are like picking them up. So I'm like, okay, cool. This gets it out the store. They're getting what, you know, they're looking for or discovering new music, which is, you know,

kind of the point of dollar band records. It Records. It's actually some good stuff in there. The biggest challenge that I'm facing right now, honestly right now, is just time management. Trying not to burn myself on both ends of the candle too much, so to speak. I took a break yesterday and I said, okay, I'm going to go see my favorite basketball team play in Memphis. So I got to go see the Celtics. I've never been to a pro basketball game, so I took the time to do that and got all my work

I needed to get done earlier that morning and saw them win. So I was like, okay, cool, I feel good. I hope to see continued growth within the next couple of months. Summers are always hard, but I think it'll be a little bit easier, especially with the movies that are coming out with Superman and Fantastic Four. I'm confident sales will continue to, if not rise, be a stable position

to where we can stay in business. Philip Rollins, owner of the Comic and Record Store, Offbeat in downtown Jackson, Mississippi. Coming up. Players have objectives, they have skills and they interact with one another to win. Strategies for the game of life. But first, let's do the numbers. Yeah, no doubts about the music today. Overall, the stock market had its biggest decline in value since March of 2020, the early days of the pandemic.

The Dow Jones Industrial Average plunged 1,679.6% to finish at 16,550 and the S&P 500 fell 274.5% to end at 53.96. But not all stocks tanked today. So to make a Coca-Cola rose 2.6%, Colgate-Palmolive foamed up 2.6%. Semiconductors may be exempt from tariffs, but that's not true for many of the products that use them. Apple was down 9-2%. Texas Instruments lost 7-9%. Toy companies are facing tariffs in Malaysia, Indonesia, and Thailand.

Hasbro fell 12-3%. Mattel lost 16 and six-tenths percent. Bonds rose. The yield on the 10-year T-note fell to 4.03 percent. Enjoy listening to Marketplace. This is Marketplace. I'm Kimberly Adams. We've talked about tariffs plenty in the context of manufacturing and consumer goods, you know, the stuff people buy. But what about that much larger chunk of the U.S. economy? Services.

Growth in the service sector declined in March compared to the month before. That's according to a report out today from the Institute for Supply Management. The report showed the slowest growth for services since last June. That's in part because business leaders were concerned about, of course, tariffs. To explain, Daniel Ackerman took a tour of the services sector. Let's start with tech. Software services aren't subject to tariffs, but they will be affected, says Dan Ives, a tech analyst at Wedbush Securities. It's about the recessionary and the global growth fears weighing on them.

Take digital advertising. When the cost of the stuff in the ads goes up, people buy less of it. If you cannibalize 10 to 15 percent of demand, that could cut digital advertising for Meta, Google, other players in social media. Next there's food service. Rich Schenck is with the consulting firm Technomic. He says restaurant owners are feeling okay right now, in part because their ingredients are more substitutable than, say, a clothing retailer's. If you run a burger joint and your imported patties get more expensive,

You can make swaps on your cheeses or your lettuce. You might be able to soften the blow a little bit. Then there are bigger ticket services. Jan Freytag is a travel analyst with the CoStar Group. He says international travelers put off by the whole trade war thing might just not come here at all. We've already seen some of that close to the Canadian border, where room demand has actually declined.

He says domestic travel could slump too, because it's a nice-to-have service, and tariffs could raise the cost of must-have items like food and fuel. That then eats into people's discretionary spending. He says that doesn't bode well for the hotel industry heading into the summer travel season. I'm Daniel Ackerman for Marketplace. Economic uncertainty, like we're living through right now, can make regular purchasing decisions challenging. Economic uncertainty, like we're living through right now, can make regular purchasing decisions challenging.

Even more so, decisions around big life moments. Think changing your job, buying a house, deciding when or if to get married. These choices have major consequences on our lives and finances. So can a better understanding of economic theory help us make better life choices? Darrell Fairweather is chief economist at Redfin and author of the new book, Hate the Game, Economic Cheat Codes for Life, Love and Work, which comes out next week. Darrell, welcome to the program. Hi, thank you for having me.

I chuckled when I saw the title of your book because obviously it's a play on the don't hate the player, hate the game idea. But why should people be thinking about economics and a lot of these decisions in our lives as games that you can apply economic principles to? Well, the way that economists view different scenarios like an interaction between an employee and a boss or an interaction between a home seller and a home buyer is similar to the way that board games or video games work where players have objectives, they have skills and they interact with one another to win.

But also I think it can help people overcome some of the anxiety they have about achieving their goals in their career or their life because seeing it as a game, I think it can help people overcome some of the anxiety they have about achieving their goals in their career or their life. Because seeing it as a game, I think just takes the pressure off and I think it gives you more agency to just find a winning strategy. You write a lot about sort of using these concepts of economics and game theory and strategizing how you play various games. And a big part of that is what information you have versus what information the other parties

in any kind of negotiation have. And you use a really interesting example in the book about job hunting and gamifying that experience to have the most edge. Can you talk about the decision that you made about how you set up your resume? So my name is Darryl Fairweather, which is a gender ambiguous name and also kind of a racially ambiguous name. Most people think about Darryl Strawberry, the famous black

baseball player, a man, or Darryl Hannah, the white woman actress. So depending on how people interpret my gender, it also dictates how they interpret my race. My middle name is Rose. So if I want people to know that I'm a woman, I include my middle name, Daryl Rose Fairweather. But I know it also makes people less likely to think of me as black, even though I am biracial and black. So when I submitted my resume last time I was applying for a job, I included Daryl Rose Fairweather to signal that because the economic research shows that white women are more likely to be called back for interviews

than black men. So I use that information to help give myself a little bit of an edge, even though, you know, it is an unfortunate thing that I did to have to kind of manipulate how people perceive my race and gender. You use a lot of pop culture references in this book to demonstrate how these economic games play out in real life. And you use a lot of examples from Destiny's Child and their breakup.

It comes from up many times throughout the book. Can you give us a rundown of how that breakup went down and why it resonated with you so much that it ends up scattered throughout your book on sort of how economics play into regular life? Well, I love Beyonce. I consider myself a member of the Beehive, but the Destiny's Child example stuck with me.

It was, I think, the most salient example of a negotiation gone wrong where back when Destiny's Child was early in their careers, they were a four-member group with Beyonce, Kelly, Latavia, and Latoya. But Latavia and Latoya started to feel like they were being not as appreciated as Beyonce. They thought that it was their management. Beyonce's dad, Matthew Knowles, was their manager and getting Beyonce preferential treatment. So they came to the group and issued an ultimatum that it was either them or Matthew Knowles, the manager. And I think they thought that

given that they were early in their career, you know, the top priority would be keeping the group together. But I think what they misunderstood was what the actual goals were of Matthew and perhaps Beyonce, that Beyonce was the star and that the group would survive without them. And that, I think is something that I related to, especially, you know, early in my career, I thought that my value was my potential. But I came to realize that my employer valued me because I would work hard and work long hours.

And once I realized that, it made me understand that I needed to find a new job opportunity in order to get the career that I really wanted. Nicole Sadegol-Klaas You say at the end of the book that you titled it Hate the Game because you don't want people hating themselves for playing the game of capitalism in its current unfair form because it's kind of what we've got, but playing to win doesn't necessarily make you complicit in the system's flaws. And I think that's something a lot of people really struggle with. Like you can see the problems in this economy, but at the same time, you still kind of have to work within it if you're going to be individually successful.

How do you encourage people to navigate that? Well, I think that capitalism or the current form of capitalism that we have is unfair. It does reward people who already have wealth, who already have connections. And going from the bottom to the top is incredibly challenging. But I think that just having like an understanding of economics, understanding your place in the economy, understanding at a very micro level how negotiations will go or how asking for a promotion might turn out for you can help you just move through the economy faster and get to where you want to be faster. And I think holding on to your own values, your own vision of where you want

to be is really important in terms of not letting capitalism change you. I think a lot of people, they get caught up and playing the career game and then that's all they know how to play when there are other games out there to play like the family game or traveling, if that's what you're into whatever it is that you Are working towards making sure you hold on to it Daryl fairweather is the chief economist at redfin an author of the new book hate the game economic cheat codes for life Love and work. Thank you so much. Thank you for having me Thank you for having me. Too much tariff news for a final note today.

John Buckley, John Gordon, Noya Carr, Diantha Parker, Amanda Peacher, and Stephanie Sieck are the Marketplace editing staff. Amir Babawi is the managing editor. And I'm Kimberly Adams. We'll see you tomorrow, everybody. This is APM. I want to take a moment to thank everybody who contributed to our March fundraiser. It means so much to know that we have your support. It means that millions of listeners can keep

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