President Trump says tariffs will spark a rebirth of American industry, but U .S. exporters are bracing for the worst. The retaliatory tariffs are going to be really ugly and it's just going to kill the man.
Will Trump's gamble on a trade war pay off?
I'm Michelle Martin, that's Layla Fadel, and this is a first from NPR News.
We also get reaction from markets and leaders around the world.
The administration's tariffs have no basis in logic and they go against the basis of our two nations partnership.
This is not the act of a friend.
And TikTok has until Saturday to find a new owner.
A number of high profile buyers are lining up, but who is leading the pack?
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President Trump is building an economic barrier designed to limit imports and encourage domestic manufacturing.
Starting this weekend, Trump plans to charge a minimum 10 % tax on virtually all foreign goods coming into the U .S. with imports from dozens of countries facing much higher levies.
Speaking in the White House Rose Garden yesterday, Trump said that tariffs would help spark a rebirth of American industry.
We're going to produce the cars and ships, ships, airplanes, minerals and medicines that we need right here in America.
The pharmaceutical companies are going to become roaring back.
They're coming roaring back.
They're all coming back to our country because if they don't, they got a big tax to pay.
Early reaction to the president's move has been mostly negative.
Stock futures fell sharply overnight.
The European Union has threatened countermeasures and other U .S. trading partners are expected to retaliate with tariffs of their own on US exports.
And Paris chief economics correspondent Scott Horsley joins us now to break this down.
Good morning, Scott.
Good morning, Linda.
All right, so you know President Trump promised high tariffs throughout the campaign, so is anyone actually surprised by this move?
I think they're surprised by the magnitude.
For example, we're talking about a 20 % tax on goods coming in from the European Union.
Much higher than the US charges today.
In other ways though, this is not surprising.
Despite the United States wealth and power, Trump has been complaining for decades that this country is being taken advantage of and he's determined to fight back with tariffs even as financial markets have been flashing red saying don't do it.
Now Canada and Mexico two of our biggest trading partners are being spared these additional tariffs for now but Trump is slapping stiff due taxes on imports from economies around the world even for products we cannot produce in the US like the coffee and banana you might be having for breakfast this morning.
Oh wow so how did the White House decide who pays what?
Trump calls these reciprocal tariffs saying they're simply designed to match the trade barriers that other countries impose on U .S. exports.
That means they do it to us and we do it to them very simple, can't get any simpler than that.
But the White House later acknowledged it would be too hard to calculate the actual trade barriers from every other country so they just picked an arbitrary number they thought would be high enough to chip away at each country's trade surplus with the U .S. And the result is a huge tariff increase, a 24 % tax on imports from Japan, a 34 % tax on imports from China in addition to the 20 % tariff that were already in place.
Now other countries might absorb some of that cost, but a big part will be paid by businesses and consumers here in the U .S. So let's talk about that.
What's the potential economic effect of that?
Economists say it will likely mean higher prices and slower growth.
consumers are nervous, so are exporters.
Tim Fiore conducts a monthly survey of factory managers for the Institute for Supply Management.
He says they're already bracing for retaliation.
Here it comes and we're already seeing that.
And we have manufacturers in the U .S. already feeling that experience.
So the retaliatory tariffs are going to be really ugly and it's just going to kill demand.
Domestic manufacturers are supposed to be the beneficiaries of this trade war, but factory orders, output, employment were all down last month in participation.
And what about international fallout?
This is an enormous gamble.
The US launched a similar worldwide trade war back in the 1930s.
It did not end well.
The notorious Smoot -Hawley tariffs are widely considered to have worsened the Great Depression.
And economists say Trump's new import taxes are even more draconian than those almost a century ago.
NPR's Scott Horsley.
Thank you, Scott. You're welcome.
We have more now on the international response to President Trump's sweeping new tariffs.
It's been swift. Yeah, leaders across the world have reacted with dismay and confusion following President Trump's announcement.
Some are preparing countermeasures targeting the U .S., while others are hoping to strike up negotiations.
For more on this, we turn to Beijing now with NPR's John Ruach. John, good morning.
Good morning. How have global markets taken the news?
Well, the fallout in markets has been far and wide.
Some of the countries that are hardest hit by the tariffs, and actually that are most dependent on trade with the U .S., are in Asia, and we saw a broad sell -off here from Hong Kong and China to South Korea all the way down to Southeast Asia.
Markets were down. Trump put a 24 % tariff on Japanese goods, which apparently surprised markets there.
The Nikkei 225 dropped close to 3 % today.
In Vietnam, which has been a huge beneficiary of U .S.-China trade friction as manufacturers have moved south of the border, Trump hit it with one of the highest tariff rates, 46%, And the country's Ho Chi Minh stock index shed nearly 7 % on the day.
In Europe it seems to be a similar story of selling.
You know economists are recalibrating their expectations now, and investors are just nervous.
And what about governments?
How are governments around the world reacting?
Unhappiness and frustration so far.
I mean many say these tariffs were unwarranted.
Here's Prime Minister Anthony Albanese of Australia which got the bare minimum 10%.
The administration's tariffs have no basis in logic, and they go against the basis of our Two Nations Partnership.
This is not the act of a friend.
Britain was hit with a minimum 10 % also, but the prime minister's office there expressed some relief that the country wasn't hit with 20%, like the EU.
Speaking of which, the European Commission president said Europe was open to negotiations but working on countermeasures, in case the talks fail.
You know, President Trump has signaled that he's open to deal -making, so many countries are taking these sweeping tariffs as kind of an opening salvo for negotiations.
Others are looking at a range of options, you know, Japan, Brazil, China have suggested that tariffs break World Trade Organization rules.
What about in China, where you are?
What's been the reaction there?
Well, the Commerce Ministry issued a statement calling for the removal of these tariffs, and it says, you know, that protectionism leads nowhere.
China's been hammered by tariffs before, and was frankly girding for this moment.
The across the board tariff rate on Chinese imports to the U .S. now is about 54 percent.
Trump was talking about 60 percent while he was campaigning, so it's not far off from that.
Professor Wu Xinbao of Fudan University in Shanghai thinks China will retaliate once the Trump tariffs take effect in a few days.
And then hopefully at some point the two sides can talk.
If neither side doesn't want to get locked down in a loose, loose situation, we have to find our way out.
But he thinks China can afford to punch back and then wait for a bit to see if Trump administration feels some heat from all these tariffs.
Any sense of how damaging these tariffs will be to these countries?
Yeah, I asked Jack Zhang about this.
He's a professor at the University of Kansas, and he runs the trade war lab there.
He says it kind of all depends.
I still hold out a sliver of hope, because it depends on how much trade destruction happens, and that depends on how much retaliation we're going to see.
You know, a lot of economists think these tariffs are going to be a big global shock anyway, and could push many countries into recession." That is NPR's Jon Rorch in Beijing.
Thank you Jon. You're welcome.
The owners of TikTok have until Saturday to sell the app.
Earlier this year lawmakers passed a law banning the app citing national security concerns unless it sheds its China -based owner, ByteDance.
Following his inauguration, President Trump said he would not enforce the ban, which was still the law, and that he'd hold a public auction to sell TikTok over the coming months.
Many bidders have lined up, including one from a YouTuber known as MrBeast and a separate offer from Amazon.
But leading the pack is software company Oracle, according to NPR's Bobby Allen, who joins me now.
Good morning, Bobby.
Good morning. So why is Oracle's offer the Trump administration's preferred plan?
Yeah for several reasons.
First, Oracle already operates almost all of TikTok's cloud so oracle systems are you know already supporting the app.
Secondly Oracle has experience with with high -level national security data.
For instance Oracle does cloud computer work for parts of the government including the CIA and finally Oracle is run by billionaire Trump supporter Larry Ellison and he has been setting the stage Leila for this deal for years by by warming up to Trump, by defending Trump, Ellison even hammered out this deal that we're talking about right now, which involves leasing TikTok's algorithm from its current owner, the Chinese company, ByteDance.
Leasing an algorithm.
Is that even a thing?
No, it's not really a thing, to be honest. It's extremely unusual, but a source close to the negotiations explained the logic behind it this way.
A new US entity would be created, led by Oracle, that can oversee TikTok.
Okay, and this new entity would lease TikTok's algorithm from ByteDance that would get around having to have the Chinese government sign off on the selling of the algorithm, which has always been an open question as to whether Beijing would approve that or not.
But I don't understand that because I thought the whole idea of the TikTok ban was to split TikTok from China.
Would this plan do that?
Yeah, that's, it depends on how you see that, right?
It's been a very divisive thing in the White House, which is full of China hawks, and this the big question whether leasing the tik -tok algorithm would mean china does not control it this gets to why congress passed a law forcing tik tok in china to break up in the first place as you've mentioned uh and lawmakers of both parties remain concerned that china will use tik -tok to influence americans to steal their data trump is hoping this deal though will put those fears to rest but there is no guarantee okay so is there a timeline when this all might happen yeah trump has set this saturday as the deadline
for when tik -tok needs to be sold.
Most are expecting a deal to be announced sometime before then.
The question becomes, how is China going to respond?
Under the Oracle deal, under consideration in the White House, they're making a concession to ByteDance by allowing ByteDance to keep a minority stake in the company.
It's worth noting that Trump's stiff tariffs on Chinese imports are part of the TikTok conversation.
Chinese authorities, I think, were hoping TikTok could be used as leverage to get a better deal on tariffs, meaning, you know, China supported a TikTok deal, maybe they would get some relief on tariffs.
But it doesn't quite look like that is what happened.
And so you're telling me that Mr. Beast doesn't have a chance?
No, Mr. Beast doesn't have a chance.
It's really sad, I know.
Alright. Thanks, Bobby.
Thanks. And that's a first for Thursday, April 3, I'm Leila Falden and I'm Michelle Martin.
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