Uncertainty in economy persists due to Trump's imposed tariffs

Uncertainty in economy persists due to Trump's imposed tariffs

Rewritten Article:

HOST:

It's been a mad run since President Trump announced his global tariffs. We've seen escalations, tariff retaliations, pauses, and now some of those pauses have run out, including the end of a loophole that let Americans dodge tariffs when buying cheap goods directly from China. So, there's a lot going on. But what's the deal? Let's try to figure it out with NPR's Scott Horsley. Hey, Scott!

HORSLEY: Hey there! It's always a wild ride.

HOST: So Scott, the economy took a dip. Is that tariff-related?

HORSLEY: It's a bit indirect, but yes. In the first quarter, there was a surge in imports as businesses and customers stocked up ahead of the tariffs. Imports are subtracted from GDP, or gross domestic product. We also saw a general slowdown in consumer spending, the main engine of economic growth. Economist Michael Pugliese of Wells Fargo says it's tough to predict the direction of the economy these days.

PUGLIESE: It's been one roller coaster ride after another. The tariffs were announced, then they were paused for 90 days. There were exemptions for certain goods, discussions of trade deals with specific countries – it's all still pretty unclear.

HORSLEY: A survey of factory managers came out recently, and some mentioned supply chains were paralyzed due to uncertainty. Meanwhile, the cost of imported parts and raw materials has been climbing, while factory orders have been falling.

HOST: I spoke with some union autoworkers at a Trump rally in Michigan, and many believe tariffs were long overdue. But among American businesses, any tariff fans?

HORSLEY: Some are. I talked with Tom Barr, who runs TK Mold & Engineering in Romeo, Michigan. His company makes injection molding equipment used by automakers. Barr's worried about increased competition from Chinese mold makers, who produce high-quality goods at significantly lower prices than what he can make here in Michigan.

BARR: So by the time they put it in a crate, load it onto a boat, and bring it to the Detroit area, it cost $80,000. That would've been $150,000 in U.S. dollars. How are we supposed to compete with that, right?

HORSLEY: To Barr, Trump's tariffs are a lifeline that could help keep him competitive. Since the tariffs went into effect, he's been getting more calls from potential customers looking for work. But those are big investments, so companies won't switch lightly if they think the tariffs might go away soon.

HOST: So Scott, are we in wait-and-see mode, or crisis mode?

HORSLEY: It varies, buddy. Consumers are feeling pretty grim, worried about higher prices and possible layoffs. Consumer confidence is as low as it's been since the COVID-19 pandemic. But if consumers keep spending, the economy should keep humming. If they don't, well, watch out.

HOST: Thanks for the breakdown, Scott.

HORSLEY: My pleasure, Don. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary.

*The U.S. tariffs on China are causing a stir in the American economy, with effects on GDP, employment, and consumer confidence. Here's what we know:

GDP Impact

• Economic Contraction: The U.S. economy shrank by 0.3% in the first quarter of 2025 due, in part, to the impact of tariffs on imports.[4]
• Global GDP Reduction: A 10% universal tariff and a specific high tariff on China could reduce global GDP by about 1%, with potential spillovers doubling this effect.[3]

Employment Impact

• Job Market Slowdown: The ADP reported only 62,000 jobs added in April 2025, about half the expected number, hinting at a cautious hiring approach due to tariff uncertainty.[4]
• Unemployment Rate: The unemployment rate is projected to rise by 0.6 percentage points by the end of 2025, with payroll employment expected to be 770,000 lower.[2]

Consumer Confidence and Spending

• Consumer Sentiment: Consumers are experiencing pessimism not seen since the COVID-19 pandemic, driven by higher prices and uncertainty.[4]
• Spending and Prices: Tariffs are expected to lead to empty shelves and higher prices for American shoppers, likely dampening consumer spending.[4]*

1. The tariffs on China are affecting the US economy, with potential global GDP reduction and a 0.3% contraction in the first quarter of 2025 due to the impact on imports.
2. Consumer confidence is low as tariffs lead to higher prices and uncertainty, which may result in decreased consumer spending and potential layoffs, affecting employment in the US.

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