Chit Chat Cafe

Hello, and I'm Christine. And I'm Adam. And today, okay, stay with me here. We're talking about tariffs. I know, It sounds But were looking at this s And it turns out this stuff has a huge impact on Exactly. It's not just boring policy. It's about why your trip to the store might be getting more expensive. So let's just let's break it down super simple. Adam, what even is a tariff? Easiest way to think about it is it's a tax, a tax on stuff that's imported from other countries. So if a company brings in, say, a new smartphone from overseas, yeah, the government slaps a tax on it at the border. And that cost, well, it doesn't just disappear. The company usually passes it right on down the line. Right. So it gets passed to the store. And then the store passes it to us when we buy the phone. You got it. So higher prices for cons And the scale of this is, honestly, it's kind of wild. The study were looking at said the average tariff rate in US is now about 12. 2%. 12%? Wow. Yeah. And get this, that's the highest it's been since 1941. Since 1941, that's, that's a long time. So we're basically taxing imports more than we have in, what, over 80 years? Now, on the one hand, the government makes a ton of money from this. The projection is 4 trillion in revenue over 10 years. Okay, $2. 4 trillion. I mean, that sounds good, right? Like, that's a huge n It does sound good on the surface. But there's always a but, isn'there? Here it comes. What's the catch? The catch is that while the government gets that revenue, the overall economy kind of shrinks. That same report projects that the GDP, the whole country's economic output, will actually decline by about 0. 8% in US. Okay, 0. 8% of GDP, that still feels a little abstract. What does that mean for me, That's the real kicker. They crunch the n Whoa, wait, a year? Per household, yep. So that $2. 4 trillion in revenue, it's not free money, we're paying for it with higher prices. So it's And that's before you even get into retaliation, right? Because when we tax their stuff, other countries just turn around and. . . They tax our stuff. Exactly. And the study points out that retaliation could make the hit to the GDP even worse. It's like a trade war where, So who gets hit the hardest by all this? Well, that's maybe the most important part. The analysis says these tariffs are, what's the word, regressive. Regressive, meaning it hurts lower income people more? Exactly. If you're a lower or middle income family, a much bigger piece of your paycheck goes toward essential goods, Right. And a lot of those things are the ones getting hit with these import taxes. So a $1,600 hit is a much, much bigger deal for a family making 50,000 a year than for one making 500,000. That makes total sense. It's a bigger percentage of their actual spending money. So I guess the big takeaway is, yeah, tariffs generate a lot of revenue for the government, but it's not happening in a vacu Not at all. That money comes at a pretty steep price for the rest of us. We're talking about slower economic growth, maybe lower wages because businesses are paying more for supplies and just less investment overall. So next time you're at the checkout and the total seems a little higher than you expected, it might not just be inflation. It could be a little piece of that tariff pie. A very expensive piece of pie. Well, that's all the time we have for today at the Chit Chat Cafe. Don't forget to follow us wherever you get your podcasts and we'll catch you next time.