Steel tariffs déjà vu

This episode explores the economic impact and political implications of the U.S. increasing tariffs on Chinese steel and aluminum, originally imposed in 2018 and now intensified under President Biden.

1. U.S. consumers and industries bear the cost of tariffs, contrary to political claims that "China will pay."
2. The tariffs have resulted in minimal job growth in the U.S. steel sector, with only a slight increase in employment.
3. Chinese steel still enters the U.S. market through indirect routes, rendering the tariff increase less effective.
4. Both President Biden and former President Trump have used the steel industry as a political tool to demonstrate toughness on China.
5. Economic experts predict that the stock value of some U.S. steel companies may rise due to these political maneuvers.

1. Introduction to Tariff Increases

Host Kristen Schwab updates listeners on the Biden administration's decision to increase steel tariffs, exploring the background and immediate impacts. Henry Epp: "That's not really what happened. In fact, it was U.S. consumers and industries here that ended up paying the tariffs."

2. Effects on U.S. Businesses

Discussion on how rising steel prices affect U.S. manufacturers and the broader economy. Kathryn Russ: "These increases in steel prices for domestic manufacturers end up making it harder when our steel-using manufacturers export abroad."

3. Political Context

Analysis of the political use of steel tariffs in U.S. foreign policy and elections. Gordon Johnson: "So ultimately, raising tariffs even further on Chinese steel might not do much."

1. Understand the real costs of tariffs on daily products and consider advocating for fair trade policies.
2. Evaluate the impact of global politics on local economies and participate in community discussions.
3. Stay informed about the origins and impacts of products you buy, considering their global economic implications.
4. Support local businesses that may be affected by international trade policies and tariffs.
5. Engage in political processes by voicing opinions on trade policies through voting and public commentary.

Today, President Joe Biden called for tariffs to be tripled on certain Chinese steel and aluminum products. These tariffs, first implemented by then-President Donald Trump in 2018, are now the latest move in the ongoing U.S.-China trade war. Plus, sky-high car insurance premiums, the government’s latest energy-efficiency standards and China’s shrinking wine market.

People

Kristen Schwab, Henry Epp, Kathryn Russ, Gordon Johnson

Companies

None

Books

None

Guest Name(s):

None

Content Warnings:

None

Invest Puerto Rico
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Kristin Schwab
From american public media, this is Marketplace in New York. I'm Kristin Schwab, in for Kairisdahl. It's Wednesday, April 17. Good to have you here today. We're starting the show with some news, deja vu, or really more of an update of sorts, on the trade war between the US and China.

Back in 2018, then President Donald Trump imposed a number of tariffs on imports to the US, including some on chinese aluminum and steel. Those tariffs never went away. And here's the deja vu part. President Biden is now calling on the US trade representative to increase them. He wants to triple tariffs on some chinese steel and aluminum that would bring them from 7.5% to 25%.

Marketplaces Henry Epp looks at the economic effects then President Donald Trump used to say China would pay all the new tariffs on its imports to the US. That's not really what happened. In fact, it was us consumers and industries here that ended up paying the tariffs. Enu Monik is a fellow for trade policy at the Council on Foreign Relations. At the end of the day, what the administration had hoped to achieve certainly did not come to fruition.

What did come to fruition was an increase in steel prices, and that definitely had an effect on american companies that use steel to make other stuff, says Kathryn Russ, a professor of economics at UC Davis. These increases in steel prices for domestic manufacturers end up making it harder when our steel using manufacturers export abroad. Okay, but the whole point of the tariffs was to boost domestic manufacturing and the domestic steelmaking industry. So did they get more people working in the steel sector? If you really squint, you might see a thousand extra jobs in that sector.

What has happened is direct chinese steel imports to the US have declined, but they were never very big to begin with. Meanwhile, since China's construction sector has struggled recently, they have more steel than they need, says Gordon Johnson, whose firm, GLJ research analyzes the industry, they've had to find other places to put their steel, so they're exporting that steel to the rest of the world. But Johnson says since steel prices are higher in the US, a lot of that cheaper chinese steel still makes its way here by way of other countries. So China can shoot their steel into Poland, thus negatively affecting polish steelmakers. And then polish steelmakers therefore will shoot their steel into the US.

So ultimately, raising tariffs even further on chinese steel might not do much, he says. But both Biden and Trump are going to use the steel industry as a political football to show that they're tough on China. Which is why he thinks the stock value of some steel companies will rise in the months ahead. I'm Henry Epp for marketplace. Wall street today started green, finished in the red.

We'll have the details when we do the numbers.

There are a handful of line items keeping the overall inflation number high. Shelter is one of them. Another is car insurance premiums have gone up, way up. On average, car insurance costs 22% more than it did about a year ago. And according to new data from JD Power, more people are comparing prices and shopping around marketplaces.

Samantha Fields has more. When Emma Balter bought her first car about four years ago, it was a brand new expense for her. I used to live in New York City and before New York City in Europe, and so I didn't own a car until I moved to Houston. So I have learnt a lot about cars and how much they cost. When she got her 2019 Nissan, her insurance was about $147 a month on top of her car payment.

Henry Epp
But I thought that's kind of how much it costs. Every year since, though, it's gone up and every year, basically I've called my broker. I'm like, hey, this has gone up again. Can you get me a better deal elsewhere? And essentially the last couple of times that I've tried to do that, they've said, listen, this is what the market is right now.

Kristin Schwab
It sucks. A lot of people are running into this these days with car insurance costs up 22% or more in some places, says Chase Gardner at the online insurance agent insurify. It's the biggest year over year jump we've seen in decades, and so we are seeing more interest in looking around for new policy. More than 13% of car owners looked around for a better deal last month. Stephen Crudson at JD Power says that's more than at any other time since the pandemic began.

Consumers are definitely, I think it's fair to say, fed up with the continual rate increases and seeing their premiums go up every six months. Whether or not they're actually able to find a lower premium is another question. A growing number of drivers are switching insurers, but only about 4%. There's also another trend JD power is seeing lately. Crudson says more people are driving without insurance, but most, like Emma Balter in Houston, just end up sticking with what they've got.

Henry Epp
Even after shopping around the last time that I called, I guess a couple weeks ago, they said, well, let me see if I can tweak your policy to give you a better price. The best her agent could find, they told her, was dollar 13 a month cheaper with a higher deductible. She passed and that's it. $205. That's just what I'm paying more than double her homeowners insurance.

I'm Samantha Fields for marketplace.

Kristin Schwab
When'S the last time you saw a movie in person at a theater? I ask because I couldn't remember. I had to dig through my email. Turns out the last time I went was a full six months ago to see killers of the Flower moon. And I'm not the only one going to the movies.

Less ticket sales in 2023 were a third lower than they were in 2019, according to the box office data site. The numbers still somehow, despite a pandemic and streaming and Hollywood strikes that halted film productions, movie theaters are still standing, and some of that has to do with their unique architecture. Kate King covers real estate for the Wall Street Journal and wrote about how movie theaters are hanging on. She joins me now. Kate, welcome to the program.

Henry Epp
Thank you for having me. So I never really thought about kind of how odd movie theaters are as a space until I read your story. What makes them so hard to repurpose? Well, if you think about it, movie theaters are built with sloped concrete floor for stadium seating, so everyone has a nice, clear view of the movie. And movie theaters have no windows.

They're big, dark rooms. So that's great for watching a movie, but it's not so great for turning that real estate into something else. So what does that mean when it comes to rent prices for these spaces and kind of who has the power there? So it's really interesting because retail more broadly is doing quite well right now. From a real estate perspective, retail landlords are in kind of a rare position of power in many respects.

They can command higher rents than in previous years. Availability for retail space broadly is at an all time low. However, movie theaters are a little bit of a different animal. Retail landlords really can't use movie theaters for anything else unless they want to tear them down completely. So rather than just leaving the spaces vacant, they've kind of been forced, when chains go into bankruptcy or leases are up for renewal, to agree to rent reductions.

Kristin Schwab
Well, what are theater owners doing to bring crowds back? Movie theater owners are definitely making the movie theater an experience that you can't get at home on your couch with your big screen. So they need to convince people that it's worth the money and the time, and possibly sitting next to someone who's coughing or laughing too loud to come into the theater. So even at the most basic level, they are ripping out those old crammed together seats and they are putting in the big, comfy recliners. Sometimes these are heated seats, sometimes they are 4d seats in the sense that they rumble around and water sprays out at you to, I guess, make a more immersive movie going experience.

Henry Epp
They're going beyond just the popcorn and candy, and they're adding in alcohol, other types of food that you can eat while you're watching, in some cases have delivered to your seat and then some. Movie theaters are kind of diversifying their properties and making sure that they're not just totally reliant on movies to bring in the revenue. So there's one theater in Texas that recently opened, which includes pickleball, bocce courts, bowling alleys, rock climbing wall, and of course, lots of restaurants and bars. It almost doesn't even sound like a movie theater anymore. I mean, do you think that cinema going is changing and will just be different in the future?

I think there's definitely a push towards this more. I think the industry term is family entertainment center, where it's really focused on the experience. So all of retail broadly is focused on making sure you're offering something that can't be gotten online for cheaper. So I think there's definitely the idea of continuing movies in a way of making it a broader, flashier experience. It almost seems like if all of the things, the pandemic, streaming, whatnot, didn't kill the movie theater, nothing will.

Kristin Schwab
Do you think that's true? I think there will always be a place for movie theaters. I think there's always going to be people who want to go and see the big blockbusters or, you know, even indie films in theaters. So it does seem like that they're indestructible to a certain degree. I don't know if we'll ever see the huge return of crowds on opening night the way it was maybe ten or 15 years ago.

Henry Epp
Maybe there won't be as many movie theaters as in the past. But for sure, I think this real estate will survive in some form long term. Kate King covers real estate for the Wall Street Journal. Thanks so much, Kate. Oh, thanks for having me.

Kristin Schwab
The Federal Reserve released its latest beige book today. Regular listeners might have noticed were a little obsessed with it around here. Thats because its not all about numbers and data. Its an anecdotal look at the economy gathered from interviews with business leaders and analysts across the twelve fed regional banks. Well take a look at some of its highlights later.

In the meantime, lets dig into our own marketplace beige book of sorts, our Rolodex of business owners we keep tabs on. Today we have Eric Vaughn, the owner of Eric's I've been framed, a custom frame shop in Detroit. Business has been pretty good. We've been extremely busy. We have a few contracts that we had to fulfill.

Eric Vaughn
We do a lot of work for the Detroit Institute of Arts. They use reproductions of some of the works there and put them in parks and other places. Each year we have to create new frames because we use wood frames and sometimes it would rain and the frames will warp. So they only expect to get one to two seasons out of the frame. Usually my deadline for them is the home opener for the Detroit Tigers.

Usually that's when they want their frames. So it was last week, last Friday.

Well, my biggest challenge is finding enough time to do the work, and it's been tough lately because we have projects and some of them are quick, fast, and it requires more time for us to actually lay it out, design it and put it together and order materials. So it's a lot that goes into it. I'm thinking about hiring someone during the summer because I do a few outdoor festivals, two to be exact, a couple jazz festivals, that I definitely need the extra help to run the booth and to make sure that we have enough people to cover. And I'm not so concerned about the wages. Most of the times they're inexperienced and so they have to start off at a certain level.

And then as they stay on, I usually increase their wages.

I hope that we can continue on with the framing and matting and repairing of art. And I have no doubt that it's going to continue because everybody has something that needs to be framed. You've got Mother's Day coming up. You have Father's Day following. After that, you have graduations.

And, you know, my daughter's graduating. I know she's going to be expecting me to frame up her diploma. So all those type of events will keep us busy.

Kristin Schwab
That was Eric Vaughn at Eric's. I've been framed in Detroit.

Coming up, they use the wine to give some presents to good clients. Sometimes the thank you note just isn't enough. But first, let's do the numbers. The Dow Jones industrial average lost 45 points, a 10th percent, to finish at 37,753. The Nasdaq fell 181 points, one and a 10th percent to close at 15 13,683.

And the S and P 500 shed 29.6 tenths percent to end at 50 22. United Airlines flew up more than 17% after posting a smaller than expected loss in the first quarter. The company said the emergency grounding of Boeing's 737 Max nine jetliner had cost it $200 million in the quarter. Otherwise it would have made a profit. Boeing was down two tenths as company whistleblowers, testifying on Capitol Hill, accused the planemaker of prioritizing profits over safety.

Rival Airbus added almost six tenths percent. Sam Fields was telling us earlier about how people are increasingly shopping around for car insurance, looking at some companies in that sector, progressive grew four tenths percent. Travelers dropped seven and four tenths percent as it posted first quarter earnings that fell short of analysts expectations. Bonds rose. The yield on the ten year t note fell to 4.58%.

You're listening to Marketplace.

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Us only. Learn more@public.com Disclosure High yield account hey there. I'm Bridget, co host of million Bazillion marketplaces podcast for kids about money. I want to tell you about our email newsletter course, million Bazillion Academy. In this new and improved course, we'll help your kids learn about crypto, credit cards, and inflation in just six weeks.

Henry Epp
Each lesson comes with a podcast episode, a fun cartoon, discussion, questions, and an activity that lets kids apply what theyre learning in the real world. You can start at any time and work at your own pace. Sign up today@marketplace.org. Academy this is Marketplace. Im Kristen Schwab.

Kristin Schwab
Yesterday on the show, we talked about how the Texas energy grid is dealing with more demand for electricity. Well, one way to curb demand is to force people to use it less by default. Think energy efficiency. The Department of Energy just issued its standards for appliances like commercial air conditioners, dishwashers, and beverage chillers. The change is expected to save businesses and households billions of dollars and reduce carbon emissions by millions of metric tons.

So for some context, we had marketplaces. Elizabeth Troval look back at how the energy standards of yesteryear are impacting energy usage today. To see energy efficiency standards at work, all it takes is a walk through your home. Andrew Dulaske is with the Appliance Standards Awareness project. Whether it's your refrigerator or your air conditioner or your clothes dryer would use much more electricity than it does if not for the standards that are on the books today.

Henry Epp
Exactly how much electricity? A typical refrigerator today uses only one fifth as much energy as a new refrigerator sold in the 1970s. That's a very big deal. But it's bigger. It's got more features.

Kristin Schwab
There's improved insulation in the walls. There's improved motors that circulate the refrigerating fluid. In the 1990s, Dan Riker with Stanford University worked for the Clinton administration improving energy efficiency standards for appliances. During his tenure, he coined the phrase building the fridge to the 21st century. We set some pretty strict standards, but.

Henry Epp
The thing is, the energy savings of those standards accrue over years. The impact is measured over decades because people buy refrigerators and they keep them. For a long time, and eventually those savings add up. Bernita Haynes is with the national Consumer Law clinic. The typical us household spends about $500 less each year on utility bills, and that's because of existing efficiency standards for a range of products.

She says standards are especially helpful for low income people who spend more of their paycheck on utility bills and tend to be renters using appliances provided by a landlord. So increasing the baseline efficiency of these appliances will ensure that landlords are actually putting more efficient appliances in these apartments so renters aren't stuck with cheap, wasteful appliances. I'm Elizabeth Trovall for marketplace.

Kristin Schwab
Henry Epp was telling us earlier about President Bidens plans to hike tariffs on chinese steel and aluminum exports. Now lets narrow in on one of the countrys major imports, wine. Some 60% of the wine consumed in China is imported, but demand has been shrinking. Its only a third of what it was in 2017. And now the countrys wine cellars are having a hard time staying in business.

Our China correspondent Jennifer Pak has more. For more than a decade, Shanghais San Yanjian operated as a wine bar where folks could sit and relax with a glass of wine. But the business was hit so hard during the pandemic that last year the owner, Leon Liang pivoted and he turned it into a shop where people can buy wine by the bottle to take out. When we rent a wine bar every month we can sell roughly around 1500 bottles. But now every month we can sell, let's say over 3500 bottles per month.

Henry Epp
At a big wine show in Shanghai, vendors complained they were hurting and had been since before the pandemic. Australian wine exporter Vik has gupta outlined part of the problem. You walk here and count the number of labels. There are 2300,000 types of wine here, he says Chinas wine market is crowded. His sales have dropped 60 70% from pre pandemic levels.

Then theres Chinas economy. Its still growing, but not as fast as before, and that hurts wine sales, says Sebastien Carot, a 7th generation winemaker from France. The wine here is used for the business. They use the wine to give some presents to good clients and when business. Is slow, he says theres no need to do that.

His sales are only 40% of what they were in 2019. The wine industry is also vulnerable to geopolitics, like when Australias government wanted to probe the origins of COVID in 2020. Soon after, the chinese government investigated Australia for unfair subsidies and dumping, says wine consultant.

Kristin Schwab
China increased the tariff on australian wine by as much as 200%. So sales of australian wine in China fell off a cliff in 2021 and 2022. China has now lifted those punitive tariffs, but the tariffs on american wine are still in place because of ongoing trade tensions. Even so, says Yinkai, there are many reasons to be hopeful about the wine industry here. Here, China still ranks among the world's top ten wine consuming nations.

Henry Epp
But he says wine makes up only 2% of the country's alcoholic drinks market. The preferred drinks are beer and a fiery grain alcohol called baijiu. China is still a largely untapped market. For one, there's still a lot of potential for expansion. That's what's brought Abdul Kalilova Rusbeck to start importing wine from his native Moldova.

Kristin Schwab
We want to enter the chinese market mainly because of the war in Ukraine. We used to be able to sell 50 million bottles a year to Russia and Ukraine. Once the war began, we lost both markets. Back at the San Yanjian wine shop, owner Liang Liang says he's opening another branch in Shanghai. He's crunched the numbers.

Leon Liang
It's around 300 am beef per person every night. Hes setting up in an area where theres lots of restaurants with very poor wine lists. He reckons if diners see his shop, they might buy a bottle of fine wine for $40 and take it to the restaurant. Many dont charge extra for bringing your own bottle. So how do you see your business in the next three to five years?

I think all the chinese market is recovering, and more and more people, theyre still drinking wine. And what they would like, he says, is fine wine at an affordable price. In Shanghai, I'm Jennifer Pack from Marketplace.

Kristin Schwab
This final note. On the way out today, I promised we'd take a look at the beige book again. That's the Federal Reserve's anecdotal look at the economy that's published eight times a year. A number of entries across the regional feds focused on jobs, and the takeaway is pretty mixed. From the Minneapolis Fed, a Wisconsin staffing contact said the job market is more unpredictable than ever, with some businesses slowing their hiring and others ramping it up.

Case in point, the Kansas City Fed says AI is replacing entire teams of software engineers. Meanwhile, out of Richmond, business owners say the number of job applicants are increasing. And one owner surveyed says when they find good workers, they hire them even if they don't have an open position. Our media production team includes Brian Allison, Jake Cherry, Justin Dooler, Drew Jostad, Gary O'Keefe, Charlton Thorpe, Juan Carlos Tirado, and Becca Weinman. Jeff Peters is the manager of media production.

And I'm Kristen Schwab. We'll be back tomorrow.

This is APM.

Henry Epp
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