STEVE INSKEEP, HOST:
President Trump said he would not back off his tariffs, and then shortly after they took effect, he backed off many of them. The president also changed the tax rates that Americans pay on Chinese goods multiple times. So what does this week add up to? We're going to talk it through with Kai Ryssdal, who many of us hear in the evenings on Marketplace. Kai, good to hear you in the morning.
KAI RYSSDAL, BYLINE: Hey, Steve, how are you?
INSKEEP: I'm doing OK. Thanks so much. What do you think about when you hear the tariff rate on Chinese goods is now 145%?
RYSSDAL: Well, I think the next move clearly is going to be infinity plus one, right? That's where this is going.
INSKEEP: Sure.
RYSSDAL: Overnight, the Chinese said we'll see your 145, and we'll go 125 of our own. But they also said if you're looking for a climbdown on this one, which I think and hope everybody is, they also said the U.S. moves are a joke, and we're not going to respond anymore. So if there's a glimmer of hope, then that's it, right?
INSKEEP: That's the glimmer of hope?
RYSSDAL: Yes.
INSKEEP: That it's a joke and we're not going to respond anymore?
RYSSDAL: Look...
INSKEEP: Oh, they're saying they're not going to raise their tariffs, but go on.
RYSSDAL: Well, no, that's exactly right. They're saying, we're done with this. And I think if you're looking for anything, that's what it's going to be - it's the Chinese saying, we're done. We can't do this anymore, and let's just see what happens. Now, at 145% or infinity plus 1, there is effectively going to be no trade between these two countries, which is really a bad thing because they're the first and second biggest economies in the world. Who knows what's going to happen. But I think if you're looking for a silver lining, that's the very small one.
INSKEEP: OK. People talk about decoupling between the U.S. and China, which would be a convulsion. They've used that term for years. But is this real decoupling if these tariffs persist?
RYSSDAL: No, it's not. Look, the U.S. and Chinese trade relationship has built over decades, and it's folly to think that in the course of months or even weeks the Trump administration is going to be able to decouple. Now, are there real structural problems with the trade relationships between the two countries? Absolutely, absolutely. But I think what's going to have to happen is that over time - and this is a time span of years and maybe decades, which is how long it took to build up - that that's what's going to have to happen. They're going to have to do it slowly and over time, not as the Trump administration seems to want to do in weeks and months.
INSKEEP: So let's talk about, well, the rest of the world. The president backed down on tariffs for the rest of the world, leaving in place this 10% tariff. But the huge tariffs on places like Vietnam go away for 90 days.
RYSSDAL: Right.
INSKEEP: I sat with a CEO just this week, who was already - this is before the president backed down.
RYSSDAL: Yep.
INSKEEP: The CEO was already acting like the recession is here, talking about a hiring freeze, preparing for layoffs, canceling leases, saving on expenses. That was before the president backed down for 90 days, the 90-day pause. What does that mean for businesspeople who do global business?
RYSSDAL: It means uncertainty. It means we don't know from one day to the next what the president of the United States is going to do with the global economy. Let's think about what's happening here, right? The entire global economy is now subject to the whims of one guy, right? And he's known to change his mind mercurially, to be kind, right? So companies and consumers are looking at this and saying, well, look, maybe we're not going to be facing actual layoffs, but certainly hiring is going to pause.
As you said, the CEO said capital expenditures, right? Investments are going to pause. And that eventually, as with everything in this economy, trickles down to the consumer. And so, consumers are going to say, well, look, maybe I don't need to buy that new TV today. Maybe I need to wait and see what's going to happen. And when you have uncertainty and chaos, people don't do things. And economic activity slowing is another word for recession.
INSKEEP: This was what we were hearing Thursday or Friday of last week when the president first announced the tariffs. People were saying, we're going to pause even shipping goods to America until we figure this out. It sounds like you're telling me that could last another three months minimum.
RYSSDAL: Three months minimum because - I'm going to say this again - we don't know what President Trump is going to do. And when you have that kind of - I'm shrugging here. Nobody can see it. But when you have that kind of I don't know, then everybody just sits and pauses. Look, that's what the Fed's going to do, too. The Fed looks at this and says, we don't know if prices are going higher. We don't know if growth is going to slow. So we're just going to sit here and do nothing, which for the Fed, for the central bank, is fine. For everybody else in this economy, to slow their economic activity is a very bad thing.
INSKEEP: You sound skeptical of all this. So tell me what you would say to somebody in the American national security establishment who would say, as Senator Todd Young said to us in the other hour of the program...
RYSSDAL: I heard it, yep.
INSKEEP: ...Effectively, well, you know, there is a problem here. Someone needs to address it because China's a problem.
RYSSDAL: Yeah, so, look, China really is a problem, and we can't emphasize that enough. There are deep structural problems. But the way to do it is not to try to do it in a week and a half or two months, right? This is going to take years and decades. So I would say now to people in positions of power, what are you doing? There is no plan right now. It's just chaos, and that is not good.
INSKEEP: And that was Senator Young's other question was, what's the plan? Kai, thanks so much.
RYSSDAL: You bet. Good to talk to you, Steve.
INSKEEP: Kai Ryssdal of Marketplace on American Public Media. Transcript provided by NPR, Copyright NPR.
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