Money Rehab with Nicole Lapin - Presidential Candidate Platforms Explained: Trump Tariffs

Episode Date: September 17, 2024

As we get closer to the election, Nicole will be explaining the big economic policies both Presidential candidates are proposing so you can know how either candidate's Presidency would affect your wallet. First up— the main economic component of Trump's platform: tariffs. Help your loved ones register to vote here: https://vote.gov/ $ Take control of your finances by using a Chime checking account with features like no maintenance fees, fee-free overdraft up to $200, or getting paid up to two days early with direct deposit. Visit: http://chime.com/MNN  $ Looking for the perfect holiday gift for your coworkers, friends, and everyone in between? Choose Nicole’s favorite wine, Justin. Get 20 percent off your order for a limited time with the code “MONEY20” at http://justinwine.com/  $ Ready to find a financial advisor that’s right for your financial goals? Get matched with a trusted, vetted financial advisor at: http://moneypickle.com/MNN  All investment strategies involve risk of loss. The information shared in this podcast is for informational and entertainment purposes only. Listeners should do their own research and consult a financial advisor before making any investment decisions. See terms for additional details: https://moneynewsnetwork.com/terms/ 

I love hosting on Airbnb. It's a great way to bring in some extra cash. But I totally get it that it might sound overwhelming to start or even too complicated if, say, you want to put your summer home in Maine on Airbnb, but you live full time in San Francisco and you can't go to Maine every time you need to change sheets for your guests or something like that. If thoughts like these have been holding you back, I have great news for you. Airbnb has launched a co-host network, which is a network of high quality local co-hosts with Airbnb experience that can take care of your home and your guests. Co-hosts can do what you don't have time for, like managing your reservations, messaging your guests, giving support at the property, or even create your listing for you. I always want to

line up a reservation for my house when I'm traveling for work, but sometimes I just don't get around to it because getting ready to travel always feels like a scramble, so I don't end up making time to make my house look guest-friendly. I guess that's the best way to put it. But I'm matching with a co-host so I can still make that extra cash while also making it easy on myself. Find a co-host at airbnb.com slash host. One of the most stressful periods of my life was when I was in credit card debt. I got to a point where I just knew that I had to get it under control for my financial future and also for my mental health. We've all hit a point where we've realized it was time to make some serious money moves. So take control of your finances by using a Chime checking account with features like no

maintenance fees, fee-free overdraft up to $200, or getting paid up to two days early with direct deposit. Learn more at Chime.com slash MNN. When you check out Chime, you'll see that you can overdraft up to $200 with no fees. If you're an OG listener, you know about my infamous $35 overdraft fee that I got from buying a $7 latte and how I am still very fired up about it. If I had Chime back then, that wouldn't even be a story. Make your fall finances a little greener by working toward your financial goals with Chime. Open your account in just two minutes at Chime.com slash MNN. That's Chime.com slash MNN. Chime feels like progress. Banking services and debit card provided by the Bancorp Bank N.A. or Stride Bank N.A.

Members FDIC. SpotMe eligibility requirements and overdraft limits apply. Boosts are available to eligible Chime members enrolled in SpotMe and are subject to monthly limits. Terms and conditions apply. Go to Chime.com slash disclosures for details. I'm Nicole Lappin, the only financial expert you don't need a dictionary to understand. It's time for some money rehab. You watched the debate last week, right? Well, if you did, you saw the topic the moderators kicked off was the economy. The issue they said was ranked number one for voters. I mean, we could have called that right. Inflation is coming down, which is great news, but there are still recession fears swirling. So we the people want to make sure

the next president of the United States can steer this economy in a good direction. As the election heats up and it's already getting pretty hot, I'm going to be breaking down some of the key economic issues and the different platforms formulated by the nominees. Today and tomorrow, I'm going to unpack a buzzy proposal from each candidate. And you know that I do not shy away from sharing my own views. But for these episodes, I am going to stay nonpartisan. I'm going to cut through the political sideshow so that you can have just the facts on how you and your wallet would be affected by either candidate. I'm going to start with Trump. Today, I'm going to be talking about a major component of his economic platform that he highlighted in the debate, tariffs. Tomorrow, I'm going to talk about Kamala Harris's controversial price

gouging ban. But first, let's start with the Trump tariffs. In the campaign for his second term, Trump has proposed new tariffs on Chinese imports, which he said will be set anywhere from 10 percent to 60 percent. When we think about how we might be affected by this policy, we actually have the benefit of hindsight here because Trump imposed a lot of tariffs during his first term. So let's take a look at what he did and how those tariffs affected the economy and individual Americans. The big picture you need to know is that a tariff is a tax that a government places on imports or exports. So when a country imposes tariffs, it increases the cost of goods coming into the country. Typically, the importer will normally pay the tariffs.

So let me just make up an example here. If there's a 25% tariff on steel from Canada, when a U.S.-based company imports steel from Canada, that American company will have to pay the tariff. The idea is that if you make foreign products more expensive, domestic products will be used instead. And then hopefully domestic jobs and industries will be protected by making foreign competitors less attractive in terms of price. So even though it's the company that's taxed, most companies don't just eat that cost themselves. Instead, they pass it on to us, the consumers, in the form of higher prices. So in the example I just made up about steel imports, if there's a 25% tariff on steel from Canada, companies will likely raise the price of products that they make with that steel, like

cars or appliances, to cover that extra expense. That means American consumers, you and me, end up paying more for the goods we buy. The tariff cost is essentially passed all the way down the supply chain, and that's why tariffs can affect the overall economy by making everything from raw materials to finished products more expensive. Sometimes companies also absorb part of that tariff cost to stay competitive. But over time, higher tariffs often lead to higher prices at checkout. OK, now let's talk about Trump. When he was president, one of his key economic strategies was to impose tariffs, particularly on China. He argued that the U.S. was getting a raw deal

in trade with other countries, particularly China, and that foreign competition was harming American businesses. His goal was to bring back jobs to industries like steel and aluminum and to reduce the U.S. trade deficit. By the way, a trade deficit is when a country imports more than it exports. During his presidency, Trump imposed over $80 billion worth of tariffs. While China was his key target, he also zeroed in on steel and aluminum. And those tariffs were practically global. In March of 2018, Trump slapped a 25% tariff on steel and a 10% tariff on aluminum imports from almost every country in the world, including very close allies like Canada, Mexico, and the European Union. So why is Trump so obsessed with steel? Well, he wanted to protect the American steel and aluminum industries from cheaper imports,

which are making it harder for U.S. companies to compete. He even brought up national security as part of his justification, saying that having strong domestic steel and aluminum production was crucial to a country's defense. But more broadly, steel is just a big deal in the U.S. America was built literally and metaphorically on steel, so it symbolizes American industry. Plus, steel has a powerful union behind it. And steel is a big industry in Pennsylvania specifically, which is famously a crucial swing state. But the steel tariffs led to a lot of friction with U.S. allies. And in some cases, those countries hit back with their

own retaliatory tariffs on American goods. For instance, Canada placed tariffs on U.S. exports like ketchup, coffee and dairy products, which was devastating news for any of those breakfast is the most important meal of the day people. But back to China, the result of Trump's tariff strategy was what became known as the US-China trade war. Trump hit China with tariffs on over $360 billion worth of goods. These tariffs came in several waves starting in 2018 and then again were designed to punish China for what Trump claimed were unfair trade practices, specifically intellectual property theft and forcing U.S. companies to share their tech when they did business in China. Here's how it worked. The U.S. imposed tariffs starting at 10%

and going up to 25% on a wide range of Chinese imports on technology like smartphones and electronics, machinery and industrial goods, and consumer goods like furniture and clothing. Generally, the big risk of imposing tariffs is retaliation. And that's exactly what China did. China slapped tariffs on $110 billion worth of American products, including very specifically cars, pork, whiskey, and soybeans, which hit U.S. farmers particularly hard. But who was the big winner of this trade war anyway? Did Trump's tariffs actually work? Well, first of all, it's worth noting that Biden did keep a lot of Trump's tariffs in place, but Biden was also dealing with a very different economy post-COVID than Trump was.

Anyway, most economists argue that Trump's tariffs had a mixed, if not negative, effect on the U.S. economy. Let's recap the three major goals of these tariffs, which again were number one, protection for domestic companies and consumers, number two, safeguarding domestic jobs, and number three, a lower trade deficit. Let's start with American businesses and consumers. The tariffs increased costs for businesses that rely on imported materials. So a lot of U.S. manufacturers depend on foreign steel and aluminum. And the tariffs meant that they had to pay higher prices for those materials. Those higher costs were then often passed on to the consumers.

And remember when I mentioned how hard farmers were hit because of the soybean tariffs? Who knew that soybeans played such an important role in our economy? But they do. In fact, the U.S. government had to bail out farmers to the tune of $28 billion in 2018 and 2019 to help offset their losses. In the face of higher costs for businesses, consumers definitely felt the squeeze. The tariffs caused price bumps in things like electronics, cars, and even everyday goods like clothing went up. Studies show that American households ended up paying about $1,300 more as a result of tariffs, which definitely did not help inflation. Now, let's talk about jobs. One of Trump's key promises was to protect American jobs, especially in manufacturing.

But did that happen? In the steel industry, there was a slight increase in jobs at first, but it wasn't nearly enough to offset the jobs lost in other industries affected by higher materials costs. In the steel industry, there was a slight increase in jobs at first, but it wasn't nearly enough to offset the jobs lost in other industries affected by higher materials costs. Studies estimate that the tariffs caused a net loss of jobs because while the tariffs did help a small number of industries, they hurt many others. One specific study from the Peterson Institute for International Economics found that for every job saved in steel

production, about 16 jobs were lost in industries that use steel. And as for the U.S. trade deficit, the U.S. trade deficit with China actually hit record highs during the tariff wars. Why did this happen? Well, it was twofold. First, tariffs didn't reduce demand. Americans still bought Chinese goods despite higher prices because there weren't always cheaper alternatives. And second, the retaliation. China and other countries retaliated with tariffs on American goods, which hurt U.S. exports and actually widened the trade deficit. So did Trump's tariffs achieve their goals? Not exactly. While they were meant to protect American industries and reduce the trade deficit, they ended up raising costs for businesses and consumers, hurt American farmers, and didn't significantly bring back jobs in the industries

they were supposed to protect. That said, the tariffs did force a conversation about trade imbalances, especially with China. And while the U.S.-China trade war didn't solve all the problems Trump wanted it to, it did lead to new trade negotiations, including the phase one trade deal signed in 2020, where China agreed to buy more American products. But even that didn't fully offset the damage from the tariffs. And looking ahead to November and beyond, economists are predicting that the cost-benefit analysis of the tariffs Trump is now proposing would have a similar over-indexing in cost. Moody's chief economist told CNN that the

proposed tariffs would likely push America into a recession and would result in roughly 675,000 jobs lost. For today's tip, you can take straight to the bank. Make sure your loved ones are registered to vote. I know we get this message beat into our heads at least every four years, but remember, anyone under the age of 21 probably hasn't voted in a presidential election yet. So if you fall into that age group or if you have kids or loved ones who do, give them a gentle reminder to register to vote and send them the link in my bio. I mean, hello, if future Madam President Taylor Swift is telling us to do so, why wouldn't we?

I love hosting on Airbnb. It's a great way to bring in some extra cash. But I totally get it that it might sound overwhelming to start, or even too complicated if, say, you want to put your summer home in Maine on Airbnb, but you live full-time in San Francisco and you can't go to Maine every time you need to change sheets for your guests or something like that. If thoughts like these have been holding you back, I have great news for you. Airbnb has launched a co-host network, which is a network of high-quality local co-hosts with Airbnb experience that can take care of your home and your guests. Co-hosts can do what you don't have time for, like managing your reservations, messaging your guests, giving support at the property, or even create your listing for you. I always want to line up a reservation for my house when I'm traveling for

work, but sometimes I just don't get around to it because getting ready to travel always feels like a scramble, so I don't end up making time to make my house look guest-friendly. I guess that's the best way to put it. But I'm matching with a co-host so I can still make that extra cash while also making it easy on myself. Find a co-host at Airbnb.com slash host. One of the most stressful periods of my life was when I was in credit card debt. I got to a point where I just knew that I had to get it under control for my financial future and also for my mental health. We've all to a point where I just knew that I had to get it under control for my financial future and also for my mental health. We've all hit a point where we've realized it was time to make some serious money moves. So take control of your finances by using a Chime checking account with

features like no maintenance fees, fee-free overdraft up to $200, or getting paid up to two days early with direct deposit. Learn more at Chime.com slash MNN. When you check out Chime, you'll see that you can overdraft up to $200 with no fees. If you're an OG listener, you know about my infamous $35 overdraft fee that I got from buying a $7 latte and how I am still very fired up about it. If I had Chime back then, that wouldn't even be a story. Make your fall finances a little greener by working toward your financial goals with Chime. Open your account in just two minutes at Chime.com slash MNN. That's Chime.com slash MNN. Chime feels like progress. Banking services and debit card provided by the Bank Corp Bank N.A. or Stride Bank N.A. Members FDIC. SpotMe eligibility requirements and overdraft

limits apply. Boosts are available to eligible Chime members enrolled in Spot Me and are subject to monthly limits. Terms and conditions apply. Go to Chime dot com slash disclosures for details. Money Rehab is a production of Money News Network. I'm your host, Nicole Lappin. Money Rehab's executive producer is Morgan Lavoie. Our researcher is Emily Holmes. Do you need some money rehab? And let's be honest, we all do. So email us your money questions, moneyrehabatmoneynewsnetwork.com to potentially have your questions answered on the show or even have a one-on-one intervention with me. And follow us on Instagram at Money News and TikTok at Money News Network for exclusive video

content. And lastly, thank you. No, seriously, thank you. Thank you for listening and for investing in yourself, which is the most important investment you can make.