Tinker, Tailor, Tariff, Trump (Pt. 2)

The U.S. government has had a busy week of trade talks. From China to the European Union, tariffs are being negotiated. Who will come out as the winner? In this episode, we're looking at the pros and cons of tariffs, including how they impact importers, exporters, and consumers. All in under 15 minutes! 

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Chapters

• 0:00 Welcome
• 0:16 U.S.- China trade talks
• 0:48 Taiwan's president changes travel plans
• 1:05 U.S.- EU trade deal explained
• 2:15 How do tariffs work?
• 6:19 How do EU governments feel about the deal?
• 7:29 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 July 29, 2025. 

There’s a lot of U.S. trade news today. Reuters said that the U.S. and China agreed to extend the 90-day tariff truce after constructive discussions in Stockholm. A trade war between the two nations would have global impacts, and it seems both negotiating parties are carefully considering the consequences of their actions. So, there’s nothing major to report, but in this case, slow and steady negotiations are preferred to the sky-high tariff figures Trump initially proposed. While these talks were happening, Taiwan's President was planning a trip that would have included stops in the U.S. Reuters said he’s delaying this diplomatic excursion because, as you can imagine, it could upset Beijing and undermine trade talks with the U.S. CBS reported on the new trade agreement between the U.S. and the European Union. 

The deal, jointly announced by Trump and European Commission President Ursula von der Leyen, imposes a 15% U.S. tariff on most EU imports, while American goods exported to the EU’s 27 member countries will face no tariffs. Before this deal, Goldman Sachs says U.S. exports to the EU had an average tariff of roughly 1%. Additionally, among other pledges, the EU has said it will purchase $750 billion worth of energy from the U.S. The AP noted that the EU is trying to exit Russian energy deals anyway, so purchasing things like natural gas and oil from the U.S. is strategic for them, too. The Trump administration said, "This colossal deal will enable U.S. farmers, ranchers, fishermen, and manufacturers to increase U.S. exports, expand business opportunities, and help reduce the goods trade deficit with the European Union.” There’s been a lot of confusion about how tariffs work. Please remember that when we’re talking about imports to the U.S., that means we are responsible for the tariffs. The company you’re purchasing the goods from could, in theory, absorb some of the cost, but for small and even mid-sized companies, that’s just not realistic long-term, and so those costs are passed onto consumers. In my experience, when larger corporations absorb unforeseen and unexpected costs, it might impact areas of the company that aren't business critical, but are extremely important, like budgets for community engagement. 

And as a result, especially in an economic downturn, consumers may then choose to purchase other products, which negatively impacts foreign sellers facing tariffs. So, when you hear pro-tariff politicians in the U.S. saying that another country is going to "pay" for tariffs we impose, they don't mean those countries are going to directly absorb the cost of the tariff; they mean they are facing the consequences of it. Tariffs are meant to encourage local purchases by making products from your country or allied nations more enticing than other foreign imports. The country where the product originates is not responsible for the tariff, but it can negatively impact its economy. For instance, if you’re buying a German car in the U.S., Germany does not pay for the tariffs the U.S. has imposed on European car imports. But if Americans stopped buying German cars because of tariffs, Germany would feel the impact of the tariff that way. Car tariffs, in theory, could incentivize more local manufacturing. But, we already have a considerable number of foreign manufacturers with outposts in the U.S. For instance, Mercedes-Benz has had an impressive plant in Alabama since 1995, and according to the AP, about 35% of the models they sell in the U.S. are manufactured here. 

As Mercedes looks at price hikes because of tariffs, I wonder if they will increase prices across all models or only the models that need to be imported. And then, there’s also the question of car parts potentially needing to be imported. For example, Toyota has manufacturing plants for Toyota and Lexus in several U.S. states, but they may still need to import parts from other countries, namely Japan, which is also facing a 15% tariff in this sector. In theory, under this new deal, some U.S. exporters may have the chance to expand their European reach because the EU is not levying high tariffs against the U.S. But you have to remember that corporations and consumers have agency. If European consumers are displeased that there are high tariffs on European goods being sent to the U.S., meaning there’s a chance some European businesses may suffer, they may be less inclined to purchase U.S.-made products. 

There’s also the issue of how this could impact workers outside of the U.S. POLITICO reported that the director of Germany’s Center Automotive Research estimates “up to 70,000 jobs across European car companies and their suppliers could be lost as automakers move production to the U.S. to skirt the 15 percent tariff.” Right now, there seems to be some relief within European governments that the 15% tariffs are significantly lower than what the Trump administration originally proposed. 

But, not everyone thinks this is a good deal for the EU because 15% is still significantly higher than what was in place under the Biden administration. The AP reported that German Chancellor Friedrich Merz seemed pleased that this deal avoided “an unnecessary escalation in trans-Atlantic trade relations” and that EU nations “were able to preserve our core interests,” but he added that “I would have very much wished for further relief in trans-Atlantic trade.” Meanwhile, senior French officials were openly critical. One said, “This is an unequal and unbalanced agreement. Europe didn’t wield its strength. We are the world’s leading trading power.” 

As this deal moves from negotiations to paper, I'll be tracking how tariffs will impact each major business sector, so stay tuned. 

Thank you for listening to The Friday Brief. Make sure you and your friends don’t miss an episode! Check out thefridaybrief.com, and follow The Friday Brief on Instagram and TikTok. Until next time, I’m Phoenix Ricks signing off from Washington, DC. Let’s work together for a world of good.