November 19, 2025 • 30 mins
On this week’s episode of Trumponomics, host Stephanie Flanders, Bloomberg’s head of government and economics, dives into what she calls “the curious case of the everywhere, nowhere tariffs.”
Since President Donald Trump’s return to the White House, his sweeping new trade levies—pitched as a way to “liberate” the US economy—have dominated headlines and whipsawed markets. But where are the real effects? Flanders is joined by Anna Wong, Bloomberg Economics’ chief US economist, and Brad Setser, senior fellow at the Council on Foreign Relations, to untangle who’s actually paying for these tariffs, how they have affected the US economy so far, and whether there’s any evidence they’re accomplishing any of Trump’s stated goals.
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Episode Transcript
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Speaker 1 (00:00):
Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2 (00:13):
I'm Stephanie Flanders, head of Government and Economics at Bloomberg,
and this is Trumppernomics, the podcast that looks at the
economic world of Donald Trump, how he's already shaped the
global economy, what on earth is going to happen next?
This week, we're investigating the curious case of the everywhere
(00:34):
nowhere tariffs. For as long as Donald Trump has been
back in the White House, everybody has been talking about
his tariffs, and never more than on April second, when
he announced he was liberating the US economy by slapping
hefty trade levees on pretty much all of America's trading partners.
Since then, we've talked about the level of the tariffs,
the negotiations over bringing them down. Politicians and consumers have
(00:58):
also talked about how they are added to inflation, especially
in all those big arguments about affordability and the cost
of living before and after the recent US off year elections.
The President recently has himself seemed to admit that tariffs
on some key food products like beef and coffee were
pushing up costs for households, and he wanted to cut
(01:18):
them We've also waited to see how tariffs might hit
jobs and profits for American companies. But amid all this talk,
we've not seen a lot of real evidence of where
exactly the tariffs were hurting, and with the stock market
still booming, we've not heard many businesses admit that tariffs
were affecting their bottom line, though, as you'll hear later,
(01:39):
recent GDP revisions do suggest that US profits in the
second quarter of this year did fall off a cliff.
So who has paid for the tariffs, how have they
affected the US economy, and what's the evidence that they're
accomplishing any or all of the President's objectives, notably cutting
the trade deficit with China. They're the riddles we're hoping
(02:03):
to solve on today's show, and we've got two great
detectives to help us get to the bottom of it.
Senior fellow at the Council on Foreign Relations Brad Setzer
my old friend. He's an expert on global trade and
capital flows, and his regular blog on the CFL page
is called Follow the Money. We worked together approximately half
a million years ago, and unlike me, he then went
back to the US Treasury to be Deputy Assistant Secretary
(02:26):
for International Economics under President Obama. Brad, great to have
you finally on Trumponomics.
Speaker 3 (02:31):
N's pleasure, and it wasn't that one.
Speaker 2 (02:34):
We obviously both still look very youthful, but it makes
me feel old.
Speaker 3 (02:39):
The illusion.
Speaker 2 (02:41):
Also joining us as so often Anna Wong, chief US
Economists for Bloomberg Economics, and before this she worked at
the Federal Reserve, US Treasury and on so common at
the White House Council of Economic Advisors during Donald Trump's
first term.
Speaker 1 (02:55):
Anna Hi Hi, I actually also worked for a Brad
Setser under Obama intration when he was Deputy Assistant Secretary.
He's my old past.
Speaker 2 (03:10):
And let me start with you just remind us how
much the average or effective tariff rate on goods coming
into the US has gone up. You know, and we've
probably lost track of a lot of the negotiations and
where things are, but there has been a significant increase
in the level of tariffs to come into the US.
Speaker 1 (03:32):
So the effective tariff rate is roughly around fourteen point
five percent, just roughly. Administration just announced some exemptions for
food imports last Friday, so that should knock off another
point two percentage point from that. So you can say
roughly around fourteen ish percent.
Speaker 2 (03:53):
Memory, I think it was about two or three coming
into this administration, so it's a pretty significant increase. The
question I asked you last week is who is paying
for these tariffs? Where are we seeing it?
Speaker 1 (04:04):
Yeah, so we look at all the data we have,
which is import prices, and you reconstruct a tariff inclusive
import price index. We also looked at PPI, We looked
at CPI. So taking all the information together, we have
come to this breakdown. It would be about four percent
of the price cost born by foreigners, seventy percent absorbed
(04:27):
by any kind of intermediate firms in the US, and
twenty six percent absorbed by US consumers through higher prices.
Speaker 2 (04:36):
When you say it's that certain chunk of it has
been absorbed by consumers, that thirty percent we're seeing that
in prices.
Speaker 1 (04:44):
Yes, So we estimate that CPI and core PCEE inflation
is a roughly zero point three percentage point higher than
it would have been.
Speaker 3 (04:55):
Without those tariffs.
Speaker 1 (04:57):
So most of those tariffs passed through are showing up
in core goods CPI, things like house appliances, washing machines,
or audio equipment, sports equipments. Those type of things. And
in fact, that point three percentage point addition on core
CPI and core pc inflation. That's quite similar to a
(05:19):
top down model from the FED too. So at the
FED we have this back of envelope model on the
impact of tariff. So a tariff hit similar to what
we see right now in total would have pushed inflation
up by one point one percentage one roughly there. According
to the FED model, if there's one hundred percent pass through,
(05:41):
So if there's point three or roughly thirty percent of
the pass through, then that corresponds to roughly point three
percentage point edition on CPI. And that's indeed what we
have seen in the year over year increase of core
good CPI. We have seen that went from naked zero
point one percent that's year over year core good CPI
(06:05):
to now one point five percent year over year. Now
that's a one point six percentage point swing.
Speaker 2 (06:11):
And Brad just as we'll get into some of the details,
but just sort of sort of on the broad scope
of what Anna just said, that thirty percent is absorbed
by consumers, and then it looks like about sixty sixty
five percent by those kind of intermediate firms who have
to pay the tariff at the border. Is that roughly
how you would look at it.
Speaker 3 (06:32):
I mean, more or less. Yeah, I think a lot
of estimates are.
Speaker 4 (06:34):
Converging around similar numbers. You can just see from the
import price data that foreigners aren't paying it, so then
it's just a question of who's absorbing it in the
US economy. It has been a slight surprise that only
roughly a third looks like it's been passed on to consumers,
an unusually high fraction seems like it's been absorbed by
the supply chain, by intermediate importers.
Speaker 2 (06:56):
I mean, obviously, Bloomberg, we are often listening in on
earning schools when companies are announcing their results. We're tracking
profits and earning revisions, and we're also keeping an eye
on the stock market, which seems to have been doing
pretty well. And even just in this recent earning season,
I seem to remember my colleagues talking about most companies
(07:18):
actually beating their expectations on profits. Maybe you first bad,
why do you think we're not hearing so much from
companies about having to pay these having to take these
higher prices or the tariffs in their margins.
Speaker 4 (07:33):
Well, I mean sort of One of the ironies is
that the parts of the US economy that generate the superprofits,
you know, the tech sector, the pharmaceutical sector, they've been
entirely exempted from the tariffs.
Speaker 3 (07:45):
Why wouldn't Nvidia be talking.
Speaker 4 (07:46):
About it because there isn't yet a terraff chips. Why
is it not impact Advisor's bottom line? Well, there isn't
yet a tariff on pharmaceuticals, and we've had some kind
of crazy fluctuations in trade because of expected tariffs on pharmaceuticals.
But at the end of the day, the tariffs haven't
hit those sectors, and I guess in other cases you're
seeing offsetting shocks. Like a firmlike Caterpillar would normally feel
(08:10):
the impact of the steel tariffs would normally feel the
impact of higher tariffs on parts, but there's a lot
of demand for generators and for some of the equipment
used to make data centers, So you kind of end
up with offsetting shocks and don't have that clear impact
on the bottom line. That's the best I can do.
It is a bit of a mystery. It does not
feel like it's been fully passed on by consumers. We
(08:32):
know it hasn't been absorbed by importers, So it implicitly
has to be impacting someone's bottom line in those sectors
where there are tariffs.
Speaker 2 (08:41):
And what's your sense of where that? I mean, if
you're saying sixty percent is being felt somewhere by corporate America.
Is this the little guy who's finding the getting squeezed
rather than these big companies we hear on the earning schools.
Speaker 1 (08:56):
Yeah, so the stock market is not the economy. It's
very important to know that the S and P five
hundred only has about five hundred firms, but the total
US economy has about seven million firms.
Speaker 2 (09:08):
You have that on your Twitter handle, date you more
or less you know common brackets. You know the stock
market is not the economy, and of.
Speaker 1 (09:16):
Which ninety percent of those seven million firms have only
less than twenty employees. And most US firms don't export
at all either. And another very specific feature about the
stock listed companies is that in total, they generate thirty
percent of revenues from outside of the US. So offsetting
shocks include, for example, the dollar depreciation this year, and
(09:39):
that ten percent dollar depreciation had boosted the revenues form
revenues for those SMP five hundred firms.
Speaker 2 (09:47):
So their profits abroad and suddenly if you're just measuring
it in the US, they're worth more.
Speaker 3 (09:52):
Yes.
Speaker 1 (09:53):
So if you want to look at the profit situation
in the rest of America, primarily these small businesses, we
have to look to the national accounts and there you
see a pretty clear evidence of profit hit. So the
second quarter GDP corporate profit was revised down significantly from
the first estimate of roughly sixty five billion to just
(10:16):
seven billion.
Speaker 2 (10:17):
In the revised estimate, sixty five turned into seven. I
know it is in that particular bit of the national
accounts does sometimes jump around a lot, but is that
a big revision?
Speaker 3 (10:26):
That is a big revision.
Speaker 1 (10:28):
When you look at this the change of corporate profits
from the second quarter of twenty twenty five compared to
the end of twenty twenty four, you see that most
of that decline are in manufacturing sector, wholesale trade and
transportation warehousing, motor vehicles. So we are seeing at the
aggregate levels some kind of margin hits, but it's just
(10:51):
not showing up in the stock market.
Speaker 2 (10:53):
That is a very striking number that the profits having
gone down for sixty five and a half to just
down the seven billion in the second quarter, And as
you pointed out, and there's evidence that it's the wholesale sector.
And when you look a bit deeper into the numbers,
are we then likely to see if the corporate sector
as a whole, even if it's these kind of smaller
(11:14):
businesses that are a little bit below the radar, if
they're the ones who are feeling the hit, are we
going to see that in jobs? Is there an economic
impact which we're still waiting to see from that?
Speaker 1 (11:26):
Yeah, So I think we can always look at these
empirical data and then go back to the theoretical models
and think about evaluate how good or bad they are.
So going back to this FED model that internally the
Divisional of International Finance has on the impact of tariff.
In twenty eighteen, the FED staff ran assimilation on what
(11:49):
a fifteen percentage point tariff shock would do the unemployment
and the impact depends on whether the FED is looking
through the impact on prices. So I would say in
the current situation, the FED is looking through it somewhere
in between. So according to the lookthrough strategy, the unemployment
rate should be going up by about zero point three
(12:12):
two point five percentage points in the first year after
the shock, and I would say that's roughly where we are,
because when we start the year, the Wall Street consensus
for unemployment rate was about four point one at the
end of twenty twenty five, and now we're looking at
four point five. So in fact, these macro models are
(12:36):
performing okay, Brad.
Speaker 2 (12:38):
If you're looking at the kind of overall impact of
these tarerts, they've obviously been very uncertain, unpredictable, and if
we were designing a trade policy, we'd probably want the
very least. We probably want something that was a bit
more stable and followed a slightly more predictable path. But
if you just were told that the effective tariff rate
(13:01):
had gone up from three percent to around fourteen percent
over the course of six to nine months, and then
you looked at these various economic indicators that change in
the openness of the US economy, do you think it's
had a less harmful impact than we might have predicted
at the beginning of the year.
Speaker 3 (13:19):
Yeah, modestly less harmful.
Speaker 4 (13:21):
I mean, largely because businesses have absorbed so much of
the one off shock, it hasn't been all felt by consumers,
and so consumers really haven't paired back spending on other goods.
Of course, part of it is also that other things
are happening. But for the tariffs, the big increase in
spending on data centers and all the investment in AI
(13:41):
might have been propelling the US economy quite forward at
a pretty fast clip. The strong run up in the
stock market is generating a wealth effect even now, and
that is also supporting household consumption. But all told, if
you said we've reincreased teriffs by a percentage point with
no offsetting policy changes, and at the end of that
(14:02):
six months consumer prices are only up thirty basis points,
that's a little smaller than I would have expected. Now,
I do think, and I think Jay Powell thinks as well,
that we're going to see a little bit of a
lagged increase in the price level.
Speaker 3 (14:14):
But in aggregate, it was never at.
Speaker 4 (14:17):
This level as opposed to the levels that came out
after Liberation Day. It was never at a level that
I thought was going to lead to a recession. In
order to get to a recession, you needed tariffs of
more like twenty percent two percentage points of GDP taken
out of the economy, and you needed no offsets, no
tax cuts to put money back in. And what we
have seen is a much compared to that giant shock,
(14:41):
a more manageable shock, and then there have been some offsets.
Speaker 2 (14:45):
It's not easy. We talked about it before on the show.
It's pretty hard for politicians to raise taxes in the
current environment. But the President has raised these taxes and
he's made a bunch of revenues.
Speaker 4 (14:56):
And then he's arguably paid a bit of a political
price for it. I mean, hence the fall in the
price of coffee, or the tariffy on coffee, hence the
decisions to exempt consumer goods that aren't made in the US.
Speaker 3 (15:08):
From some of the tariffs.
Speaker 4 (15:10):
Even if the aggregate impact has been somewhat more modest
than might have been initially expected, it still has impacted
certain very salient prices, and it certainly directionally has increased
the cost of living, which is an issue here as
you know. So I wouldn't say it's been politically costless.
It just hasn't pushed the economy off a generally growing trajectory.
Speaker 2 (15:49):
Let's sort of change the focus a bit. I guess
we should also put in a health warning. Anyone who's
a dedicated listener will notice that we've resolutely not talked
about the possibility that half of these tariffs are going
to get unconstitutional by the Supreme Court. The principal reason
why we haven't talked about them is everybody else's, and
the slightly less principled is that we just thought every
(16:09):
time we did would be guarantee that the moment we
put it out there would be a decision that would
suddenly put everything in question. So when that happens, we
will get Brad and Anna back to talk about what
that means. But Brad, outside of China, I suspect you're
one of a handful of people who understands the Chinese
balance of payments, and you've often pointed to things that
(16:30):
people don't want to notice or would rather go away.
Of course, one of the key objectives of these tariffs
was to reduce the US trade deficit and encourage American
producers to make more in the US, encourage US consumers
to buy more American products. I mean, we obviously it
is early days, but how is that side of the
(16:52):
agenda going well?
Speaker 4 (16:55):
I mean, unfortunately, there's really no impact that there's been
a reallocation of production to the United States. We're just
not seeing a boom in manufacturing, and not a boom
in the kind of manufacturing that was substitute for China.
Speaker 3 (17:09):
So just zero evidence.
Speaker 4 (17:11):
I would say that is happening again early, but zero
is the right number. There was a reallocation of final
assembly away from China to Southeast Asia in a quite
significant way, and also to Taiwan. If you look at
the latest trade numbers out of Taiwan, they're going up
like crazy, and that is a function at least in
part of doing your servers in Taiwan rather than finyal
(17:34):
assembly in China. The interesting thing is that after the
latest deal, the deal that was negotiated in Korea, the
base tariff on China is going to come down from
thirty to twenty. Now there's legacy tariffs on some goods
from the Trump one trade case, and in some cases
those are twenty five. In some cases those are seven
and a half, some cases those are zero. But for
(17:56):
most of the goods it's the new tariffs are either
going to be twenty seven and a half, which is high,
or twenty which is also high. But twenty is not
that different from the nineteen or twenty now facing Southeast Asia.
Speaker 3 (18:09):
So structurally, I.
Speaker 4 (18:11):
Think there was a lot of movement out of China
to do final assembly elsewhere in anticipation of a different
terra structure than has actually emerged. What has emerged, if
this sticks, is a terra structure that's too high on
Southeast Asia and too low on China to generate the
kind of reallocation away from China that you saw on
Trump's first term, and it's still too small, particularly with
(18:34):
the exchange rate moves, to get much production coming back
to the US.
Speaker 2 (18:38):
That's really interesting. I mean, I think a lot of
fair amounted people will say it's pretty hard to just
quickly build a factory, and so we might not see
that physical production move. But I think if your main
goal is to wean the US off a particular right
liiance on China, and that's obviously been a goal that's
also carried through from the first Trump administration through the
(18:59):
Biden years, that is a very striking conclusion from the
recent trade deal, and actually some of our geoeconomists analysts
we're making the same point. It seems odd to be
in effect penalizing some of the countries that are trying
to compete with China, whose basket we might want to
put more eggs in. But anna the trade deficit is
(19:20):
there a sense? Is the composition of the trade deficit fit?
I mean, have we reduced the amount of imports coming
into the US with these tariffs?
Speaker 1 (19:28):
I can offer a perspective on what these earning calls
are saying. So Bloomberg Economics and Bloomberg Intelligence have been
using AI extraction technology to extract all the TERRORFF related
quotes from the earnings transcripts so far, and what I
have seen is at number one, a theme that emerges.
As Brad said, there are many other offsetting things that's
(19:49):
happening outside of this tariff space that's helping beef up
the margins of firms like AI, and also deregulations on
environmental stuff on autos. However, the second most dominant theme,
I would say is how firms mitigate these tariff costs.
And I see a lot of firms mentioning sourcing more
(20:13):
efficient sourcing outside of China, and in fact, many of
these firms are projecting forward guidance saying that in twenty
twenty six their effective tariff rate would be lower. I mean,
regardless of what the statutory tarif rate is because many
of the supply chain mitigation strategies they put in this
year will be in full operation next year, and all
(20:36):
of it surrounds sourcing outside of China. And I looked
at those statements and I wonder, well, but what if
there's a US China deal that lower the Chinese tariff
and to below the Southeast Asian because many of these
mitigation strategy involved moving to Southeast Asia or to the
USMCA region. As of now, this positive pigure partly hinges
(21:01):
on these mitigation strategies.
Speaker 2 (21:04):
That's interesting. They thought that was the one sure thing,
was that there would want to be a bit less
reliant on China, and then it turns out maybe they
didn't need it. I am kind of intrigued. He's been
so variable and unstable in his trade policies that you've
told us in the past. Producers were possibly not raising
prices because they thought, well, I might have to cut
prices again. You know, they may all go away in
(21:25):
a week's time. And at the same time, the threat
of tariffs or the reality of tariffs, was making them
do all these cost cutting things. If the tariffs then
go away, down the road, he would have helped increase
the efficiency of US business.
Speaker 1 (21:38):
Right probably, But if the tariff were to suddenly go away,
for example with the Supreme Court ruling, it would be
super polish for the market. Because when you read these
earning transcripts, what struck me is that had there not
been tariffs, these profit margins would be through the roof.
(21:59):
Like even with tariffs, they're already talking about it being
really good, and even Ford and GM of these big
auto makers are talking about how they're finally getting to
margins of eight to ten percent, and the auto sector
is so resilient.
Speaker 3 (22:14):
In fact, for.
Speaker 1 (22:15):
Them, the tariff is creating domestic protectionalism, I mean, which
is benefiting them from their perspective, even though it does
create a more than one billion tariff costs for some
of these auto firms. But the original intent of tariff
is domestic protectionalism, and some firms, for example in auto
and steel sectors, are seeing some of that.
Speaker 2 (22:39):
Brad quite a lot of voters for Donald Trump thought
this was just about buying fewer goods from the rest
of the world, and we have made those goods more
expensive to some degree, have we reduced the amount coming
into the country we have the tariffs reduced the number
of imports coming into the country.
Speaker 4 (22:58):
I'll start with a dodge in the come back and
actually answer the question. The dodges of course we lack
trade data for the past two months because the government.
The correct answer is that so far the trade deficit
has not gone down. And then the further component of
that answer is we've had some of the most crazy
swings in the trade data in human history, tied to
(23:21):
swings in products that didn't end up having any tariffs.
So we have this huge surgeon gold imports in the
first quarter because everybody was afraid that gold was going
to get tariffed. Well, guess what, Gold didn't get hit
by any tariffs, and now some of that gold's flying
out of the US back to London. People were terrified
that the high value added pharmaceuticals were going to be
(23:42):
tariffed and that was going to undermine all these tax
efficient supply chains ie produced in Ireland to avoid payan
US corporate income tax. So you have gigantic quantities, not
big quantities physically, but valueized, crazy numbers of pharmaceuticals coming
into the US in the first quarter and so forth.
Speaker 3 (24:01):
That turned out not.
Speaker 4 (24:02):
To be necessary because pharmaceutical companies are doing deals.
Speaker 3 (24:06):
Who knows quite what's going to happen with those deals.
Speaker 4 (24:09):
Maybe they'll be more fill and finish, but the net
effect was you had these giant swings and distortions with
no actual tariff being imposed. When you look through that,
imports are not really down. And when you look further
through that, I think you'll see that imports in some
sectors that have been heavily tariffed, like autos, are a
(24:29):
little down, and then imports in sectors that are tied
to capital expenditure in data centers and so forth, and
which have not been heavily tariffed are up and up
a lot. So the aggregate will mask a lot of
different stories. But we're not currently trending towards a smaller deficit.
(24:50):
I think there's a lot of reasons for that, one
of which is that a big boom in capital expenditures
normally pulls and imports, and we still rely on imported chips.
The build out of TSMC and Arizona's taken time, and
so you know, you really are seeing big increases in
imports in those categories, and I fully expect that to
be the dominant theme of the second half and the
(25:11):
trade data once we get the data, just on this reallocation.
For a firm like Apple, the fentanyl tariff which used
to be twenty percent and now ten that was hitting
them because the fentanyl tariff didn't have any exclusions. For
the reciprocal tariff, which was the tariff on everybody else,
(25:31):
you had an electronics and semiconductor's exclusion. Now that electronics
and semiconductctor exclusion did not include game stations. We are
kind of weird and arbitrary and where you draw the limit.
And that's true across the board. So Apple's mitigation strategy
would just be get out of China. For some others,
your mitigation strategy was initially to go to Southeast Asia
(25:54):
because it was much lower ten than on China. That
mitigation strategy may not work as well going forward, and
your next mitigation strategies final assembly in Mexico or Central
America where you have very strong exclusions, presuming that the
USMCA renegotiation doesn't change things. To me, one of the
surprises though, is that in the macro data, you would
(26:16):
think all this policy uncertainty would have had a bigger
impact and you really just don't see the policy uncertainty
impact yet. But it really has made life difficult for
a lot of firms. And I mean it's made life
difficult for a lot of analysts. I always put a
star next to the estimates of the effective teriff rate
because some tack, some tariffs don't stack, there are exclusions,
(26:40):
there are rebates.
Speaker 3 (26:41):
It has become insanely complex.
Speaker 2 (26:44):
Anna, I guess all these things always have to come
back to the FED. You said yourself their model for
thinking about things and the effect of tariffs was sort
of broadly holding up the fact that consumers are taking
about a third of this on the chin and then
you're seeing the rest in various ways in the corporate America,
(27:04):
but it's not really as obvious because there's so much
stuff going on. Does that affect how they might be
thinking about inflation coming down the track? I mean, one
thing I heard you say was maybe there isn't this
isn't a lagged effect. We may have seen most of
what we're going to see, Is that right?
Speaker 3 (27:21):
Yeah?
Speaker 1 (27:22):
I think what we are seeing right now reflect well
one of the model's forecasts. It's not the same result
as what the Fed's research has been saying earlier this year,
but it matches the result of one particular model from
twenty eighteen, which is most of it would be absorbed
by firms and hence there will be the hit would
(27:42):
be on the labor market. So at the end of
the day, the US economy is mostly a service driven economy.
Speaker 3 (27:50):
You look at the CPI.
Speaker 1 (27:51):
Index, about three quarters are services sectors, only a quarters
goods sector. Also, if you look at it from the
income perspective, two thirds of the US is labor share,
the rest is capital share. So what will happen to
inflation in the next twelve months, importantly will be driven
(28:13):
by the labor market. And there are so many things
that's heading the labor market. Aside from tariff there's also
the issue of is AI reducing hiring, which is another
almost as big as an issue as a driver as tariffs.
And my answer to that is, I think both tariffs
and AI point toward the direction of a drag, a
(28:37):
major drag to the labor market. If I were the FED,
I would be more worried about downside risks to the
labor market.
Speaker 2 (28:44):
Right. So my takeaway from this is just because we
did promise we would sort of answer those riddles that
I posed at the start questions households. We see and
hear people talking about affordability and high cost of things.
They are clearly feeling the pain, and some of that
is about tariffs, but there's an awful lot of other
(29:06):
things that are affecting their costs and their outlook. Corporate
America paying about two thirds of the tariffs. It's not
being paid by foreign exporters. But there's so much other
good news in corporate America now with AI and other
things that the bad news associated with tariffs is literally
(29:27):
getting lost in the mix. So I guess that might
take aways that they tarifs are a lot easier to
talk about than to find in the real life economy.
Anna Wong, Brad Setter, thank you so much, thank you,
thank you, thanks for listening to Trumpnomics from Bloomberg. It
(29:53):
was hosted by me Stephanie Flanders, and I was joined
by Brad Setter, Senior fellow at the Council of Foreign Relations,
what Chief US economist for Bloomberg Economics. Trumponomics was produced
by Samasadi and Moses and with help from Amy Keen.
Sound design was by Blake Maples. And Kelly Gary and
Sage Bowman is Bloomberg's head of podcasts, and to help
(30:15):
others find us and enjoy us, please rate and review
it highly wherever you listen to podcasts.
Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2 (00:13):
I'm Stephanie Flanders, head of Government and Economics at Bloomberg,
and this is Trumppernomics, the podcast that looks at the
economic world of Donald Trump, how he's already shaped the
global economy, what on earth is going to happen next?
This week, we're investigating the curious case of the everywhere
(00:34):
nowhere tariffs. For as long as Donald Trump has been
back in the White House, everybody has been talking about
his tariffs, and never more than on April second, when
he announced he was liberating the US economy by slapping
hefty trade levees on pretty much all of America's trading partners.
Since then, we've talked about the level of the tariffs,
the negotiations over bringing them down. Politicians and consumers have
(00:58):
also talked about how they are added to inflation, especially
in all those big arguments about affordability and the cost
of living before and after the recent US off year elections.
The President recently has himself seemed to admit that tariffs
on some key food products like beef and coffee were
pushing up costs for households, and he wanted to cut
(01:18):
them We've also waited to see how tariffs might hit
jobs and profits for American companies. But amid all this talk,
we've not seen a lot of real evidence of where
exactly the tariffs were hurting, and with the stock market
still booming, we've not heard many businesses admit that tariffs
were affecting their bottom line, though, as you'll hear later,
(01:39):
recent GDP revisions do suggest that US profits in the
second quarter of this year did fall off a cliff.
So who has paid for the tariffs, how have they
affected the US economy, and what's the evidence that they're
accomplishing any or all of the President's objectives, notably cutting
the trade deficit with China. They're the riddles we're hoping
(02:03):
to solve on today's show, and we've got two great
detectives to help us get to the bottom of it.
Senior fellow at the Council on Foreign Relations Brad Setzer
my old friend. He's an expert on global trade and
capital flows, and his regular blog on the CFL page
is called Follow the Money. We worked together approximately half
a million years ago, and unlike me, he then went
back to the US Treasury to be Deputy Assistant Secretary
(02:26):
for International Economics under President Obama. Brad, great to have
you finally on Trumponomics.
Speaker 3 (02:31):
N's pleasure, and it wasn't that one.
Speaker 2 (02:34):
We obviously both still look very youthful, but it makes
me feel old.
Speaker 3 (02:39):
The illusion.
Speaker 2 (02:41):
Also joining us as so often Anna Wong, chief US
Economists for Bloomberg Economics, and before this she worked at
the Federal Reserve, US Treasury and on so common at
the White House Council of Economic Advisors during Donald Trump's
first term.
Speaker 1 (02:55):
Anna Hi Hi, I actually also worked for a Brad
Setser under Obama intration when he was Deputy Assistant Secretary.
He's my old past.
Speaker 2 (03:10):
And let me start with you just remind us how
much the average or effective tariff rate on goods coming
into the US has gone up. You know, and we've
probably lost track of a lot of the negotiations and
where things are, but there has been a significant increase
in the level of tariffs to come into the US.
Speaker 1 (03:32):
So the effective tariff rate is roughly around fourteen point
five percent, just roughly. Administration just announced some exemptions for
food imports last Friday, so that should knock off another
point two percentage point from that. So you can say
roughly around fourteen ish percent.
Speaker 2 (03:53):
Memory, I think it was about two or three coming
into this administration, so it's a pretty significant increase. The
question I asked you last week is who is paying
for these tariffs? Where are we seeing it?
Speaker 1 (04:04):
Yeah, so we look at all the data we have,
which is import prices, and you reconstruct a tariff inclusive
import price index. We also looked at PPI, We looked
at CPI. So taking all the information together, we have
come to this breakdown. It would be about four percent
of the price cost born by foreigners, seventy percent absorbed
(04:27):
by any kind of intermediate firms in the US, and
twenty six percent absorbed by US consumers through higher prices.
Speaker 2 (04:36):
When you say it's that certain chunk of it has
been absorbed by consumers, that thirty percent we're seeing that
in prices.
Speaker 1 (04:44):
Yes, So we estimate that CPI and core PCEE inflation
is a roughly zero point three percentage point higher than
it would have been.
Speaker 3 (04:55):
Without those tariffs.
Speaker 1 (04:57):
So most of those tariffs passed through are showing up
in core goods CPI, things like house appliances, washing machines,
or audio equipment, sports equipments. Those type of things. And
in fact, that point three percentage point addition on core
CPI and core pc inflation. That's quite similar to a
(05:19):
top down model from the FED too. So at the
FED we have this back of envelope model on the
impact of tariff. So a tariff hit similar to what
we see right now in total would have pushed inflation
up by one point one percentage one roughly there. According
to the FED model, if there's one hundred percent pass through,
(05:41):
So if there's point three or roughly thirty percent of
the pass through, then that corresponds to roughly point three
percentage point edition on CPI. And that's indeed what we
have seen in the year over year increase of core
good CPI. We have seen that went from naked zero
point one percent that's year over year core good CPI
(06:05):
to now one point five percent year over year. Now
that's a one point six percentage point swing.
Speaker 2 (06:11):
And Brad just as we'll get into some of the details,
but just sort of sort of on the broad scope
of what Anna just said, that thirty percent is absorbed
by consumers, and then it looks like about sixty sixty
five percent by those kind of intermediate firms who have
to pay the tariff at the border. Is that roughly
how you would look at it.
Speaker 3 (06:32):
I mean, more or less. Yeah, I think a lot
of estimates are.
Speaker 4 (06:34):
Converging around similar numbers. You can just see from the
import price data that foreigners aren't paying it, so then
it's just a question of who's absorbing it in the
US economy. It has been a slight surprise that only
roughly a third looks like it's been passed on to consumers,
an unusually high fraction seems like it's been absorbed by
the supply chain, by intermediate importers.
Speaker 2 (06:56):
I mean, obviously, Bloomberg, we are often listening in on
earning schools when companies are announcing their results. We're tracking
profits and earning revisions, and we're also keeping an eye
on the stock market, which seems to have been doing
pretty well. And even just in this recent earning season,
I seem to remember my colleagues talking about most companies
(07:18):
actually beating their expectations on profits. Maybe you first bad,
why do you think we're not hearing so much from
companies about having to pay these having to take these
higher prices or the tariffs in their margins.
Speaker 4 (07:33):
Well, I mean sort of One of the ironies is
that the parts of the US economy that generate the superprofits,
you know, the tech sector, the pharmaceutical sector, they've been
entirely exempted from the tariffs.
Speaker 3 (07:45):
Why wouldn't Nvidia be talking.
Speaker 4 (07:46):
About it because there isn't yet a terraff chips. Why
is it not impact Advisor's bottom line? Well, there isn't
yet a tariff on pharmaceuticals, and we've had some kind
of crazy fluctuations in trade because of expected tariffs on pharmaceuticals.
But at the end of the day, the tariffs haven't
hit those sectors, and I guess in other cases you're
seeing offsetting shocks. Like a firmlike Caterpillar would normally feel
(08:10):
the impact of the steel tariffs would normally feel the
impact of higher tariffs on parts, but there's a lot
of demand for generators and for some of the equipment
used to make data centers, So you kind of end
up with offsetting shocks and don't have that clear impact
on the bottom line. That's the best I can do.
It is a bit of a mystery. It does not
feel like it's been fully passed on by consumers. We
(08:32):
know it hasn't been absorbed by importers, So it implicitly
has to be impacting someone's bottom line in those sectors
where there are tariffs.
Speaker 2 (08:41):
And what's your sense of where that? I mean, if
you're saying sixty percent is being felt somewhere by corporate America.
Is this the little guy who's finding the getting squeezed
rather than these big companies we hear on the earning schools.
Speaker 1 (08:56):
Yeah, so the stock market is not the economy. It's
very important to know that the S and P five
hundred only has about five hundred firms, but the total
US economy has about seven million firms.
Speaker 2 (09:08):
You have that on your Twitter handle, date you more
or less you know common brackets. You know the stock
market is not the economy, and of.
Speaker 1 (09:16):
Which ninety percent of those seven million firms have only
less than twenty employees. And most US firms don't export
at all either. And another very specific feature about the
stock listed companies is that in total, they generate thirty
percent of revenues from outside of the US. So offsetting
shocks include, for example, the dollar depreciation this year, and
(09:39):
that ten percent dollar depreciation had boosted the revenues form
revenues for those SMP five hundred firms.
Speaker 2 (09:47):
So their profits abroad and suddenly if you're just measuring
it in the US, they're worth more.
Speaker 3 (09:52):
Yes.
Speaker 1 (09:53):
So if you want to look at the profit situation
in the rest of America, primarily these small businesses, we
have to look to the national accounts and there you
see a pretty clear evidence of profit hit. So the
second quarter GDP corporate profit was revised down significantly from
the first estimate of roughly sixty five billion to just
(10:16):
seven billion.
Speaker 2 (10:17):
In the revised estimate, sixty five turned into seven. I
know it is in that particular bit of the national
accounts does sometimes jump around a lot, but is that
a big revision?
Speaker 3 (10:26):
That is a big revision.
Speaker 1 (10:28):
When you look at this the change of corporate profits
from the second quarter of twenty twenty five compared to
the end of twenty twenty four, you see that most
of that decline are in manufacturing sector, wholesale trade and
transportation warehousing, motor vehicles. So we are seeing at the
aggregate levels some kind of margin hits, but it's just
(10:51):
not showing up in the stock market.
Speaker 2 (10:53):
That is a very striking number that the profits having
gone down for sixty five and a half to just
down the seven billion in the second quarter, And as
you pointed out, and there's evidence that it's the wholesale sector.
And when you look a bit deeper into the numbers,
are we then likely to see if the corporate sector
as a whole, even if it's these kind of smaller
(11:14):
businesses that are a little bit below the radar, if
they're the ones who are feeling the hit, are we
going to see that in jobs? Is there an economic
impact which we're still waiting to see from that?
Speaker 1 (11:26):
Yeah, So I think we can always look at these
empirical data and then go back to the theoretical models
and think about evaluate how good or bad they are.
So going back to this FED model that internally the
Divisional of International Finance has on the impact of tariff.
In twenty eighteen, the FED staff ran assimilation on what
(11:49):
a fifteen percentage point tariff shock would do the unemployment
and the impact depends on whether the FED is looking
through the impact on prices. So I would say in
the current situation, the FED is looking through it somewhere
in between. So according to the lookthrough strategy, the unemployment
rate should be going up by about zero point three
(12:12):
two point five percentage points in the first year after
the shock, and I would say that's roughly where we are,
because when we start the year, the Wall Street consensus
for unemployment rate was about four point one at the
end of twenty twenty five, and now we're looking at
four point five. So in fact, these macro models are
(12:36):
performing okay, Brad.
Speaker 2 (12:38):
If you're looking at the kind of overall impact of
these tarerts, they've obviously been very uncertain, unpredictable, and if
we were designing a trade policy, we'd probably want the
very least. We probably want something that was a bit
more stable and followed a slightly more predictable path. But
if you just were told that the effective tariff rate
(13:01):
had gone up from three percent to around fourteen percent
over the course of six to nine months, and then
you looked at these various economic indicators that change in
the openness of the US economy, do you think it's
had a less harmful impact than we might have predicted
at the beginning of the year.
Speaker 3 (13:19):
Yeah, modestly less harmful.
Speaker 4 (13:21):
I mean, largely because businesses have absorbed so much of
the one off shock, it hasn't been all felt by consumers,
and so consumers really haven't paired back spending on other goods.
Of course, part of it is also that other things
are happening. But for the tariffs, the big increase in
spending on data centers and all the investment in AI
(13:41):
might have been propelling the US economy quite forward at
a pretty fast clip. The strong run up in the
stock market is generating a wealth effect even now, and
that is also supporting household consumption. But all told, if
you said we've reincreased teriffs by a percentage point with
no offsetting policy changes, and at the end of that
(14:02):
six months consumer prices are only up thirty basis points,
that's a little smaller than I would have expected. Now,
I do think, and I think Jay Powell thinks as well,
that we're going to see a little bit of a
lagged increase in the price level.
Speaker 3 (14:14):
But in aggregate, it was never at.
Speaker 4 (14:17):
This level as opposed to the levels that came out
after Liberation Day. It was never at a level that
I thought was going to lead to a recession. In
order to get to a recession, you needed tariffs of
more like twenty percent two percentage points of GDP taken
out of the economy, and you needed no offsets, no
tax cuts to put money back in. And what we
have seen is a much compared to that giant shock,
(14:41):
a more manageable shock, and then there have been some offsets.
Speaker 2 (14:45):
It's not easy. We talked about it before on the show.
It's pretty hard for politicians to raise taxes in the
current environment. But the President has raised these taxes and
he's made a bunch of revenues.
Speaker 4 (14:56):
And then he's arguably paid a bit of a political
price for it. I mean, hence the fall in the
price of coffee, or the tariffy on coffee, hence the
decisions to exempt consumer goods that aren't made in the US.
Speaker 3 (15:08):
From some of the tariffs.
Speaker 4 (15:10):
Even if the aggregate impact has been somewhat more modest
than might have been initially expected, it still has impacted
certain very salient prices, and it certainly directionally has increased
the cost of living, which is an issue here as
you know. So I wouldn't say it's been politically costless.
It just hasn't pushed the economy off a generally growing trajectory.
Speaker 2 (15:49):
Let's sort of change the focus a bit. I guess
we should also put in a health warning. Anyone who's
a dedicated listener will notice that we've resolutely not talked
about the possibility that half of these tariffs are going
to get unconstitutional by the Supreme Court. The principal reason
why we haven't talked about them is everybody else's, and
the slightly less principled is that we just thought every
(16:09):
time we did would be guarantee that the moment we
put it out there would be a decision that would
suddenly put everything in question. So when that happens, we
will get Brad and Anna back to talk about what
that means. But Brad, outside of China, I suspect you're
one of a handful of people who understands the Chinese
balance of payments, and you've often pointed to things that
(16:30):
people don't want to notice or would rather go away.
Of course, one of the key objectives of these tariffs
was to reduce the US trade deficit and encourage American
producers to make more in the US, encourage US consumers
to buy more American products. I mean, we obviously it
is early days, but how is that side of the
(16:52):
agenda going well?
Speaker 4 (16:55):
I mean, unfortunately, there's really no impact that there's been
a reallocation of production to the United States. We're just
not seeing a boom in manufacturing, and not a boom
in the kind of manufacturing that was substitute for China.
Speaker 3 (17:09):
So just zero evidence.
Speaker 4 (17:11):
I would say that is happening again early, but zero
is the right number. There was a reallocation of final
assembly away from China to Southeast Asia in a quite
significant way, and also to Taiwan. If you look at
the latest trade numbers out of Taiwan, they're going up
like crazy, and that is a function at least in
part of doing your servers in Taiwan rather than finyal
(17:34):
assembly in China. The interesting thing is that after the
latest deal, the deal that was negotiated in Korea, the
base tariff on China is going to come down from
thirty to twenty. Now there's legacy tariffs on some goods
from the Trump one trade case, and in some cases
those are twenty five. In some cases those are seven
and a half, some cases those are zero. But for
(17:56):
most of the goods it's the new tariffs are either
going to be twenty seven and a half, which is high,
or twenty which is also high. But twenty is not
that different from the nineteen or twenty now facing Southeast Asia.
Speaker 3 (18:09):
So structurally, I.
Speaker 4 (18:11):
Think there was a lot of movement out of China
to do final assembly elsewhere in anticipation of a different
terra structure than has actually emerged. What has emerged, if
this sticks, is a terra structure that's too high on
Southeast Asia and too low on China to generate the
kind of reallocation away from China that you saw on
Trump's first term, and it's still too small, particularly with
(18:34):
the exchange rate moves, to get much production coming back
to the US.
Speaker 2 (18:38):
That's really interesting. I mean, I think a lot of
fair amounted people will say it's pretty hard to just
quickly build a factory, and so we might not see
that physical production move. But I think if your main
goal is to wean the US off a particular right
liiance on China, and that's obviously been a goal that's
also carried through from the first Trump administration through the
(18:59):
Biden years, that is a very striking conclusion from the
recent trade deal, and actually some of our geoeconomists analysts
we're making the same point. It seems odd to be
in effect penalizing some of the countries that are trying
to compete with China, whose basket we might want to
put more eggs in. But anna the trade deficit is
(19:20):
there a sense? Is the composition of the trade deficit fit?
I mean, have we reduced the amount of imports coming
into the US with these tariffs?
Speaker 1 (19:28):
I can offer a perspective on what these earning calls
are saying. So Bloomberg Economics and Bloomberg Intelligence have been
using AI extraction technology to extract all the TERRORFF related
quotes from the earnings transcripts so far, and what I
have seen is at number one, a theme that emerges.
As Brad said, there are many other offsetting things that's
(19:49):
happening outside of this tariff space that's helping beef up
the margins of firms like AI, and also deregulations on
environmental stuff on autos. However, the second most dominant theme,
I would say is how firms mitigate these tariff costs.
And I see a lot of firms mentioning sourcing more
(20:13):
efficient sourcing outside of China, and in fact, many of
these firms are projecting forward guidance saying that in twenty
twenty six their effective tariff rate would be lower. I mean,
regardless of what the statutory tarif rate is because many
of the supply chain mitigation strategies they put in this
year will be in full operation next year, and all
(20:36):
of it surrounds sourcing outside of China. And I looked
at those statements and I wonder, well, but what if
there's a US China deal that lower the Chinese tariff
and to below the Southeast Asian because many of these
mitigation strategy involved moving to Southeast Asia or to the
USMCA region. As of now, this positive pigure partly hinges
(21:01):
on these mitigation strategies.
Speaker 2 (21:04):
That's interesting. They thought that was the one sure thing,
was that there would want to be a bit less
reliant on China, and then it turns out maybe they
didn't need it. I am kind of intrigued. He's been
so variable and unstable in his trade policies that you've
told us in the past. Producers were possibly not raising
prices because they thought, well, I might have to cut
prices again. You know, they may all go away in
(21:25):
a week's time. And at the same time, the threat
of tariffs or the reality of tariffs, was making them
do all these cost cutting things. If the tariffs then
go away, down the road, he would have helped increase
the efficiency of US business.
Speaker 1 (21:38):
Right probably, But if the tariff were to suddenly go away,
for example with the Supreme Court ruling, it would be
super polish for the market. Because when you read these
earning transcripts, what struck me is that had there not
been tariffs, these profit margins would be through the roof.
(21:59):
Like even with tariffs, they're already talking about it being
really good, and even Ford and GM of these big
auto makers are talking about how they're finally getting to
margins of eight to ten percent, and the auto sector
is so resilient.
Speaker 3 (22:14):
In fact, for.
Speaker 1 (22:15):
Them, the tariff is creating domestic protectionalism, I mean, which
is benefiting them from their perspective, even though it does
create a more than one billion tariff costs for some
of these auto firms. But the original intent of tariff
is domestic protectionalism, and some firms, for example in auto
and steel sectors, are seeing some of that.
Speaker 2 (22:39):
Brad quite a lot of voters for Donald Trump thought
this was just about buying fewer goods from the rest
of the world, and we have made those goods more
expensive to some degree, have we reduced the amount coming
into the country we have the tariffs reduced the number
of imports coming into the country.
Speaker 4 (22:58):
I'll start with a dodge in the come back and
actually answer the question. The dodges of course we lack
trade data for the past two months because the government.
The correct answer is that so far the trade deficit
has not gone down. And then the further component of
that answer is we've had some of the most crazy
swings in the trade data in human history, tied to
(23:21):
swings in products that didn't end up having any tariffs.
So we have this huge surgeon gold imports in the
first quarter because everybody was afraid that gold was going
to get tariffed. Well, guess what, Gold didn't get hit
by any tariffs, and now some of that gold's flying
out of the US back to London. People were terrified
that the high value added pharmaceuticals were going to be
(23:42):
tariffed and that was going to undermine all these tax
efficient supply chains ie produced in Ireland to avoid payan
US corporate income tax. So you have gigantic quantities, not
big quantities physically, but valueized, crazy numbers of pharmaceuticals coming
into the US in the first quarter and so forth.
Speaker 3 (24:01):
That turned out not.
Speaker 4 (24:02):
To be necessary because pharmaceutical companies are doing deals.
Speaker 3 (24:06):
Who knows quite what's going to happen with those deals.
Speaker 4 (24:09):
Maybe they'll be more fill and finish, but the net
effect was you had these giant swings and distortions with
no actual tariff being imposed. When you look through that,
imports are not really down. And when you look further
through that, I think you'll see that imports in some
sectors that have been heavily tariffed, like autos, are a
(24:29):
little down, and then imports in sectors that are tied
to capital expenditure in data centers and so forth, and
which have not been heavily tariffed are up and up
a lot. So the aggregate will mask a lot of
different stories. But we're not currently trending towards a smaller deficit.
(24:50):
I think there's a lot of reasons for that, one
of which is that a big boom in capital expenditures
normally pulls and imports, and we still rely on imported chips.
The build out of TSMC and Arizona's taken time, and
so you know, you really are seeing big increases in
imports in those categories, and I fully expect that to
be the dominant theme of the second half and the
(25:11):
trade data once we get the data, just on this reallocation.
For a firm like Apple, the fentanyl tariff which used
to be twenty percent and now ten that was hitting
them because the fentanyl tariff didn't have any exclusions. For
the reciprocal tariff, which was the tariff on everybody else,
(25:31):
you had an electronics and semiconductor's exclusion. Now that electronics
and semiconductctor exclusion did not include game stations. We are
kind of weird and arbitrary and where you draw the limit.
And that's true across the board. So Apple's mitigation strategy
would just be get out of China. For some others,
your mitigation strategy was initially to go to Southeast Asia
(25:54):
because it was much lower ten than on China. That
mitigation strategy may not work as well going forward, and
your next mitigation strategies final assembly in Mexico or Central
America where you have very strong exclusions, presuming that the
USMCA renegotiation doesn't change things. To me, one of the
surprises though, is that in the macro data, you would
(26:16):
think all this policy uncertainty would have had a bigger
impact and you really just don't see the policy uncertainty
impact yet. But it really has made life difficult for
a lot of firms. And I mean it's made life
difficult for a lot of analysts. I always put a
star next to the estimates of the effective teriff rate
because some tack, some tariffs don't stack, there are exclusions,
(26:40):
there are rebates.
Speaker 3 (26:41):
It has become insanely complex.
Speaker 2 (26:44):
Anna, I guess all these things always have to come
back to the FED. You said yourself their model for
thinking about things and the effect of tariffs was sort
of broadly holding up the fact that consumers are taking
about a third of this on the chin and then
you're seeing the rest in various ways in the corporate America,
(27:04):
but it's not really as obvious because there's so much
stuff going on. Does that affect how they might be
thinking about inflation coming down the track? I mean, one
thing I heard you say was maybe there isn't this
isn't a lagged effect. We may have seen most of
what we're going to see, Is that right?
Speaker 3 (27:21):
Yeah?
Speaker 1 (27:22):
I think what we are seeing right now reflect well
one of the model's forecasts. It's not the same result
as what the Fed's research has been saying earlier this year,
but it matches the result of one particular model from
twenty eighteen, which is most of it would be absorbed
by firms and hence there will be the hit would
(27:42):
be on the labor market. So at the end of
the day, the US economy is mostly a service driven economy.
Speaker 3 (27:50):
You look at the CPI.
Speaker 1 (27:51):
Index, about three quarters are services sectors, only a quarters
goods sector. Also, if you look at it from the
income perspective, two thirds of the US is labor share,
the rest is capital share. So what will happen to
inflation in the next twelve months, importantly will be driven
(28:13):
by the labor market. And there are so many things
that's heading the labor market. Aside from tariff there's also
the issue of is AI reducing hiring, which is another
almost as big as an issue as a driver as tariffs.
And my answer to that is, I think both tariffs
and AI point toward the direction of a drag, a
(28:37):
major drag to the labor market. If I were the FED,
I would be more worried about downside risks to the
labor market.
Speaker 2 (28:44):
Right. So my takeaway from this is just because we
did promise we would sort of answer those riddles that
I posed at the start questions households. We see and
hear people talking about affordability and high cost of things.
They are clearly feeling the pain, and some of that
is about tariffs, but there's an awful lot of other
(29:06):
things that are affecting their costs and their outlook. Corporate
America paying about two thirds of the tariffs. It's not
being paid by foreign exporters. But there's so much other
good news in corporate America now with AI and other
things that the bad news associated with tariffs is literally
(29:27):
getting lost in the mix. So I guess that might
take aways that they tarifs are a lot easier to
talk about than to find in the real life economy.
Anna Wong, Brad Setter, thank you so much, thank you,
thank you, thanks for listening to Trumpnomics from Bloomberg. It
(29:53):
was hosted by me Stephanie Flanders, and I was joined
by Brad Setter, Senior fellow at the Council of Foreign Relations,
what Chief US economist for Bloomberg Economics. Trumponomics was produced
by Samasadi and Moses and with help from Amy Keen.
Sound design was by Blake Maples. And Kelly Gary and
Sage Bowman is Bloomberg's head of podcasts, and to help
(30:15):
others find us and enjoy us, please rate and review
it highly wherever you listen to podcasts.
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