Marketplace - Steel tariffs déjà vu 

Episode Date: April 17, 2024

Today, President Joe Biden called for tariffs to be tripled on certain Chinese steel and aluminum products. These tariffs, first implemented by then-President Donald Trump in 2018, are now the latest move in the ongoing U.S.-China trade war. Plus, sky-high car insurance premiums, the government’s latest energy-efficiency standards and China’s shrinking wine market. 

A lot has happened in the last six years or so, but don't forget, we're still in a trade war. From American public media, this is Marketplace. In New York, I'm Kristin Schwab in for Kai Rizgal. It's Wednesday, April 17th. Good to have you here. Today, we're starting the show with some news deja vu, or really more of an update of sorts on the trade war between the US and China. Back in 2018, then President Donald Trump imposed a number of tariffs on imports to the US, including some on Chinese aluminum and steel. Those tariffs never went away. And here's the deja vu part. President Biden is now calling on the U.S. trade representative to increase them. He wants to triple tariffs

on some Chinese steel and aluminum. That would bring them from seven and a half percent to twenty five percent. Marketplace's Henry Epp looks at the economic effects. Then President Donald Trump used to say China would pay all the new tariffs on its imports to the U.S. That's not really what happened. In fact, it was U.S. consumers and industries here that ended up paying the tariffs. Inu Monik is a fellow for trade policy at the Council on Foreign Relations. At the end of the day, what the administration had hoped to achieve certainly did not come to fruition.

What did come to fruition was an increase in steel prices, and that definitely had an effect on American companies that use steel to make other stuff, says Catherine Russ, a professor of economics at UC Davis. These increases in steel prices for domestic manufacturers end up making it harder when our steel-using manufacturers export abroad. Okay, but the whole point of the tariffs was to boost domestic manufacturing and the domestic making it harder when our steel using manufacturers export abroad. OK, but the whole point of the tariffs was to boost domestic manufacturing

and the domestic steel making industry. So did they get more people working in the steel sector? If you really squint, you might see 1,000 extra jobs in that sector. What has happened is direct Chinese steel imports to the US have declined, but they were never very big to begin with. Meanwhile, since China's construction sector has struggled recently, they have more steel

than they need, says Gordon Johnson, who's from GLJ Research, analyzes the industry. They've had to find other places to put their steel. So they're exporting that steel to the rest of the world. But Johnson says, since steel prices are higher in the U.S., a lot of that cheaper Chinese steel still makes its way here by way of other countries. So China can shoot their steel into Poland, thus negatively affecting Polish steelmakers. And then Polish steelmakers, therefore, will shoot their steel into the U.S.

So ultimately, raising tariffs even further on Chinese steel might not do much, he says, but both Biden and Trump are going to use the steel industry as a political football to show that they're tough on China. Which is why he thinks the stock value of some steel companies will rise in the months ahead. I'm Henry Epp for Marketplace. Wall Street today started green, finished in the red.

We'll have the details when we do the numbers. There are a handful of line items keeping the overall inflation number high. Shelter is one of them. Another is car insurance. Premiums have gone up, way up. On average, car insurance costs 22% more than it did about a year ago. And according to new data from JD Power, more people are comparing prices and shopping around. Marketplace's Samantha Fields has more. When Emma Balter bought her first car about four years ago, it was a brand new expense for her. I used to live in New York City and before New York City in Europe.

And so I didn't own a car until I moved to Houston. So I have learned a lot about cars and how much they cost. When she got her 2019 Nissan, her insurance was about $147 a month on top of her car payment. But you know, I thought that's kind of how much it costs. Every year since, though, it's gone up. And every year, basically, you know, I've called my broker. I'm like, hey, this has gone up again. Can you get me a better deal elsewhere?

And essentially, the last couple of times that I've tried to do that, they've said, listen, this is what the market is right now. It sucks. A lot of people are running into this these days. With car insurance costs up 22 percent, or more in some places, says Chase Gardner at the online insurance agent, Insurify. It's the biggest year-over-year jump we've seen in decades.

And so we are seeing more interest in looking around for a new policy. More than 13 percent of car owners looked around for a better deal last month. Steven Crudson at JD Power says that's more than at any other time since the pandemic began. Consumers are definitely, I think it's fair to say, fed up with the continual rate increases and seeing their premiums go up every six months. Whether or not they're actually able to find a lower premium is another question. A growing number of drivers are switching insurers, but only about four percent. There's also another trend JD Power is seeing lately, Crudson says, more people are driving without insurance. But most, like Emma Balter in Houston, just end up

sticking with what they've got, even after shopping around. The last time that I called, I guess a couple of weeks ago, they said, well, let me see if I can tweak your policy to give you a better price. The best her agent could find, they told her, was $13 a month cheaper with a higher deductible. She passed. And that's it. $205. That's just what I'm paying.

More than double her homeowner's insurance. I'm Samantha Fields for Marketplace. When's the last time you saw a movie in person at a theater? I ask because I couldn't remember, I had to dig through my email. Turns out the last time I went was a full six months ago to see Killers of the Flower Moon. And I'm not the only one going to the movies less. Ticket sales in 2023 were a third lower than they were in 2019, according to the box office data site The Numbers. Still, somehow, despite a pandemic and streaming and Hollywood strikes that halted film productions, movie theaters are still standing. And some of that has to do with their

unique architecture. Kate King covers real estate for the Wall Street Journal and wrote about how movie theaters are hanging on. She joins me now. Kate, welcome to the program. Thank you for having me. So I never really thought about kind of how odd movie theaters are as a space until I read your story. What makes them so hard to repurpose? Well, if you think about it, movie theaters are as a space until I read your story, what makes them so hard to repurpose? Well, if you think about it, movie theaters are built with sloped concrete floor for a stadium seating so everyone has a nice clear view of the movie. And movie theaters have no windows. They're big dark rooms. So that's great for watching a movie, but it's not

so great for turning that real estate into something else. Nicole Sade So what does that mean when it comes to rent prices for these spaces and kind of who has the power there? Jennifer Lange So it's really interesting because retail more broadly is doing quite well right now from a real estate perspective. Retail landlords are in kind of a rare position of power in many respects. They can command higher rents than in previous years. Availability for retail space broadly is at an all-time low. However, movie theaters are a little bit of a different animal. Retail landlords really can't use

movie theaters for anything else unless they want to tear them down completely. So rather than just leaving the spaces vacant, they've kind of been forced when chains go into bankruptcy or leases are up for renewal to agree to rent reductions. Well, what are theater owners doing to bring crowds back? Movie theater owners are definitely making the movie theater an experience that you can't get at home on your couch with your big screen. So they need to convince people that it's worth the money and the time and possibly sitting next to someone who's coughing or laughing too loud to come into the theater. So even at the most basic level, they are ripping out those old crammed together seats and they are putting in the big comfy recliners. Sometimes these are heated seats, sometimes

they are 4D seats in the sense that they rumble around and water sprays out at you to, I guess, make a more immersive movie going experience. They're going beyond just the popcorn and candy, and they're adding in alcohol and other types of food that you can eat while you're watching. In some cases have delivered to your seat. And then some movie theaters are diversifying their properties and making sure that they're not just totally reliant on movies to bring in the revenue. So there's one theater in Texas that recently opened which includes Pickleball, Bochy Courts, Bowling Alley, Rock Climbing Wall, and of

course lots of restaurants and bars. It almost doesn't even sound like a movie theater anymore. I mean, do you think that cinema going is changing and will just be different in the future? I think there's definitely a push towards this more. I think the industry term is family entertainment center, where it's really focused on the experience. So all of retail broadly is focused on making sure you're offering something that can't be gotten online for cheaper. So I think there's definitely the idea of continuing movies in a way of making it a broader, flashier experience.

It almost seems like if all of the things, the pandemic, streaming, whatnot, didn't kill the movie theater, nothing will. Do you think that's true? I think there will always be a place for movie theaters. I think there's always going to be people who want to go and see the big blockbusters or even indie films in theaters. So it does seem like that they're indestructible to a certain degree. I don't know if we'll ever see the huge return of crowds on opening night the

way it was maybe 10 or 15 years ago. Maybe there won't be as many movie theaters as in the past, but for sure, I think this real estate will survive in some form long term. Kate King covers real estate for the in some form long term. The Federal Reserve released its latest beige book today. Regular listeners might have noticed we're a little obsessed with it around here. That's because it's not all about numbers and data. It's an anecdotal look at the economy, gathered from interviews with business leaders and analysts across the 12 Fed regional banks. We'll take a look at some of its highlights later. In the meantime, let's dig into our own marketplace beige book of sorts, our Rolodex of Business Owners We Keep Tabs

On. Today we have Eric Vaughn, the owner of Eric's I've Been Framed, a custom frame shop in Detroit. Business has been pretty good. We've been extremely busy. We have a few contracts that we had to fulfill. We do a lot of work for the Detroit Institute of Arts. They use reproductions of some of the works there and put them in parks and other places. Each year we have to create new frames because we use wood frames and sometimes it would

rain and the frames will warp, you know, so they only expect to get one to two seasons out of the frame. Usually the my deadline for them is the home opener for the Detroit Tigers. Usually that's when they want their frames. So it was last week, last Friday. Well my biggest challenge is finding enough time to do the work. And it's been tough lately because we have projects and some of them are quick, fast, and it requires more time for us to actually lay it out, design it, and put it together and order materials.

So it's a lot that goes into it. I'm thinking about hiring someone during the summer because I do a few outdoor festivals too to be exact, a couple jazz festivals that I definitely need the extra help to run the booth and to make sure that we have enough people to cover. And I'm not so concerned about the wages. Most of the times they're unexperienced and so they have to start off at a certain level and then as they stay on I usually increase their wages. I hope that we can continue on with the framing and matting and repairing of art.

I have no doubt that it's going to continue because everybody has something that needs to be framed. You've got Mother's Day coming up, you have Father's Day following after that, you have graduations and my daughter's graduating. I know she's going to be expecting me to frame up her diploma. So all those type of events will keep us busy. That was Eric Vaughn at Eric's I've Been Framed in Detroit. Coming up... They use the wine to give some presents to good clients.

Sometimes the thank you note just isn't enough. But first, let's do the numbers. The Dow Jones Industrial Average lost 45 points, a tenth percent, to finish at 37,753. The Nasdaq fell 181 points, one in a tenth percent, to close at 15,683. And the S&P 500 shed 29 points, six tenths percent, to end at 5022. United Airlines flew up more than 17 percent after posting a smaller than expected loss in the first quarter. The company said the emergency grounding of Boeing's 737 MAX 9 jetliner had cost it

$200 million in the quarter. Otherwise, it would have made a profit. Boeing was down 2 tenths percent as company whistleblowers testifying on Capitol Hill accused the plane maker of prioritizing profits over safety. Rival Airbus added almost 6 tenths percent. Sam Fields was telling us earlier about how people are increasingly shopping around for car insurance.

Looking at some companies in that sector, Progressive grew 0.4%, Travelers dropped 0.7% and 0.4% as it posted first quarter earnings that fell short of analysts' expectations. Bonds rose, the yield on the 10-year T-note fell to 4.58%. You're listening to Marketplace. This is Marketplace. I'm Kristin Schwab. Yesterday on the show, we talked about how the Texas energy grid is dealing with more demand for electricity. Well, one way to curb demand is to force people to use it less, by default. Think energy efficiency. The Department of Energy just issued its standards

for appliances like commercial air conditioners, dishwashers, and beverage chillers. The change is expected to save businesses and households billions of dollars and reduce carbon emissions by millions of metric tons. So for some context, we had Marketplace's Elizabeth Troval look back at how the energy standards of yesteryear are impacting energy usage today. To see energy efficiency standards at work, all it takes is a walk through your home. Andrew Dulaski is with the Appliance Standards Awareness Project. Whether it's your refrigerator or your air conditioner or your clothes dryer

would use much more electricity than it does if not for these standards that are on the books today. Exactly how much electricity? A typical refrigerator today uses only one fifth as much energy as a new refrigerator sold in the 1970s. That's a very big deal, but it's bigger. It's got more features. There's improved insulation in the walls. There's improved motors that circulate the refrigerating fluid.

In the 1990s, Dan Riker with Stanford University worked for the Clinton administration improving energy efficiency standards for appliances. During his tenure, he coined the phrase, building the fridge to the 21st century. We set some pretty strict standards. But the thing is, the energy savings of those standards accrue over years. The impact is measured over decades because people buy refrigerators and they keep them for a long time. And eventually those savings add up. Bernita Haynes is with the National Consumer Law Clinic. The typical U.S. household spends about $500 less each year on utility bills, and that's

because of existing efficiency standards for a range of products. She says standards are especially helpful for low-income people who spend more of their paycheck on utility bills and tend to be renters using appliances provided by a landlord. So increasing the baseline efficiency of these appliances will ensure that landlords are actually putting more efficient appliances in these apartments. So renters aren't stuck with cheap, wasteful appliances. I'm Elizabeth Troval for Marketplace. Henry F. was telling us earlier about President Biden's plans to hike tariffs on Chinese steel and aluminum exports. Now let's narrow in on one of the country's major imports,

wine. Some 60% of the wine consumed in China is imported, but demand has been shrinking. It's only a third of what it was in 2017. And now the country's wine sellers are having a hard time staying in business. Our China correspondent Jennifer Pak has more. For more than a decade, Shanghai's San Nian Jian operated as a wine bar, where folks could sit and relax with a glass of wine. But the business was hit so hard during the pandemic that last year the owner, Li Yung Liang, pivoted

and he turned it into a shop where people can buy wine by the bottle to take out when we run a wine bar every month we can sell roughly around 1500 bottles but now every month we can sell let's say over 3500 bottles per month at a big wine show in Shanghai, vendors complained they were hurting and had been since before the pandemic. Australian wine exporter Vikas Gupta outlined part of the problem. There are two, 300,000 types of wine here. He says China's wine market is crowded.

His sales have dropped 60, 70% from pre-pandemic levels. Then there's China's economy. It's still growing, but not as fast as before. And that hurts wine sales, says Sebastian Carreau, a seventh generation winemaker from France. The wine here is used for the business. They use the wine to give some presents to good clients. And when business is slow, he says, there's no need to do that.

His sales are only 40% of what they were in 2019. The wine industry is also vulnerable to geopolitics. Like when Australia's government wanted to probe the origins of COVID in 2020. Soon after, the Chinese government investigated Australia for unfair subsidies and dumping, says wine consultant Yin Kai. China increased the tariff on Australian wine by as much as 200 percent. So sales of Australian wine in China fell off a cliff in 2021 and 2022. China has now lifted those punitive tariffs, but the tariffs on American wine are still

in place because of ongoing trade tensions. Even so, says Ying Kai, there are many reasons to be hopeful about the wine industry here. China still ranks among the world's top 10 wine-consuming nations. But he says wine makes up only 2% of the country's alcoholic drinks market. The preferred drinks are beer and a fiery grain alcohol called Baijiu. China is still a largely untapped market for wine. There's still a lot of potential for expansion. That's what's brought Abdulkhalilov Rusbek to start importing wine from his native Moldova. We want to enter the Chinese market mainly because of the war in Ukraine.

We used to be able to sell 15 million bottles a year to Russia and Ukraine. Once the war began, we lost both markets. Back at the San Lian Jian wine shop, owner Liang Liang says he's opening another branch in Shanghai. He's crunched the numbers. It's around 300 yuan beef per person every night. He's setting up in an area where there's lots of restaurants with very poor wine lists. He reckons if diners see his shop, they might buy a bottle of fine wine for $40 and take

it to the restaurant. Many don't charge extra for bringing your own bottle. So how do you see your business in the next three to five years? I think all the Chinese market is recovering. And more and more people, they're still drinking wine. And what they would like, he says, is fine wine at an affordable price. In Shanghai, I'm Jennifer Pak from Marketplace. This final note on the way out today, I promise we'd take a look at the beige book. Again, that's the Federal Reserve's anecdotal look at the economy that's published eight

times a year. A number of entries across the regional feds focused on jobs, and the takeaway is pretty mixed. From the Minneapolis Fed, a Wisconsin staffing contact said the job market is more unpredictable than ever, with some businesses slowing their hiring and others ramping it up. Case in point, the Kansas City Fed says AI is replacing entire teams of software engineers. Meanwhile, out of Richmond, business owners say the number of job applicants are increasing and one owner surveyed says when they find good workers, they hire them, even if they don't have an open position.

Our media production team includes Brian Allison, Jake Cherry, Jessen Duller, Drew Jostad, Gary O'Keefe, Charlton Thorpe, Juan Carlos Tirado, and Becca Weinman. Jeff Peters is the manager of media production, and I'm Kristin Schwab. We'll be back tomorrow. This is APM. All over the country, schools are changing the way they teach reading. I'm calling for a renewed focus on literacy. We have gotten this wrong in New York and all across the nation.

And it's happening because of a podcast. I think your podcast has changed my life. And I'm going to share this podcast with everyone I meet. Sold a Story investigates how teaching kids to read went wrong. New episodes of Sold a Story are available now.