LEILA FADEL, HOST:
Investors got an unwelcome reminder this week that President Trump still likes tariffs.
MICHEL MARTIN, HOST:
Stocks tumbled Monday after the president threatened to impose stiff new import taxes on more than a dozen countries, including Japan and South Korea. Trump pushed back the effective date of those tariffs, however, until August 1. And if recent history is a guide, he could change course before that. In the meantime, though, U.S. importers are facing several more weeks of tariff limbo.
FADEL: NPR's Scott Horsley joins us now to discuss all this. Hi, Scott.
SCOTT HORSLEY, BYLINE: Good morning, Leila.
FADEL: So, Scott, it feels like tariffs, no tariffs, tariffs, no tariffs - a little bit like "Groundhog Day" here. What's going on?
HORSLEY: Yeah. Well, Trump posted letters on social media yesterday threatening to slap 25% tariffs on everything the U.S. imports from Japan and South Korea, along with even higher rates on goods from other smaller trading partners. Those tariff rates are similar to the ones Trump called for back in April, using a formula based on the U.S. trade deficit with each country. Of course, back in April, he backed down after a sharp sell-off in the stock market. At the time, the president said he was suspending the highest tariffs for 90 days to allow time to make new trade deals. Now, that 90-day window closes tomorrow, and so far, not a lot of new deals have been struck. So once again, Trump is pushing back the effective date for another 3 1/2 weeks. So who knows what the real tariff rate will ultimately be? For now, the waiting game continues.
FADEL: So what does that mean for trading partners or for U.S. businesses and consumers?
HORSLEY: For trading partners, they might be wondering just how serious Trump is since he keeps moving the goalposts. The two countries that have struck trade deals, the U.K. and Vietnam, did not get any real tariff relief from the United States. For businesses that depend on imports or consumers who, say, want to buy a Japanese car or a Korean appliance, this just means more uncertainty. Should they race to buy now before the tariffs go up? Should they wait to see if tariffs will be lower down the road? It's hard to make a decision when the rules keep changing. And Scott Lincicome, who is a trade expert at the libertarian Cato Institute, says that's where we are right now.
SCOTT LINCICOME: We have no idea what tariffs will be in August. We have no idea what they'll be next year. And that is a brutal investment environment for either importers or individuals looking to invest in the United States.
HORSLEY: A report from the Institute for Supply Management last week said this tariff limbo is really weighing on the U.S. factory sector, which, by the way, is supposed to be the beneficiary of the president's trade war. As one factory manager quoted in the report put it, "customers do not want to make commitments in the wake of massive tariff uncertainty."
FADEL: OK. And meanwhile, the government continues to collect tens of billions of dollars in tariff revenue. How's that going?
HORSLEY: So far this year, the government's collected close to a hundred billion dollars in tariffs. More than two-thirds of that has come in just since April, when Trump announced his worldwide import taxes. Lincicome says foreign companies might absorb some of that tariff expense, but most of the tax is going to fall on families and businesses here in the United States.
LINCICOME: Barring a really radical departure from the traditional economics, it means that somebody in America is paying all of those new taxes.
HORSLEY: And even though the higher tariffs have been pushed back until at least August 1, the average tax on imports today is five or six times what it was before Trump returned to the White House and launched this new trade war.
FADEL: NPR's Scott Horsley. Thank you, Scott.
HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.
NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.
