In short
Trump’s reciprocal tariffs took effect at midnight (Aug 7), applying to about 90 countries (10% to 50% depending on deals and trade deficits). The episode explains what tariffs are, who pays them, how costs will filter into prices (“slow burn”), which goods may rise first, and the legal/political uncertainty (IEEPA authority challenged in court). It also covers announced tariff-related agreements and broader economic impacts.
Guests
David Lynch, Washington Post in-house tariffs and global trade expert; author of The World’s Worst Bet.
Key claims
Importers of record pay tariffs to U.S. Customs (not foreign governments). Price increases won’t instantly jump everywhere; companies stocked inventory earlier. Tariffs act like a “25-pound backpack” for global growth. IEPA use to levy tariffs is unprecedented and is being litigated.
Notable examples
Florsheim/Nunn Bush raising prices July 1; Procter & Gamble lifting prices on about a quarter of products (Tide, Head & Shoulders, Mr. Clean, Pampers). Apple’s Tim Cook meeting Trump; Apple investment $600B and tariff consideration/exemptions for semiconductors. India tariff doubled to 50% (linked to Russian oil). Switzerland hit with 39%.
Written by AI. May contain mistakes. Listen to the episode to check what was said.
Chapters
Tap a time to open that second in VOUnderstanding the Tariffs
1:30 to 3:16
Discover how tariffs work and their implications for consumers.
“Today, what these tariffs mean for all of us now that they're here.”
Immediate Impact of Tariffs
3:16 to 7:20
Find out how tariffs affect product prices and consumer behavior.
“Well, tariff is just a fancy word for tax.”
Corporate Response to Tariffs
7:20 to 14:00
Explore how companies like Apple navigate tariff challenges.
“out of that inventory that they brought in before tariffs took effect and start importing more product that is hit with the new tariff.”
Introduction to Tariffs Discussion
14:00 to 14:15
The hosts introduce the topic of tariffs and their implications.
“and dodging the worst of the rhetorical brickbacks that the president can throw at CEOs.”
Trump's Tariff Strategy
15:01 to 16:28
Discussion on President Trump's tariff announcements and the nature of trade agreements.
“being a negotiating tactic in some way and extracting deals.”
Legal Authority Over Tariffs
16:28 to 19:02
Exploration of the legal authority the president claims regarding tariffs and its implications.
“Well, the European Union or the European Commission, which is the executive arm of it, has no power to compel European companies to make investments anywhere.”
Global Trade Relationships Impacted
19:02 to 21:29
Analyze the effects of tariffs on global trading relationships, especially with key countries.
“The court has said, for instance, that the Federal Reserve is sort of a special case.”
Economic Implications of Tariffs
21:29 to 24:25
Discussion on how tariffs impact the U.S. and global economy moving forward.
“What could these tariffs mean for the broader global economy?”
Conclusion and Acknowledgments
24:25 to 24:57
Wrap-up of the episode with acknowledgments to contributors and a closing note.
“It's just, again, you're going to be running with that 25-pound backpack.”
Transcript
Automatic transcript. May contain errors.0:01David Lynch:We've been hearing about President Donald Trump's tariffs for months. And honestly, I kind of just stopped thinking about them. Because first they were on. Mr. President, is there anything China, Canada and Mexico can do tonight to forestall your implementation of tariffs tomorrow? No, not right now.
0:25Sabby Robinson:No.
0:25David Lynch:And then they were off. It looks like the U.S. has blinked because in the last few minutes, I'm just looking at the markets now, they've rocketed up, the U.S. stock market up 6 % on that news. The deadlines kept moving.
0:38Sabby Robinson:Just literally in the last couple of minutes, we're hearing that President Trump has announced that there will be a 90-day pause on reciprocal tariffs for all countries except China.
0:51David Lynch:Sometimes it seemed like the tariffs weren't actually going to happen, but the threat of them were just negotiating tactics. Huge deal. Yeah. Was tough negotiations.
1:01Sabby Robinson:I knew it at the beginning, and it was indeed very tough, but we came to good conclusions from both sides. So again, congratulations and many thanks. Thank you very much.
1:11David Lynch:Thank you. But then I woke up this morning, and the tariffs are here, and they are real. So now what? From the newsroom of The Washington Post, this is Post Reports. I'm Elahe Izadi. It's Thursday, August 7th. Today, what these tariffs mean for all of us now that they're here. I talk with my colleague David Lynch. He's The Washington Post's in-house expert on tariffs and global trade. He literally just wrote a book on the subject.
1:51David Lynch:David, thanks so much for being here. Glad to be here. So, David, we are talking at 10 a.m. These sweeping tariffs took effect at midnight. What does that mean? What countries have what tariffs as of right now?
2:05Sabby Robinson:Well, the tariffs that took effect just past midnight last night apply to something like 90 countries. and they range on the low side from 10 % for places like the United Kingdom, all the way up to 50 % for countries like Brazil. But the numbers vary depending on whether a trading partner has signed a deal with the president, depending on how much of a trade deficit we're running with that country because the president is trying to close the trade deficit. But the one thing that I think is clear, if you're a supply chain manager for any company in the United States that brings in widgets to make a product here or that brings in retail goods to sell to consumers like you and I, anything you're bringing in from abroad is going to be more expensive than it was.
2:54Sabby Robinson:And it's also going to be a much more complicated landscape because you've got to figure out where is this good coming from, how is it being assessed, what product is it in some cases. It's just a much more complicated landscape than it was, say, at the beginning of the year.
3:09David Lynch:Yeah. And I know we've talked about this on the show before, but David, just remind us, what are tariffs exactly?
3:16Sabby Robinson:Well, tariff is just a fancy word for tax. That's all it is. This is a tax on imported goods. Because, again, the president wants Americans to buy fewer things from overseas. He wants more stuff to be made here. That sounds like a laudable objective. Most people at first glance would support that. The difficulty is we don't make everything here. We don't grow a lot of coffee here. That's why we bring it in from Brazil or Kenya. We don't have a lot of banana farms. That's why we bring bananas in from elsewhere. But the idea is by making those foreign products more expensive, you as a consumer and American businesses as a intermediate consumer will be encouraged to buy stuff made here in the United States, not overseas.
3:58David Lynch:But just to be clear, these other countries like Brazil itself as a country is not paying this tax, right? Like when a good arrives here, what happens? Yep.
4:08Sabby Robinson:Yep. No, that's an important point because the president has clouded the issue by repeatedly saying that countries will pay the tax. That's not the case. The U.S. importer of record is legally responsible for paying that tax, and they pay it in the following way. The good that they're importing lands, say, at the port of Los Angeles. as it enters the country. Officials with the U.S. Customs and Border Protection Agency determine what type of product it is, where it's from, and they assess the appropriate tariff against that product. Let's say it's$100 worth of stuff from China, and the applicable tariff should be 55%.
4:51Sabby Robinson:It's$100 worth of stuff, 55 % tariff.
4:55David Lynch:Thanks for picking$100 for my math mind.
4:57Sabby Robinson:Yeah, I haven't taken a math course in a long time, but this I can handle. So you owe the government, you the importer, the American importer, you owe the government$55. And you have to pay the customs agency that money, just like when you and I come back from traveling overseas. If we've bought a rug in Turkey or some chocolates somewhere, if there's a customs duty, you have to pay it to bring that item into the country. Same for a U.S. importer. They pay the customs agency. They bring the product in. Now, we can have a slightly longer conversation about how that cost is ultimately apportioned, and maybe we'll do that later.
5:35Well, yeah, I actually do want to ask you this because, you know, like I said, I kept hearing about this deadline.
5:42David Lynch:It kept getting extended. It kept getting extended. So now that it's here, my immediate question is, if I go to the store later today or tomorrow, will a product that I saw on Monday now be 20 % more?
5:56Sabby Robinson:No.
5:57David Lynch:First of all— So like immediately prices are not immediately overnight going up?
6:00Sabby Robinson:No, this is more what I would describe as a slow burn. It's not like flipping a light switch and suddenly every type of product is X percent more expensive. It's a little more complicated than that. And companies, you know, they've seen a lot of these tariffs coming because Lord knows the president's been talking about them since January 20th in some cases. So if you're an importer and you hear the president talking about tariffs just about every day, you react to that. And so in many cases, companies have been bringing more stuff into the country, particularly in the first three months of the year, trying to get ahead of any tariff increases.
6:35Sabby Robinson:So they've been stocking up their inventory, and then they've been selling that off over the past few months. And so that has insulated, many of us, from price increases so far. Some companies have already begun raising prices because, you know, there are tariffs that have taken effect already before the ones that took effect last night on things like steel and aluminum. So steel prices have gone up. That's affected, you know, folks who make Campbell's soup or beer cans or cars or all sorts of things. So in many cases, they've adjusted their prices, but not everything in the economy. And likewise, what happened just past midnight today is not something where you should rush out to the store right now, but you're going to start seeing more of this, again, a slow burn, percolate through the economy as companies run out of that inventory that they brought in before tariffs took effect and start importing more product that is hit with the new tariff.
7:32Sabby Robinson:Then they're going to have to, in many cases, not all, but in many cases, they've talked about raising prices.
7:38David Lynch:What goods should consumers expect to see most impacted in this slow burn?
7:45Sabby Robinson:Well, just yesterday, the company that makes Florsheim and Nunn Bush shoes said they began raising prices July 1st because of the tariffs that they were already paying and expected to pay. Procter & Gamble, a week or two ago, said they'd be lifting prices on about a quarter of their product portfolio. And, you know, P &G makes tons of stuff that every American household uses, Tide detergent, Head & Shoulders, Mr. Clean, and Pampers diapers. Now, I should say that the Procter & Gamble didn't say they were going to raise prices on everything they make. They said about a quarter of their product.
8:23David Lynch:But those are some essential items. I mean, diapers are things that, I mean, if I hear, you know, maybe the price of diapers will go up, that feels pretty bit.
8:30Sabby Robinson:Absolutely. And again, the other thing that's complicated about tariffs is people hear, oh, there's a 25 % tariff on products from country X. That doesn't mean the final price of that good goes up by 25%. Because if I'm the importer and I have a Chinese factory making my product and my costs as the importer are going up by 25 % because I have to pay for it as we discussed to bring it into the country. Well, I don't want to bear that all myself if I can find somebody else to pay it. So I may lean on you as my Chinese supplier and say, look, you got to help me out here. You got to eat some of this cost or I'm going to find somebody else to make my diapers or to make my detergent.
9:12Sabby Robinson:And maybe in many cases you want to hang on to your American business because this is a big market. It's a lucrative market. And so you'll find ways to make your operation a little more efficient. And so you'll say, yeah, I'll eat about 5 % of that or I'll eat 10 % of that. And then I, as the importer, can find a way to maybe operate a little more efficiently. Maybe I'll use more machinery than people in my factory or I'll cut costs somewhere else. I won't give out pay raises or whatever. And then when we get to the point where, okay, you've taken as much as you can take, I've taken as much as I can take, then I got to turn around and raise prices on the final customer, the American consumer.
9:50Sabby Robinson:but it won't be 25 % because maybe you've eaten 10 and I'll eat 10. So maybe the price will go up by 5%. I don't know.
9:57David Lynch:The cynic in me feels like why wouldn't a company just turn to raising prices as the first option, especially if the product they're making, the competition is all kind of in the same boat as you.
10:08Sabby Robinson:Well, they often don't do it as the first option because many markets are still very competitive. And we've come out of this episode under the Biden administration where inflation was quite high for a couple of years. People got very angry about it. They were unfamiliar with inflation after the previous 15 or so years when inflation had been almost non-existent. And so companies were able to raise prices during that episode. They've been a little slower to act this time because nobody really knew where the tariffs were going to land. The first three or four months of this, the president would say one thing about tariffs on Monday.
10:42Sabby Robinson:He'd say a different thing on Tuesday. A week later, he'd say something completely different. And companies said, you know what? I don't know what I'm going to be paying in three months or six months for my goods from overseas. Let me just try and hunker down and get through this and see where things land. And now we're getting a little more clarity. They feel like they know where things are going to be to some degree. So now the price increases are starting to happen. And another important point is even though the tariffs make the foreign products more expensive. Domestic makers who compete with foreign goods see that happening and say, oh, my foreign competition just became 10 % more expensive.
11:22Sabby Robinson:Well, I'm going to raise my prices 8%.
11:24David Lynch:Oh, but it still seems like, hey, I'm cutting you a deal.
11:27Sabby Robinson:You know, as long as I'm cheaper than the foreign guy, I'll probably pick up some market share. I'm not going to just stand still. There's money on the table here. I'm going to grab it.
11:36David Lynch:Yeah, wow. Have individual companies been trying to directly lobby the Trump administration to get exemptions to these tariffs?
11:46Sabby Robinson:Yeah, I mean, companies have been, as you would expect, in as fluid and irregular a landscape as we're in at the moment, have been trying to pull whatever levers they can to frankly get on the president's good side, to convince administration officials that, you know, their product is essential or special in some way.
12:05David Lynch:One thing that really caught my eye, though, was the CEO of Apple, Tim Cook, appearing in the Oval Office yesterday.
12:13Sabby Robinson:Mr. President, thank you very much for having me here today. You've been a great advocate for American innovation and manufacturing, and I'm grateful for your leadership.
Read the full transcript
12:23David Lynch:He gave Donald Trump this gift. And what deal exactly were they talking about? That moment really struck me as, wow, this massive company is striking a deal in this moment with the president directly. Not a country, this company.
12:38Sabby Robinson:Yeah, and Apple, I think, has been among the most successful at sort of playing the Trump administration game, if you will. And yesterday, Mr. Cook, as you say, was in the Oval Office with the president for a ceremony to highlight Apple's decision to up its planned investment in the United States to$600 billion over the next several years.
13:00David Lynch:Investment of what?
13:01Sabby Robinson:Well, there are questions about this. It's described as an American manufacturing initiative, and Apple, which has long had a supply chain centered in China, is moving production of some items back to the United States.
13:17David Lynch:So, but then what do they get in exchange for saying that they're going to do this?
13:20Sabby Robinson:Well, they get a tariff consideration, and that tariff exemption applies to the semiconductors, the computer chips that Apple brings into the country and other products that it makes in China. And I should say this was a big deal to Apple. This was something that the decision had gone the other way, could have cost them a couple hundred million dollars, the company said a few months ago, I think, to investors. And, you know, Tim Cook personally got involved, lobbied Howard Lutnick, the Commerce Secretary. and I think is generally seen as one of the more successful CEOs, not just in the president's current term, but back in his first term.
13:57Sabby Robinson:Cook has been very successful at sort of getting what he needs out of the Trump administration and dodging the worst of the rhetorical brickbacks that the president can throw at CEOs.
14:15David Lynch:After the break, we talk about what these tariffs could mean for the broader economy. We'll be right back.
14:40David Lynch:you can trust. Get answers you don't have to question with Ask the Post AI, trained exclusively on post journalism with clear sourcing. And if we don't know the answer, we'll tell you. Ask the Post AI. Find it on WashingtonPost.com or in the app. So in the lead up to this moment, President Trump has talked about this deadline and these tariffs being a negotiating tactic in some way and extracting deals. I know things are fluid, things could change, but as of right now, what sort of deals, and I'm using quotation marks here, deals have been struck and which may happen in the coming days with what countries?
15:22Sabby Robinson:Yeah, the president has announced deals with some major trading partners like the European Union and Canada, Vietnam, Indonesia, and the details vary from country to country. These are not what we think of as, you know, full-blown trade deals like the NAFTA, the North American Free Trade Agreement back in the mid-90s, which most people are familiar with. You know, that sort of agreement was, A, approved by Congress, B, as thick as a phone book, and also thus legally binding. It was an actual treaty, as was the USMCA, which was the United States, USM, Mexico, Canada agreement that the president negotiated in his first term that replaced NAFTA.
16:06Sabby Robinson:That was also, you know, an actual treaty with 30 chapters, lots of details. These are a few pages. Are they legally binding? No, because they're just agreements. And there's nothing to stop the president from deciding to raise tariffs in a different way six months or a year from now. And in many cases, like the European Union and I think Korea and Japan have pledged to make certain investments in the United States. Well, the European Union or the European Commission, which is the executive arm of it, has no power to compel European companies to make investments anywhere. So these are aspirational goals.
16:49Sabby Robinson:When they say they're going to invest$600 billion, well, you know, Ursula von der Leyen, the head of the EC, cannot command Mercedes-Benz to go open a new plant in the United States.
17:01David Lynch:Can the president just unilaterally do this? Make these decisions around tariffs? I thought Congress had to be involved in this.
17:08Sabby Robinson:You're not alone in that thought. Yeah, there's one big interesting question that hangs over this whole enterprise, which is, does the president have the authority that he's claimed to do what he's been doing? And from the start, the president has invoked a law, the International Emergency Economic Powers Act, which does not mention the word tariffs anywhere in its text. It gives the president authority at a time of national emergency to do all sorts of things with the economy, including regulate imports. Now, the administration has said that gives the president carte blanche authority to do whatever he wants to levy tariffs of any number on any product.
17:54Sabby Robinson:Now, no president in history has used this law, which is referred to as IEPA, in this way. No one has ever used it to raise tariffs.
18:03David Lynch:So we're in a truly unprecedented moment.
18:05Sabby Robinson:Truly unprecedented. The national emergency that he declared is the trade deficit that we've been running every year since 1975. So is something that started 50 years ago, does that qualify as an emergency? The administration's argument is yes, that the economic effects have been so dire that it is now an emergency that we must meet with these high tariffs. This is being tested in court. The administration has already lost once at a specialized court called the Court of International Trade, appropriately enough. Those judges ruled that the president does not have this authority. The administration has appealed in federal appeals court.
18:44Sabby Robinson:Arguments there were heard last week. We should get a decision from that 11-judge panel sometime in the coming weeks that no one's sure when. It's likely that this question will eventually make its way to the Supreme Court, which has shown a deference to executive power. But there have been limits. The court has said, for instance, that the Federal Reserve is sort of a special case. The president can't exert his authority willy-nilly over the Fed. So it would be an interesting test to see this case reach the Supreme Court. If the administration were to lose, which is a real possibility, you can't be certain, but it's a possibility, the president would effectively have to start over.
19:24Sabby Robinson:And in theory, it would also require the government to refund all the tariff money that they've been collecting to the importers who paid it, which would be quite an administrative and financial burden.
19:36David Lynch:What countries are you paying attention to on the question of, will they try to come to the table and sit down and have some kind of framework agreement to lower their tariff?
19:50Sabby Robinson:Yeah, I think the big ones that are still out there are India, Brazil. Switzerland's a smaller economy, but they were stunned by the president's decision to hit them with a 39 percent tariff. And before you ask me why, I have no idea.
20:05David Lynch:And what about India? Because I think that was a new one, right?
20:08Sabby Robinson:Yeah. And the India situation is striking because, you know, the bigger picture here is for several years now, under both Republicans and Democrats, the U.S. has been trying to develop a better relationship with India as a counterweight to China. And this is a strange way to develop that relationship because the tariff, what the president calls a reciprocal tariff, was 25%. It's now been doubled to 50%. Oh, my gosh. Because the president doesn't like that India is continuing to buy Russian oil. And so just in the blink of an eye, he doubled that tariff. The U.S. trade negotiators, always complain about dealing with India.
20:49Sabby Robinson:It's always a tough negotiation, even under the best of circumstances. There are protectionist pressures within India. Their agricultural industry is a lot of very small and often very poor, small-scale farmholders. And so the government's very wary of just opening up that market and letting giant American operations meet the demand there. It would put a lot of people out of work. And so those negotiations are always fraught. So it's not a surprise that this has become difficult. What is a surprise, though, is for a country that has strategic value and importance to the United States, to hit them in the face with a 50 percent tariff is interesting.
21:28David Lynch:We've talked a lot about what these tariffs could mean for U.S. consumers. What could these tariffs mean for the broader global economy?
21:36Sabby Robinson:Well, the global economy has been remarkably resilient so far. It has not been growing at sort of a particularly impressive pace, but it has been growing and been continuing to grow, been continuing to make progress globally on bringing down inflation. But what's going to happen as these tariffs take effect going forward is it acts almost like a runner trying to run a marathon. You'd rather be running it without a 25-pound backpack. And this is the 25-pound backpack that the global economy is going to have to run with. It's just going to make things a little less efficient. It's going to slow things down, and it's going to become an increasing problem.
22:18David Lynch:And what about the U.S. economy? You know, I took a look at the stock market today. It seemed like the markets looked okay. What could these do to the U.S. economy going forward?
22:29Sabby Robinson:Yeah, the market has been remarkably strong since it sold off quite noticeably back in April after the president first announced all of these, again, what he calls reciprocal tariffs. Dozens and dozens of countries affected. The market took a nosedive.
22:45David Lynch:Oh, yeah. I remember people saying, if you have a 401k, don't look at it. Yeah, yeah.
22:49Sabby Robinson:It was always good advice.
22:50David Lynch:Yeah, I guess so.
22:51Sabby Robinson:But since then, it's up from the depths of that sell-off. It's up something like 26%, 27%. So it's been, the market has looked at this and said, okay, we can live with it, which is not what people initially expected. But you're starting to see an erosion in the economic performance. And this was behind the president's decision last week to fire the head of the Bureau of Labor Statistics when he got a jobs report that he didn't like. That jobs report showed that some of the strength that we thought the U.S. economy had over the last few months was a mirage. That the job growth that we thought had occurred in May and June basically had not occurred.
23:30Sabby Robinson:And for the last three months, job growth has been anemic at best. So we're going into what is going to be sort of the blank, just got real phase of this trade episode. No longer theoretical.
23:46David Lynch:No longer theoretical.
23:47Sabby Robinson:They're here. And so economists are starting to say the economy that already has been slowing, job growth anemic, inflation pressure still proving stubborn and ticking up just a bit. Economists expect now further slowing in the growth. Of course, you can get different estimates from different people, but somewhere around zero to maybe 1 percent. That's going to feel pretty slow. And if job growth remains where it is, that's going to feel not so great to the average person. But not, I should say, not a recession, not the end of the world, not a financial crisis. Things aren't falling off a cliff.
24:25Sabby Robinson:It's just, again, you're going to be running with that 25-pound backpack.
24:31David Lynch:Well, David, thank you so much for taking time to explain all this once again. I truly appreciate it, and I wish you many cups of coffee in the coming hours and days and weeks.
24:41Sabby Robinson:Sounds good. Thanks.
24:47David Lynch:David Lynch covers trade for The Post. He's also the author of a new book, The World's Worst Bet, How the Globalization Gamble Went Wrong and What Would Make It Right. That's it for Post Reports. Thanks for listening. Today's show was produced by Sabi Robinson. It was edited by Maggie Penman with help from Reena Flores. It was mixed by Sam Baer. Thank you to Tadeo Ruiz-Sandoval, Renny Sronofsky, Laura Benshoff, and Jen Liberto. If you value this kind of reporting, please subscribe to The Washington Post. We actually have a great deal going right now on a premium subscription. That comes with three extra logins that you can share with friends and family.
25:29David Lynch:Check it out at WashingtonPost.com slash subscribe. And we'll also include a link to it in our show notes. I'm Elahe Izadi. We'll be back tomorrow with more stories from The Washington Post.
25:49David Lynch:When it comes to the big questions, who you ask matters. from breaking news to politics that impact your life to advice you can trust. Get answers you don't have to question with Ask the Post AI, trained exclusively on post journalism with clear sourcing. And if we don't know the answer, we'll tell you. Ask the Post AI. Find it on WashingtonPost.com or in the app.
From the publisher
David Lynch covers trade for The Post, and he joins us to explain how the tariffs will affect consumer prices and the broader economy.
David is the author of the forthcoming book “The World’s Worst Bet: How the Globalization Gamble Went Wrong (And What Would Make It Right).”
Today’s show was produced by Sabby Robinson. It was edited by Maggie Penman with help from Reena Flores. It was mixed by Sam Bair.
Subscribe to The Washington Post here.
