Tariffs, grocery prices and other listener questions

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0:40realized as we started to sift through this diet metaphoric pile was that our inbox was filled with, yes, with letters, but also with uncertainty and excitement and shock. This was not an ordinary bunch of questions. Like, take this one from an academic historian. So my name is Aaron Fountain and I live in Maryland. Our producer, Emma Peasley, called Aaron up. Do you want to tell me about your question and why you decided to write into us? So since the 2024 presidential election, many commentators in media have talked about how many voters voted for Trump because of economic anxiety and inequality.

1:21But I'm curious, do people think that he can actually, you know, continue to address inequality and will it actually get better or will it get worse? I will say with your question, we were like, we don't know. Like your question is a hard question. Were you expecting, like, what kind of answer did you think? You know, it's hard because, like I said, I am a historian by training. It really takes years and sometimes decades to assess something. Decades. Even Erin, who wrote in with a question, acknowledges we just can't know yet. We have no crystal ball. There's no way to know exactly what will happen.

2:02And yeah, a lot of your questions, it's just impossible to answer now. But what we can do is look at how much power the president really has to shape the economy. Where does that power come from? And can Trump use it to do the things he has promised to do? Hello, and welcome to Planet Money. I'm Amanda Aronchik. Today on the show, your questions about the next four years with answers. Questions about tariffs, oil, grocery prices, and the future of NPR. That's all coming up.

2:45This message comes from NPR sponsor Zendesk, introducing the next generation of AI agents built to deliver resolutions for everyone. With an easy setup that can be completed in minutes, not months, Zendesk AI agents resolve 30 % of interactions instantly, quickly giving your customers what they need. Loved by over 10 ,000 companies, Zendesk AI makes service teams more efficient, businesses run better, and your customers happier. That's the Zendesk AI effect. Find out more at zendesk.com. Okay, so today we are doing questions from you, our listeners, all about President-elect Donald Trump and the next four years.

3:25To answer your questions, I will be bringing in different people from the Planet Money team. First up, Jeff Guo. Hello, Jeff. Hey, Amanda. So my listener question has to do with one of President Trump's big campaign promises. It's about oil. I will end the devastating inflation crisis immediately, bring down interest rates and lower the cost of energy. We will drill, baby, drill. Ah, drill, baby, drill. That one's a classic. It really is. So listener Michael Mesa basically wanted to know, can the president make a dent in energy prices and also, you know, in inflation by encouraging oil production?

4:05Yeah, this seems like a big, important international question because the U.S. is the largest producer of oil in the world. Exactly. So I called up Samantha Gross, and she actually used to work in the oil industry. She was an engineer. She helped oil refineries manage their leftover gunk. I used to say that if it came out the back end of the refinery, it was my fault. Or my job, I should say. Ooh, yuck. Now, these days, Samantha is an expert in energy policy at the Brookings Institution. And she says when it comes to increasing the supply of oil, the president basically has two main moves. Number one, he can open up more federal land for drilling, you know, hand out more drilling permits, that sort of stuff.

4:46Yes, right. There have been, I remember, it's all coming back to me, a lot of political fights over this, right? Whether the president was going to allow for drilling in the Arctic or drilling in the Gulf Coast. Yeah, and those fights matter when it comes to protecting those places from pollution and potential oil spills. But in terms of just raw, crude production, Samantha says it's not that significant. Only about a quarter of U.S. oil comes from federal land or waters. So it gets a lot of attention because it's a lever that the president has. But it's not where most of our production comes from.

5:23Most of the oil that the U.S. produces has always come from private land or land owned by individual states like Texas. The president doesn't control that. OK, but if President Trump just threw open the doors and was like, yeah, come on in oil companies, you can drill on federal land, no problem. Like, I have to assume that that would be enough oil production that it would bring down the price of oil at least some. Yes and no. Samantha says in the long term, maybe. But we're talking like the really long term because oil and gas companies, they make their drilling plans years and years in advance.

6:01They'll have the land that's producing now. They'll have the next land they plan to drill. They'll have some land that is prospective, that they're still figuring things out. So it can be years between leasing land and drilling on it. And the other thing is that even if President Trump wants companies to drill more on federal land, it's not clear that the companies themselves would even really want to. Because the rest of the world, it's already producing a lot of oil right now. This is a time of pretty ample supply in oil markets. This is good for prices if you want to see lower prices as a consumer.

6:41But if you are an oil company, those lower prices, they're probably discouraging you from investing more in oil projects. Right. Companies are not saying drill, baby, drill, because they won't necessarily get a good price for their oil. Exactly. Samantha says that's the reason OPEC countries like Saudi Arabia, Iraq, Iran, they've been holding back their oil production because they don't like the price right now. Oh, interesting. So it sounds like no matter how much federal land the president just opens up, he can't make companies go drill on that land. No, it's up to the market. Up to the market.

7:17Right. OK, so, Jeff, you also mentioned that there is a second big thing that the president can do to affect the price of oil. Oh, yeah. This is actually pretty cool. The U.S. has this thing called the Strategic Petroleum Reserve. It's literally a bunch of caves where we stockpile a ginormous amount of oil for emergencies. God, I love all the caves that we just store things in. So great. You know, think of it as like a gigantic underground tank. They are like sort of mined out caverns made of salt. So you can put the oil in there, you know, as liquid in these big old caverns. They just pump the oil into these caves.

7:52They sure do. Yes. They're like gigantic salt caves. Wow. Where are these? In the Gulf Coast, like Louisiana, Texas. And get this, these salt caves, they can hold enough oil to supply the entire world for like a week. I guess that is a lot of oil, right? It is a lot of oil. We use a lot of oil in a week. It is the largest oil stockpile in the world, okay? And so remember when Russia invaded Ukraine and oil prices spiked? One thing that President Biden did was to open up the reserves and start selling some of what's in there. Ah, yes. Unleash the oil. And most economists think that made a difference, at least enough to, you know, stabilize oil prices in the short term.

8:38Now, Biden didn't do it alone, of course. Other countries, they also opened up their own reserves. But it sounds like you couldn't actually bring down oil prices this way in the long term if it's only lasting for a week. No, no. The caves are ginormous, but they're not that ginormous. OK. So back to our listener Michael's question, can the president bring down the price of oil so that, you know, help fight inflation? And it sounds like the answer is not really. The oil market is simply too big for the limited tools that the president has access to. Right. And by the way, energy prices, they aren't even that big of a part of inflation.

9:14Like, even if you look back at the 1970s energy crisis, like if you actually decompose the different factors, economists say... We got to move on. We got to move on. Although, honestly, that does sound very interesting. OK, we'll save that for another time, Amanda. Thank you so much. Thanks, Amanda.

9:33OK, Amanda, what a pleasure. Wait just a second. No, no. I introduce you. You're coming to my show, dude. Oh, dang it. OK, so I want to let you know we have another question from a listener. This one is from Jen Penzis. So here's a question. Why are groceries still so expensive? Why has inflation decreased but food is still 25 % more? OK, so we looked this up. And between 2019 and 2023, grocery prices did increase by 25%, as Jen said. And broadly, overall inflation was less. It increased by nearly 18 percent. Now, of course, inflation was a huge issue in this past election, and Trump has promised to bring down the cost of groceries.

10:17Right. So, Greg Rosalski, our newsletter writer, a little bit about Jen. Jen watches grocery prices closely. She even made a spreadsheet where she tracked how much she was spending on things like eggs and ground turkey and milk, I think. Love spreadsheets. Love a spreadsheet. So, what do you think is the answer to her question? Why are groceries still so expensive, even though inflation overall has slowed? So first of all, I got to say, Jen, I feel you. Grocery prices do seem really high. But, you know, to answer this question, the first thing I want to do is just sort of like sort out this difference between the price level and inflation.

10:53So to clarify, the price level is like, you know, the general or average level of prices of goods and services in the economy. Inflation is different, though. It's an increase in the price level. It's the change, not the level. So how about this? So think of an inflatable pool. An inflatable swimming pool, like one of those kiddie pools? Maybe a big one so I could get in and swim around. Okay. The height of the water is kind of like the price level. And now imagine there's a hose going into this pool. Okay, we're filling up the inflatable pool here. You turn it on, you're filling it up. So the water going into the pool, that's inflation, right?

11:32So when the pool is filling quickly, the rate of inflation is high. But when you close the spigot a little bit, the water then slows to a trickle. And now the pool is filling up less quickly. That's the rate of inflation slowing down. OK, so that's that's pretty much the situation that we are in now. Right. The inflation hose is slower than it was. But that does not mean that the water level or the price level is lower. Price of groceries is still really high. Yeah. So as you said earlier, Amanda, grocery prices have actually outpaced overall inflation over the last five or so years. And mind you, groceries are something we buy all the time.

12:12So we've all really noticed these high prices. Like every time you go to the grocery store, you're like, dang it, these eggs are, I don't know, like a million dollars. Like a billion dollars for eggs. What am I going to have to get a mortgage on this freaking omelet? However, since late 2023, the rate of inflation for groceries has significantly slowed down. In fact, between August 2023 and November 2024, it was significantly lower than the overall rate of inflation. Now, I don't know what Jen is exactly buying at the grocery store. It sounds like she's a big fan of poultry products. Eggs in particular have spiked quite a bit in recent months because of bird flu.

12:53There goes my omelets. I don't know about you, Amanda. But yeah, this increase in the price of eggs, it actually drove an increase in the overall grocery inflation rate more recently. Okay, so you've explained what's going on now, but I think what Jen really wants to know is will grocery prices ever go down again? Will things get cheaper at the supermarket? it. Yeah. So I hate to be the bear of bad news here. Grocery prices tend not to go down. There was one big exception though. In 2016, American grocery prices fell a little bit for the first time in like nearly 50 years. No kidding. But I think, you know, the fact that this was like the first time it happened in nearly 50 years and it wasn't that big of, you know, a fall in prices, it suggests that like, we're probably not going to see a big drop of grocery prices anytime soon.

13:44These things tend to go up over time, not go down. Okay, so if grocery prices are unlikely to go down, how is Jen or anyone really supposed to keep up? Like, how are we supposed to be able to afford to buy this very expensive food? Yeah, and also, I mean, like, I should say that she should hope to get a raise and, you know, like, hope her household income goes up because that's generally what happens over time. You'll see this spike in the price level and people start demanding raises and we'll get used to higher sticker prices at grocery stores. And actually over the last year or so, the wages of Americans have been going up and they've been growing faster than overall grocery prices.

14:29Okay. So Jen, you thought you were calling about groceries, but really we are suggesting you go ask for a raise. Thank you, Greg. This has been super helpful. It's always a good call. We have more questions and answers coming up. Questions about the potential impact of Trump's tariffs on our purchases, like, for example, when we buy an iPhone. And will President-elect Donald Trump find a way to cut NPR's funding? That's all after the break. Oh, whoa, I want to hear that segment. Exactly.

15:09So our next question is from a listener named Jane Gray. This one is about the media. It impacts us. We get this question a lot. And I decided to bring it to Brooke Gladstone. She is the co-host of the public radio show on the media, and she's just finished reporting an episode about public broadcasting funding. I read her the listener question. What is the likelihood that Trump's administration will cut funding for NPR? Well, I think that prognostication is a mugs game, especially in the era of Trump. So let me just say that. One of Brooke's first media gigs back in the 1980s was writing for Current, which is like this industry trade magazine.

15:51So since the very beginning of her media career, Brooke has seen many attempts to cut funding to public broadcasting. Nixon tried to do it, but that was before I was covering it. Certainly during the Reagan era, and Newt Gingrich was a very big advocate of killing public broadcasting. George W. Bush also tried to do it. And the great stalwart warriors like Big Bird and Mr. Rogers have fought it back. So first a little context. NPR and PBS get some of their funding from the government through the Corporation for Public Broadcasting, or CPB. which was established by President Lyndon Johnson back in 1967 as part of his Great Society programs.

16:39A couple of years later, PBS was founded, then NPR. But almost immediately after Richard Nixon took office in 1969, Nixon tried to cut its proposed funding. He did not like being criticized, and he saw the media as his adversary. So that year, Mr. Rogers, who is still establishing himself and his neighborhood as this educational place on television for children, he goes to testify before a Senate committee about the value of public television. I'm constantly concerned about what our children are seeing. And for 15 years, I have tried in this country and Canada to present what I feel is a meaningful expression of care.

17:27Do you narrate it? I'm the host, yes, and I do all the puppets and I write all the music and I write all the scripts. Well, I'm supposed to be a pretty tough guy, and this is the first time I've had goosebumps for the last two days. Well, I'm grateful not only for your goosebumps but for your interest in our kind of communication. At that time, those goosebumps did help keep the CPB's funding intact. But when President Nixon was reelected in 1972, he again targeted the CPB and vetoed a measure that would have given it more funding. So in the next administration, in an attempt to protect CPB's funding, the Public Broadcasting Financing Act of 1975 gets passed.

18:16And this is important. In that act, there is a guarantee that the CPB would have this kind of unique budget. It is funded two years in advance to protect it from political meddling. That means that this year's CPB budget was already set and appropriated two years ago. But there is a way to claw back that money. Rescission means that they can go in and cut things that were previously appropriated. Rescission. Rescission as opposed to cut, meaning going back to cut something they already agreed to. Right. So a rescission means taking back money that has already been appropriated but has not been spent yet.

19:00This is something the president can ask Congress to do to avoid spending funds on things like the CPB. Brooks says, yes, having Mr. Rogers or Big Bird show up on Capitol Hill, that's fun and helpful. But really, the funding for CBB has survived because a bipartisan majority of representatives in the House have supported public broadcasting. Their constituents wanted it. That is because 70 percent of this government money goes to the 1 ,500 locally owned public radio and TV stations. These are all across the country. And they take that money from the CBB and they spend it in a bunch of different ways.

19:41Some of that money might go to pay NPR for programming. A lot goes to pay local reporters and to pay the cost of running a station. So, Brooke says that cutting CPB funding would hurt NPR, yes, but it would hurt these local stations a lot more. Stations that act as a service and might be the only source of local news. It is able to bring vital information to communities that would not get it. It is that simple. You're not going to strangle NPR if that's what they want to do. If they hate all things considered and morning edition, they're not going to kill it this way. The only thing they'll kill is rural stations in Alaska telling people where the ice is thin on the river that serves as a roadway in the winter.

20:35The station Brooke is referring to is KYUK in Bethel, Alaska, and they're aptly named show River Watch, which is people keeping a close eye on their river. In the winter, they want to make sure it's really frozen if they are going to drive on it. How much snow do you guys have left? We don't have very much snow. How about your temperature this morning? This morning was about six below. Wow, it's quite a bit colder than... I was holding my breath this past weekend when it started raining. Oh man, I hope this isn't it. We've seen the river break up upriver several times during November. If we can make it to December without a big warm-up, then it'll probably hold together.

21:21Literally, Riverwatch. So, to our listeners' question. Yes, it is very likely that the Trump administration will try to cut funding to NPR. Trump has called to cut funding for NPR in the past, and he tried last time he was president. But it didn't work because really, the decision over the future of the Corporation for Public Broadcasting's funding, that lies with Congress.

21:48All right, now on to our final listener question. To answer it, I have invited on Planet Money producer Willa Rubin. Hello, Willa. Hey, Amanda. So this question comes from listener Brian Bunton from South Carolina, and he wrote in to ask about his iPhone. He says it's three years old. He probably doesn't need to upgrade it for a few years, but he wants to know. Will, is it possible that he has called the wrong show? There's got to be like a tech show out there for him. Okay, now tell him what is his Planet Money-ish question. OK, so he wants to know, should he go ahead and get a new phone before Trump takes office, given that Trump is promising to increase tariffs?

22:32Oh, good question. By the way, we should say Apple is an NPR sponsor. OK, so let me summarize. Brian is wondering, should he buy himself a new iPhone now and avoid the price potentially going up because of a future tariff, which, as we know, is basically an import tax? Is that right? Yes, exactly. So I called up Yale economics professor Amit Kundwal, who said that one scenario is that maybe there just won't be tariffs on iPhones because companies can request exemptions. In the last round of tariffs that the previous Trump administration launched in 2018, 2019, it turned out that the iPhone was exempted from those tariffs.

23:13Oh, interesting. So Apple avoided tariffs on their iPhones. Yeah. So iPhones were almost subject to tariffs. But Tim Cook, CEO of Apple, during the last trade dispute, he went to Trump and was like, listen, if you put tariffs on the iPhones that we assemble in China, those tariffs will make it harder for my American company to compete with Androids. many of which are made by Samsung, South Korean company, which does a lot of its manufacturing in Vietnam. And ultimately, there was never a tariff on iPhones. Also, Tim Cook does seem to be maintaining his relationship with Trump. He recently visited Mar-a-Lago.

23:57Also, he donated a million dollars to Trump's inauguration fund. Ah, yes. OK. So maybe Brian doesn't need to get a new iPhone yet because if iPhones didn't get a tariff last time, possibly they won't get one this time. Right. Although Trump has also said that he would increase tariffs on everything coming from China. OK, and that may include products made by Apple. But I know that since the pandemic, a lot of the companies have been diversifying where they manufacture and assemble their products. Is Apple, in fact, making all of their iPhones in China? No, not all of them. So for years, iPhones have been assembled in China, in the city of Zhengzhou, at a factory that is so big, it is sometimes called iPhone City.

24:47But yeah, like you said, since the pandemic, also because of increasing tensions with China, also labor costs, more and more companies are using a business strategy called China Plus One. And the idea is like, yes, still make stuff in China, sure, but also branch out, make things in another country too. And so these days, yeah, Apple is making more and more of its iPhones outside of China. In the past five years, for example, they've been increasingly shifting iPhone production to Vietnam and India. Got it. OK, India and Vietnam. But who knows? Maybe Trump will put tariffs on products coming from Vietnam or India or from anywhere or from everywhere.

25:30So what is a listener like Brian supposed to do? Could he just like wait a little bit longer? He didn't really need that new iPhone. I mean, how different is the new iPhone, really? Come on, let's be honest here. Yeah, but it is also hard to know just how long to wait for a couple of reasons. First, because tariffs don't all get imposed at once. Since the trade dispute with China began, there have been multiple rounds. And next, because once a tariff gets announced, there's no standard amount of time for how long it actually takes to then go into effect. And then even when those tariffs do take effect, like who knows how long it'll take before those extra costs wind up getting passed on to us.

26:17Right. And they may not get passed on at all. Right. Although, you know, research from the last trade dispute showed that usually they did. And by the way, I asked Apple to talk about all of this, all their tariff plans. They didn't get back to me. OK, so what are we what are we going to tell Brian? Should he get a new iPhone? Yes or no? So actually, when I called up Brian to talk about all this, he had a confession. I actually did get a new iPhone already. You did? I did. Can you tell me why? Was it because of the kinds of questions you wrote in about? Pretty much. I wrote in the question, but I kind of came to the conclusion myself, probably rather be safe than sorry.

26:58That's always been my philosophy. Oh, wow, Brian. Maybe you could have emailed us a little earlier, just teasing. We did make Brian wait for this answer. What did Amit think of Brian's choice? Well, I asked him. Did Brian do the right thing? Yeah, so I think that given that he was planning to upgrade anyways, I think he hedged his bets and went ahead and bought it, which makes sense. Okay, great. But guess all's well that ends well. Yeah, but, you know, Brian owns other things. And he was looking around his house thinking, like, I don't know, other tariffs? The dryer has an issue where it doesn't turn off.