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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. For most of the

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Speaker 1: past year, we've been talking about tariffs a lot in

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Speaker 1: the future. Tense tariffs have been coming and then maybe not.

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Speaker 1: They've been on and off, up and down, calculated and recalculated.

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Speaker 2: President Trump rolling out a set of tariffs schedule to

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Speaker 2: start April second.

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Speaker 3: Facing a global market meltdown, President Donald Trump has a

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Speaker 3: promptly backed down on his tariffs on most nations. President

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Speaker 3: Trump is hinting there may be another round of reversals

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Speaker 3: on his tariffs.

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Speaker 1: But now they're here. According to Bloomberg Economics estimates, the

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Speaker 1: average US tariff rate is sent at over fifteen percent,

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Speaker 1: compared to just over two percent last year, and that's

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Speaker 1: brought up new, more immediate questions like how are tariffs

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Speaker 1: actually getting collected, how much money are they bringing in,

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Speaker 1: and crucially, who is paying for them. To answer these questions,

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Speaker 1: I called Stacy Vanocksmith, a financial journalist and the co

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Speaker 1: host of Bloomberg Business Weeks, Everybody's Business podcast.

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Speaker 2: If I can tell you how much time recently I

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Speaker 2: have spent trying to track down what tariffs are associated

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Speaker 2: with what countries at a particular time, it would be

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Speaker 2: a very long story.

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Speaker 1: Stacy's been speaking with importers, exporters, business owners, and economists

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Speaker 1: to try to understand what these higher tariff levels really

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Speaker 1: mean for global trade and how companies are deciding whether

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Speaker 1: to eat those costs or to pass them on.

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Speaker 2: I talked to a customs broker here in New York

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Speaker 2: who said at customs brokers just kind of a middleman

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Speaker 2: between an importer and an exporter. And he said he

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Speaker 2: would just cover the cost often of the tariffs because

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Speaker 2: they were so low, they would just throw it in

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Speaker 2: for their client.

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Speaker 1: That's not so easy anymore. I'm Sarah Holder, and this

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Speaker 1: is the big take from Bloomberg News today on the show,

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Speaker 1: how much money Trump's tariffs have generated for the US

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Speaker 1: government so far, and what we know about who's picking

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Speaker 1: up the tap. At its most basic level, a tariff

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Speaker 1: is really just a tax on imports or exports. It's

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Speaker 1: almost always paid on imports, though, and it's calculated as

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Speaker 1: a percentage of the imported goods value. The rate depends

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Speaker 1: on the product and its country of origin. Right now,

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Speaker 1: for example, a containership from the UK would face a

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Speaker 1: ten percent tariff. Germany or South Korea would be hit

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Speaker 1: with a fifteen percent tariff Bloomberg. Stacy Vanicksmith says, the

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Speaker 1: tariff is collected when the goods hit US soil.

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Speaker 4: So at the airport or the ship port.

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Speaker 2: It is a form that looks like a tax form,

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Speaker 2: and the custom broker fills it out, the importer of

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Speaker 2: record fills it out, they pay the tariff, and it

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Speaker 2: is paid where the goods come in to the US.

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Speaker 1: I asked Stacy to break it down at the level

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Speaker 1: of a single shipping container.

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Speaker 2: So let's say the ship comes in and it's full

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Speaker 2: of a million dollars worth of lobster tails, and the

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Speaker 2: tariff is twenty percent. So essentially, when the ship gets there,

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Speaker 2: you have a customs broker who's sort of tracking it.

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Speaker 2: They're not necessarily physically there to meet it, but they're

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Speaker 2: tracking the shipping container, so the shipping container gets there.

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Speaker 2: When it gets there, the customs agent fills out a

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Speaker 2: form that looks a lot like a tax form. It

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Speaker 2: sort of looked like a W nine if you've ever

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Speaker 2: seen one of those. I was really hoping it would

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Speaker 2: be splashier or sexier than it was, but it just

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Speaker 2: looks like a line on a tax form. Unfortunately, but

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Speaker 2: that is where the tariff is calculated. It gets calculated

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Speaker 2: right there based on the declared value of the goods

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Speaker 2: getting shipped there. And the way that it works is

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Speaker 2: the company basically says, yes, we will pay that amount

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Speaker 2: and then has a certain amount of time I believe

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Speaker 2: it's two weeks to pay that tariff to get that

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Speaker 2: money to the government. So they have bonds that sometimes

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Speaker 2: get issued, sort of like a bail bond. And it

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Speaker 2: didn't used to be a big deal at all, but now,

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Speaker 2: of course, the expenses can be really big and they're

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Speaker 2: changing all the time. So for companies this can be

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Speaker 2: a bigger expense and can really eat into or in

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Speaker 2: some cases, wipe out their profit margins.

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Speaker 5: Right.

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Speaker 1: The issue being that these companies don't have all that

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Speaker 1: money potentially on hand to pay the US government, and

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Speaker 1: so they have to take out these bonds.

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Speaker 2: Yeah, a lot of businesses operate on a really narrow margin.

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Speaker 2: The company I was dealing with specializes in seafood, and

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Speaker 2: a lot of restaurants or supermarkets operate on these really

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Speaker 2: razor thin margins and everything is really perfectly mapped out,

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Speaker 2: and so this really throws a wrench.

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Speaker 4: Into their operations.

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Speaker 2: And their expenses, and you know, it's not necessarily that

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Speaker 2: they can't always afford it. It's just it's a total

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Speaker 2: disruption of the way that they did business and cost structure,

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Speaker 2: and it's really throwing everybody for a loop.

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Speaker 1: The Trump administration says the tariffs raised nearly thirty billion

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Speaker 1: dollars in July, and last week Steven Myron, the chair

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Speaker 1: of President Trump's Council of Economic Advisors, came on Bloomberg

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Speaker 1: TV to project that the tariffs will bring in much

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Speaker 1: much more money for the government over the next decade.

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Speaker 3: You know, the CBO did a study when the One

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Speaker 3: Big Beautiful Bill was under consideration in Congress, finding that

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Speaker 3: the total effect of the tariffs would be three trillion

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Speaker 3: dollars over the course of a decade. You know, I

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Speaker 3: think that tariff rates have moved a little bit higher

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Speaker 3: since then, and so my team is actually currently crunching

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Speaker 3: through the numbers right now as we speak with the

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Speaker 3: new tariff rates. But I wouldn't be surprised if the

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Speaker 3: final number is closer to four trillion dollars over a

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Speaker 3: decade instead of three.

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Speaker 1: The Trump administration has suggested the tariff revenue could help

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Speaker 1: offset the costs of tax cuts in the recently passed

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Speaker 1: Tax and Spending bill, the idea being cut domestic taxes

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Speaker 1: raise import taxes.

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Speaker 2: The problem is, definitely you can raise money with tariffs,

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Speaker 2: but the amount of money that we'll be coming in

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Speaker 2: from tariffs is just nowhere near the amount of money

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Speaker 2: that would have come in from the taxes on business

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Speaker 2: and the income taxes. It's just not even It's just

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Speaker 2: not even close. It won't come close to replacing it.

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Speaker 1: The question is who's footing the bill that's next? Now

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Speaker 1: that many of President Trump's so called reciprocal tariffs are

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Speaker 1: in place, the journalist Stacey Vanocksmith says, the key question

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Speaker 1: is who's paying them. The White House has long maintained

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Speaker 1: that foreign companies will foot the bill, but are they.

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Speaker 2: I talked to economist Justin Wolfers from the University of Michigan,

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Speaker 2: and he said there are three and a half places

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Speaker 2: where the cost of tariffs can end up. One is

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Speaker 2: foreign companies pay for them. Number two is US companies

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Speaker 2: pay for them. Number three is we pay for them.

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Speaker 2: And the half is that stuff just disappears.

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Speaker 1: We'll come back to the half. In Justin Wolfers, three

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Speaker 1: and a half options in a minute. For now, let's

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Speaker 1: stick with the idea that foreign companies, domestic companies or

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Speaker 1: consumers will pay for Trump's tariffs. And if we start

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Speaker 1: with foreign companies Trump's choice, well, in theory, it might

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Speaker 1: make sense that they could be forced to cover the

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Speaker 1: cost of tariffs.

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Speaker 2: I mean, you would think, since the US is the

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Speaker 2: top buyer for so many countries and so many companies

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Speaker 2: around the world, that if you said, listen, you got

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Speaker 2: to cut your price by whatever it is, fifteen percent,

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Speaker 2: twenty percent, we won't buy your stuff anymore, that would

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Speaker 2: be an offer that they could not refuse.

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Speaker 4: The thing is they are refusing it.

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Speaker 5: There's something called the import price.

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Speaker 1: Index that's economist justin Wolfers.

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Speaker 5: And it measures the average price of goods coming into

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Speaker 5: the country before tariffs are charged. Bad news. It's beading

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Speaker 5: exactly flat. What that tells us is that Trump was wrong. Literally,

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Speaker 5: none of it's being paid for by foreign countries.

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Speaker 4: Which indicates that there are no deals being cut.

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Speaker 1: Why not, Why isn't that happening?

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Speaker 4: That's a good question.

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Speaker 2: I think there could be a lot of things going on.

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Speaker 2: One could be maybe just feeling like we need to

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Speaker 2: change our policy here, like relying on the US so

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Speaker 2: much for where we sell our stuff is just not

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Speaker 2: a good policy going forward. Also, there have been so

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Speaker 2: many changes in the tariffs. I know this from talking

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Speaker 2: to a lot of US companies too. They don't feel

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Speaker 2: like they know enough to cut a deal even because

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Speaker 2: you know, if you're a foreign company and you cut

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Speaker 2: a deal making up for a twenty percent tariff, and

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Speaker 2: all of a sudden there is an exemption or the

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Speaker 2: tariff gets cut to five percent, it's just really hard

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Speaker 2: for anybody to operate and to make deals, And so

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Speaker 2: I think foreign companies are hesitant to leave money on

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Speaker 2: the table when they just don't know how things are

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Speaker 2: going to pan out.

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Speaker 1: Which means either US companies or US consumers must be

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Speaker 1: paying for these tariffs right The.

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Speaker 2: Strange thing is, it doesn't seem like either of those

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Speaker 2: things is happening right now. Inflations been pretty tame, Like

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Speaker 2: I feel like we've all been expecting I personally have

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Speaker 2: been expecting to see inflation prices going up, and that

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Speaker 2: hasn't happened so far.

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Speaker 1: At least, tariffs haven't significantly bumped up the prices consumers

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Speaker 1: are paying for their tube socks, potato, chips or blonde chairs.

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Speaker 2: At the same time, companies have been reporting really solid

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Speaker 2: earnings for the most part, and so I was very

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Speaker 2: curious it seemed like that money was just kind of vanishing.

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Speaker 2: One of the economists I talked to was Chad Boundies

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Speaker 2: with the Peterson Institute, and he actually told me he

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Speaker 2: thought that tariffs were in a kind of a liminal

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Speaker 2: space right now, because he was like, listen, Trump campaigned

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Speaker 2: on tariffs. Companies knew this was coming, and they had

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Speaker 2: months to stockpile things. And in fact, if you look

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Speaker 2: at the data, you can see there's a spike in

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Speaker 2: imports from US companies right before the presidential election and

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Speaker 2: in the you.

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Speaker 4: Know, the weeks following it.

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Speaker 2: Companies were preparing for this, and so they were really

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Speaker 2: taking in a lot of goods at a lower price,

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Speaker 2: and so they haven't had to pass those costs on.

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Speaker 2: And then the other thing is companies hesitate a lot

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Speaker 2: before they passed prices on to consumers. The Pricing Lab

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Speaker 2: at Harvard did a big study back in twenty seventeen

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Speaker 2: in the first round of tariffs, and most companies took

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Speaker 2: an average of six months before they started passing tariff

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Speaker 2: costs along to consumers, and then even a year and

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Speaker 2: a half later, they were still not entirely passing them

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Speaker 2: on because they're worried about losing customers. They're worried about

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Speaker 2: giving competitors an edge. They're worried also about the tariffs

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Speaker 2: changing so much and how to respond. So I think

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Speaker 2: companies are kind of waiting and seeing, and some companies

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Speaker 2: are eating the cost. You know, we saw GMS earnings

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Speaker 2: come out. Their earnings were down by a billion dollars

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Speaker 2: and they said tariffs were a big part of that.

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Speaker 2: They didn't feel like they could pass the cost on

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Speaker 2: right now.

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Speaker 1: But there are signs that price increases may already be

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Speaker 1: on the way.

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Speaker 2: The Pricing Lab at Harvard found that we are actually

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Speaker 2: starting to see the little sprouts of prices rising because

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Speaker 2: of tariffs, especially on things from China. Those are household goods,

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Speaker 2: which are things like linens and carpet and things like that.

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Speaker 2: A lot of those are made in China. Furniture also

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Speaker 2: a lot of furnitures made in China, so things like that.

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Speaker 2: In electronics, a lot of electronics made in China, So

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Speaker 2: the prices there have gone up. They've gone up by

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Speaker 2: an average of three percent. So the price spike isn't

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Speaker 2: big yet, but it is starting to happen.

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Speaker 1: And there are other more subtle ways companies can pass

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Speaker 1: costs onto consumers.

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Speaker 2: Smaller packaging, more air, and our potato chip bags, cheaper

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Speaker 2: thread on our shirt buttons. It gets passed on in

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Speaker 2: some way that basically means that our dollar does not

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Speaker 2: have as much value, does not buy as much.

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Speaker 1: From inflation to shrinkflation to skinflation. There are lots of

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Speaker 1: ways US consumers might start seeing the cost of the

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Speaker 1: new tariffs passed on to them. But there's one more

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Speaker 1: way US consumers will feel the impact, the third and

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Speaker 1: a half option that economist Justin Wolfers was talking about.

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Speaker 5: I said this three and a half ways this could

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Speaker 5: play out. The half is you just stop trying. Just

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Speaker 5: don't send the bout. You don't send the bout of

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Speaker 5: it because prices, if they were to be charged, would

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Speaker 5: be so high you wouldn't be able to sell the goods,

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Speaker 5: and so that's a cost as in you end up

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Speaker 5: doing with that, you have a less of selection.

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Speaker 2: One of the things that can happen is people just

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Speaker 2: stop importing stuff. It's just not worth it, you know.

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Speaker 2: So this is everything from like I don't know.

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Speaker 1: To what ghost flation? Is that a new one?

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Speaker 2: Just ooh, I like this appear completely I think TM

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Speaker 2: immediately ghost flation. Actually, ghostflation is fantastic. I love ghost Yes,

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Speaker 2: it is ghost flation. It's and that is when you

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Speaker 2: go to the store and you're like, hey, wait a minute,

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Speaker 2: where's the French cheese that I like or the avocados

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Speaker 2: from Mexico or the sweaters from Switzerland, where like, where's

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Speaker 2: all the stuff and it's just not there.

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Speaker 1: If tariffs make it too expensive for companies to import

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Speaker 1: a certain product, they might just stop. That means a

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Speaker 1: smaller selection at the store and fewer choices for consumers. So, Sacey,

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Speaker 1: we're in this kind of in between place right now

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Speaker 1: where companies are absorbing what they can for as long

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Speaker 1: as they can. How long can or will they keep

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Speaker 1: doing that?

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Speaker 2: The liminal space question. I mean, the answer is we

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Speaker 2: don't know. It's very funny. I felt like when I

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Speaker 2: was reporting the story, inflation was a little bit like

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Speaker 2: a monster in a horror movie, where like you didn't

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Speaker 2: know when it was going to show up or how

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Speaker 2: it was going to show up, but you know the

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Speaker 2: ghost was going to come out in some way and

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Speaker 2: it was going to be bad, so I sort of

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Speaker 2: felt like I was tracking this monster around the economy.

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Speaker 2: It looks like from everything we know from past situations,

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Speaker 2: particularly from the twenty seventeen tariffs, it's about six months

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Speaker 2: before we really start to see the impact. The tariffs

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Speaker 2: get processed pretty slowly through the economy, but then it's

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Speaker 2: kind of steady. So I think we're quite cushioned right now.

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Speaker 2: And you know, who knows also what deals are going

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Speaker 2: to get cut, So I think companies also might have

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Speaker 2: to take for that reason, to pass things on. It

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Speaker 2: may take a little longer this time, because people want

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Speaker 2: to wait for things to settle down before they make

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Speaker 2: any big company changing moves. You know, if you're running

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Speaker 2: a huge company and the tariffs are up and down

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Speaker 2: by twenty percent inside of a week, which sounds insane,

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Speaker 2: But if you're running a company, the smartest thing to

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Speaker 2: do is wait, even if it costs you, because if

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Speaker 2: you act too quickly, it could cost you even more.

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Speaker 1: After so much tariff whiplash, it makes sense that companies

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Speaker 1: might be wary of changing their prices too soon, but

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Speaker 1: Stacy says it's unlikely the effects of these new tariffs

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Speaker 1: will completely disappear, even if the next administration has a

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Speaker 1: different trade agenda, because once the tariff genie gets out

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Speaker 1: of the bottle, it's hard to put it back in.

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Speaker 2: The problem is, as I talked to a bunch of

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Speaker 2: trade economists, you know, whole industries start to get built

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Speaker 2: up around the tariffs, and a bureaucracy builds up around

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Speaker 2: the tariffs, and so the momentum becomes to keep the

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Speaker 2: tariffs in place. It's not as simple as just ending them.

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Speaker 2: It's not as easy as like, Okay, great, so we

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Speaker 2: can get all those toasters coming back into the US

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Speaker 2: that you had now diverted to selling to France. And no,

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Speaker 2: it's not quite so easy because supply chains have shifted,

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Speaker 2: buying patterns of shifted, prices have shifted. US retailers don't

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Speaker 2: want to charge less at that point either.

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Speaker 4: So these things come with inertia.

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Speaker 1: It's not just about perhaps being dependent on some sort

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Speaker 1: of tariff revenue. It's that there's this entire paraff ecosystem

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Speaker 1: that's really hard to unwind.

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Speaker 2: Yes, yes, and that is one of the big concerns

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Speaker 2: that got expressed to me by a bunch of economists

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Speaker 2: was like well, once this is in place, it's going

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Speaker 2: to be hard to dismantle.

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Speaker 1: This is the Big Take from Bloomberg News. I'm Sarah Holder.

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