Tinker, Tailor, Tariff, Trump

This episode has updates about USAID and Trump's new tariffs on Canada, Mexico, and China. Will this lead to more tariffs against the United States? How will these tariffs impact U.S. consumers? How do tariffs work? We answer those questions and more in the first part of our new series on U.S. tariff wars. 

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Chapters

• 0:00 Welcome
• 0:18 USAID update
• 1:10 Trump's tariff war will impact American consumers and the image of the United States
• 2:15 My experience working on tax negotiations in the food and beverage industry
• 2:26 Why do consumers eat the cost of tariffs?
• 3:11 Tariffs are the ultimate group project, consumers cannot "opt out" from the consequences. Let's look at steel as an example.
• 4:04 Tariff wars are never good for peace and security
• 5:30 Trade is a language between governments
• 6:54 Until next time!

Transcript

Welcome to The Friday Brief, a news podcast by Girl Friday. I’m Phoenix Ricks, the CEO of Girl Friday and your host. This is your brief for February 02, 2025. 

USAID Update

Last week, I noted a personal wish that the media would share more powerful stories from USAID to show Americans why our humanitarian aid efforts matter. That wish was short-lived, as the Trump administration has laid off numerous USAID employees, effectively dismantling aid efforts worldwide. The USAID websites now redirect you to the White House’s new website or give you an error message. To make matters worse, NBC reported that yesterday, USAID’s director of security and a security deputy were placed on administrative leave because they tried to prevent employees from the new Department of Government Efficiency from accessing secure USAID systems. 

Trump's New Tariffs

In more news from DC, the U.S. is now in Donald Trump’s tariff era. Reuters says that Trump imposed a 25% tariff on goods from Canada and Mexico and a 10% tariff on China. Given the swift responses from Canada and Mexico, this may lead to a trade war against the United States. Trump’s tariffs will hit U.S. consumers the hardest and won’t just impact one industry. For example, these three trading partners - Canada, Mexico, and China -  are responsible for exporting car parts, clothes, food, and wood to U.S. companies. Even companies with Made in America taglines often source critical parts from abroad. Everyone from your local Main Street furniture retailer to large conglomerates will be impacted. The difference between them is this: large corporations can try to shift some production to other countries, whereas smaller companies don’t have the same networks or finances to make that change. Having worked on tax and trade negotiations in the food and beverage industry, I can tell you that when tariffs are imposed broadly across goods, consumers are the ones who eat the cost. 

How Tariffs Work

Now, why does that happen? It’s because the company importing the goods absorbs the tariffs, not the country exporting the goods. So, if your local Made in America clothing retailer imports fabrics from Mexico, they pay the price for those textiles, not the country of Mexico. Even extremely wealthy companies cannot or will not eat 100% of those additional fees in the long term, so they increase the cost of their products. Some people might hear this and say they’ll stop buying certain foods and stop purchasing new clothes or other superfluous goods. 

Tariff Example: Steele

Okay, that might work for some individual purchases, but remember, tariffs are a group project. Here’s a perfect example: steel. Reuters said that the U.S. Steelworkers union, which they note is the largest industrial union in North America, criticized Trump's tariffs on Canada. You might immediately think about everything in your home with steel components. But better yet, start thinking about our nation’s transportation infrastructure. This goes beyond how a potential change in the cost of steel will impact the price of your next refrigerator. The bigger question is, will U.S. towns and cities be able to afford necessary bridge repairs if the cost of steel skyrockets? Will our safety be impacted? 

Canada Responds

When tariff wars happen, governments often encourage their citizens to buy products sourced wholly from their nation to avoid the additional costs and show a bit of national support during the trade conflict. Prime Minister Justin Trudeau did just that today. In addition to imposing a retaliatory tariff on U.S. goods, Trudeau addressed the nation and said, "Many among us will be affected by this, and we will have some hard times. I ask you to be there for each other. Now is the time to choose Canada." 

Mexico Responds

Similarly, President Sheimbaum of Mexico said, "I've instructed my economy minister to implement the plan B we've been working on, which includes tariff and non-tariff measures in defense of Mexico's interests." Reuters notes that her social media post did not specify Mexico's targets within the US market. Trump has also promised to impose tariffs on the EU. What will their response be, and how will it impact U.S. and EU consumers? More importantly, how will these tariff wars impact our relationships with other nations? 

Trade is a Language

One thing I learned about negotiating global taxes in the food and beverage industry is that trade is a language. Governments are conveying to one another the importance of their relationship, their willingness to collaborate, and their country’s financial needs. Once you get to the negotiating table as a corporation, with your government and industry associations at your side, you get to see this language in action. By now, you know I love good movie references. Tax negotiations always reminded me of the movie Thirteen Days. I was thirteen when it was released and became instantly obsessed with the Cuban Missile Crisis. There’s this scene where Dylan Baker, playing U.S. Secretary of Defense Robert McNamara, is exasperated explaining the purpose of Kennedy’s naval strategy. He says, “This is not a blockade. This is language. A new vocabulary, the likes of which the world has never seen! This is President Kennedy communicating with Secretary Khrushchev!” That level of skilled and flexible diplomacy is needed again now. 

Until next time!

And that concludes your brief for today. Make sure you don’t miss an episode! Follow Dear Girl Friday on Instagram, where we post episode summaries and sources. You can sign up for The Friday Brief newsletter on deargirlfriday.com. Until next time, I’m Phoenix Ricks signing off from Washington, D.C. Let’s work together for a world of good.