Transcript

Are Trump's Tariffs Working?

From The Plain Bagel · Episode page · Watch on YouTube

· 18 min · 3,414 words · 25 timestamped sections

This is the full, timestamped transcript of "Are Trump's Tariffs Working?", an episode of The Plain Bagel published September 12, 2025 (18 min, about 3,414 words). It mentions 8 people, works and ideas, including Donald Trump, Goldman Sachs, European Union, Apple Inc., Cynthia Aribo.

What is discussed, and when

  1. – 3:00: Cynthia Aribo
  2. – 6:00: Goldman Sachs
  3. – 9:00: Goldman Sachs
  4. – 12:00: Institute of Supply Management's Manufacturing Index, S&P Global US Manufacturing PMI
  5. – 15:00: European Union

Notable quotes from "Are Trump's Tariffs Working?"

  • Month of June. So, are Trump's tariffs actually working? Is Trump making like Cynthia Aribo and defying gravity? Or is the US economy actually sputtering here?
    about Cynthia Aribo · at
  • Pay the cost directly they have been lowering their prices to compensate for the higher fee. In fact, Goldman Sachs estimates that consumers so far have only borne about 1/5if…
    about Goldman Sachs · at
  • Hasn't really shown meaningful signs of reigniting. One gauge of manufacturing activity, the S&P global US manufacturing PMI did in fact see a strong rebound in August. Another…
    about S&P Global US Manufacturing PMI · at
  • Hundreds of billions, while countries like the United Arab Emirates, Japan, and the Collective European Union have seemingly agreed to invest trillions of dollars into the…
    about European Union · at

Who and what is mentioned in this episode?

People

Companies & orgs

Concepts & topics

Full transcript with timestamps

Hey everyone, it's Richard. You're watching the plane bagel. It's been 7 months since Trump first started what would end up being America's trade war against most of the world with tariffs being the market dominating topic of the year and the slew of trade announcements bringing America's effective tariff rate to roughly 17% the highest it's been since 1935. All under the premise that the tariffs would benefit the US by getting foreign countries to pay for access to US consumers, bringing manufacturing jobs back to America, and ultimately spurring economic growth for the country. Now, tariffs have long been a tool used by countries to keep foreign companies out of what are deemed to be sensitive industries. But the idea that they could spur economic growth or this sort of prosperity is a fairly controversial idea, not really supported by economic theories or empirical evidence. So, it's no surprise that we

saw these tariff announcements followed by market sell-offs and predictions of surging inflation and a recession by the end of the year. And yet, that hasn't happened. Prices so far haven't really moved as high as was initially feared. The stock market has returned to pushing new record highs, and the economy has actually been posting better than expected results. All the while, the White House is claiming to have brought in trillions of dollars of foreign investment to the country, supporting the idea that seemingly against all odds, the US has managed to hard ball its way into prosperity, uh, using its massive consumer base as a bargaining chip to negotiate many concessions from foreign countries and get them to pay tribute to their economy. But depending on where you look, the figures can paint a very different picture. Labor, for example, has continued to disappoint. In August, we saw the massive 258,000

downward revision to the estimated May and June hiring numbers with a more recent estimate actually pointing to a decrease in non-farm payrolls for the month of June. So, are Trump's tariffs actually working? Is Trump making like Cynthia Aribo and defying gravity? Or is the US economy actually sputtering here? Well, with us now being 6 months into this period of of high tariffs, we now have some more data to help better understand what's happened year to date. And today we'll look into some key areas and discuss how they've been impacted by Trump's tariffs and importantly why they might have been moving against expectations. But before hopping into that, it's worth understanding the opposing view. Why many economists are against Trump's tariff regime. You see, like other forms of taxation, tariffs are considered to be an inefficient price distortion to the market.

Something that both lowers the quantity traded and increases prices. And while they can be important to utilize from a national security standpoint, when it comes to free trade, they generally prevent countries from taking full advantage of specialization. The idea that if different countries focus on different areas and get better at those things, the group of trading partners as a whole will mutually benefit from higher quality goods or lower prices. Now, a big part of Trump's tariff campaign is America's large trade deficit. The fact that the country imports hundreds of billions of dollars more than it exports to other countries.

Uh but this isn't inherently a bad thing for the United States. Yes, there can be uh consequences to having a large trade deficit, but it's quite normal for a wealthy nation to be a net importer of goods. And for the US specifically, this deficit has actually helped the US dollar and financial markets maintain their global dominance. Since this exporting of dollars contributes to it being the most widely used currency globally, not to mention that being able to buy a foreign good for less than you could domestically comes with its own benefits. And while yes, tariffs may allow certain domestic industries to prosper with the protections put in place uh thereby creating jobs in those select areas, it's generally the view that the higher costs passed on to the consumers and the general job loss from the distortion isn't generally worth the protection. In fact, while Trump's tariffs on steel during his first term

did create thousands of new jobs in that industry, this benefit was offset by the impact to manufacturing where higher input costs led to a relative decline in employment. And with seeing many examples historically of countries hurting their economic output by imposing tariffs, you can see why many economists generally advocate for free trade. But it brings us to the first main question that's puzzled a lot of people by now. If tariffs are so bad for inflation and the like, why aren't prices rising? After all, tariffs should directly increase the cost of a good because they are literally increasing the cost of buying that thing. So, you should see prices increase as a result.

Yet, Trump has highlighted that inflation is virtually non-existent except for windmills, I guess, stating that it's foreign countries who are paying the higher price of these tariffs, not Americans. Now, both of those statements are technically incorrect given that tariffs are paid for at the importer level and we are still obviously having inflation. It is true that the latest inflation figures have been below expectations with CPI price levels increasing just 2.9% as of the most recent release, above the central bank's target, but still fairly below the higher rates feared by economists. Meanwhile, the PPI, which measures prices charged by producers, was recently reported to have increased 2.6%. 6% with the level actually dropping.1% month overmonth in August. Something that among other things has prompted many to argue that tariffs are actually deflationary not inflationary. And it is

true that foreign companies are absorbing some of the cost of the tariffs here because while they don't pay the cost directly they have been lowering their prices to compensate for the higher fee. In fact, Goldman Sachs estimates that consumers so far have only borne about 1/5if of the entire cost of Trump's tariffs with Teimu, for example, recently reducing the price of its popular products by an average of 18%. Supporting the idea that Trump has seemingly pulled off the impossible of raising record levels of tariff revenue without pushing up prices meaningfully.

The problem, however, is that it's not foreign companies absorbing the lion's share of these levies. According to Goldman Sachs, foreign exporters have actually paid less than US consumers, covering just 14% of these new fees, while US businesses have covered the remaining 64%. Meaning effectively that domestic parties have paid roughly 86% of the record-breaking tariff revenue that's been brought in. Now, the reason US companies have willingly taken the brunt of these levies is because in 2025, we've seen consumer confidence drop to its lowest point since the pandemic. Many companies are concerned that consumers would rather forego spending than pay higher prices. And with the trade situation being so volatile with new trade deals being announced and changes made, it appears companies are trying to avoid alienating their consumer base and waiting to see how things ultimately shake out. So that

helps to explain why we haven't seen the surge of inflation that many expected by now. Uh but another component here to consider is the inventory stockpiling. Uh on the announcement of tariffs, we actually saw the US increase its trade deficit to a record high as companies increased imports trying to get ahead of the new levy. Something that temporarily has allowed companies to put off their price hikes as they haven't yet paid more for their own inputs. The problem, however, is that neither of these mitigation methods are sustainable. Uh Goldman Sachs estimates that by the fall, consumers will be covering 67% of the cost of tariffs as companies increasingly pass along their price increases. Now, it's a common misconception that if you have a tariff rate of say 50% on steel imports, that that will increase the price of most goods directly by 50%, assuming they have imported uh components. However,

the cost of final products has many other factors baked into it in addition to imports, including uh labor involved with final assembly domestically as well as retail staff who sell that product. Uh neither of which would be impacted directly by a tariff rate. Nonetheless, many forecasts have pointed to a broad general price increase of 2 percentage points above what we're currently seeing, meaning that we could see inflation of 4 to 5% across the board once businesses passed on more of the tariff costs. So, while the current inflation situation has been used by some as evidence that economists have been wrong, and to be clear, uh they are wrong a lot, uh you can see that it's not so much that tariffs aren't impacting price levels, but more so that companies are trying to compensate for it and to hold off hiking their own prices as long as possible in the face of a weak consumer base. Now, as for why

some have posited that tariffs are actually deflationary, that stems from some monetary schools of economic thought that argue that all forms of taxation are deflationary in nature, given that they pull money out of the economy and thereby reduce money supply and liquidity, which is a real factor in consideration. Taxation does have a depressing impact on money supply. And if we experience a recession, it could very well lead at some point to a decrease in price levels as economic contractions tend to be deflationary.

But this real deflationary pressure of tariffs is often offset by the direct impact tariffs have on prices, the disruption it causes to supply chains, which brings other costs as companies have to set up new infrastructure and the economy deals with the dead weight brought on by taxes. And in this case, the fact that the US government is directly offsetting any deflationary influence from tariffs with the big beautiful bill, which cuts taxes, increases government spending, and is forecasted to increase the government deficit by $1 trillion over the next decade, even after accounting for tariff revenue brought in. And thankfully, we don't have to theorize about the relationship between tariffs and inflation because again, we have empirical evidence to demonstrate that while the impact is not always clear-cut. Historically, tariffs tend to lead to higher price levels for the imposing country. The circumstances

where you often see prices fall is when again the tariffs occur during or cause a recession. During periods of economic expansion, inflation is actually exacerbated by tariffs. And as a side note, regarding the PPI measure that many use as evidence of deflation, it was actually services that saw a decrease in price and ultimately pulled the measure down. Goods where tariffs are actually applying still saw their prices increase. But then what about the other angle, the manufacturing jobs? Uh Trump has long argued that the US has hollowed out its manufacturing capabilities by relying on foreign countries and that tariffs would help bring these jobs back on shore. Is that in fact what we're seeing? Well, no. While we did in fact see the trade deficit for the United States fall 25% year-over-year in July, that also followed a period of record high imports. So it is somewhat to be expected. And domestic manufacturing

hasn't really shown meaningful signs of reigniting. One gauge of manufacturing activity, the S&P global US manufacturing PMI did in fact see a strong rebound in August. Another gauge, the Institute of Supply Management's manufacturing index, instead showed that the US had had its sixth month of manufacturing activity contraction with Susan Spence, the chair of the survey committee, indicating that 69% of manufacturing GDP was estimated to be in contraction. We've also seen sluggish performance from other indicators such as the real final sales to private domestic purchasers, which measures domestic purchases of domestic production. And while the figure was better than expected with its recent release, it's still lower than it was a year ago despite the current trade barriers. And as we alluded to, when it comes to jobs, things haven't looked so promising with the latest update pointing to a continued decline at the

aggregate level with unemployment ticking to its highest point in four years as the US saw more job seekers than job openings for the first time since April 2021. And for manufacturing jobs specifically, the area that the tariffs are seemingly targeting, well, jobs have actually fallen for the fourth month in a row. Now, of course, it is to be expected that jobs wouldn't surge immediately on the announcement of tariffs. It takes time for companies to build out their domestic manufacturing infrastructure and capacity, and so it could take years before we see a meaningful impact on manufacturing jobs.

And Trump has argued that with the trade negotiations and record amounts of investment coming into the country, jobs are sure to follow. Apple, Project Stargate, Nvidia, and a number of other companies have made their own sizable domestic investment promises in the hundreds of billions, while countries like the United Arab Emirates, Japan, and the Collective European Union have seemingly agreed to invest trillions of dollars into the United States as part of their trade negotiations. And if we saw these manufacturers and countries follow through on those investment promises, that could very well lead to a meaningful boost to economic activity in the United States. After all, America's total foreign direct investment in 2024 was around $330 billion. So investments in the trillions of dollars, even if spread out over Trump's term, would move the needle quite a bit. The problem is that it's questionable how much

follow-through we'll actually see with these deals. While Japan has moved the closest to cementing its investment promise with a recently signed memorandum of understanding outlining the terms of the arrangement, the Gulf State investment promises so far represent verbal commitments that would be challenging for the economies to meet. Not to mention, some of these actually stem from prior agreements before Trump's term. The European Union doesn't actually have grounds to enforce a $600 billion investment from its member states with it admitting that this is just what's expected to come from private companies. And for South Korea, who promised a $350 billion investment, we're already seeing disagreements over the terms of that investment package. Now, yes, we've seen domestic companies promising to invest more in the US. Apple being one of the key examples of a situation where Trump has seemingly been successful in

convincing a company to bring manufacturing into the United States. But for many of these investment promises, the largest of which are for tech or pharmaceutical companies, it's unclear whether these announcements are based on tariffs or just the surging demand for AI infrastructure and drug development in the United States. The Taiwanese semiconductor company TSMC, for example, which made one of the largest commitments from a foreign company at $100 billion, actually made this announcement in March before any tariffs had been announced on Taiwan or semiconductors, with in fact a Reuters review finding that a good chunk of investments claimed by the Trump administration were either previously secured under Biden or just part of routine spending. And while a lot of these investment promises do span multiple years, so far the infrastructure buildout needed to bring manufacturing jobs back to the US just

hasn't really kicked off yet. There's this great chart that was shared with me that shows that US factory construction is actually down 7% from last year. Ironically, thanks in part to companies finishing up their projects under Biden era incentive programs like chips or the inflation reduction act. Now, of course, this or really any of the other factors we've talked about might change in the future. I think hopefully this video has demonstrated that in the short term, you do have these distortions that make it hard to figure out what's actually going on. Some of the gauges we referenced, for example, like the opposing manufacturing indices, rely on executive surveys and may not be perfectly accurate. Well, even labor data, as we've seen, is prone to meaningful revisions, which was recently exemplified by the massive nearly 1 million jobs that were cut out of past estimates for the 12-month period ending

this past March. But the point is to highlight that while we've heard of these lofty promises from different countries, companies, and the like. We just haven't yet seen followrough with it. And there hasn't been much evidence to date that on the net, America's economy has benefited from tariffs. But then why is the economy growing so much? After all, we saw in the second quarter that US GDP actually grew 3.3% year-over-year, faster than expected and higher than its long-term average. Well, part of this is again the distorting impact of tariffs. Imports, for example, contributed to a lower first quarter GDP print and a higher second quarter print.

But one aspect to consider is that the US economy does have other strong factors moving in its favor. For one, there's the big beautiful bill. Yes. Uh while a controversial piece of legislation given that it does increase the US government's debt load uh which has caused some turmoil in the US bond market, it did also come with tax cuts and other things that could stimulate the economy. There's also of course the AI gold rush with UBS estimating that tech companies will spend $375 billion on AI infrastructure in 2025 and $500 billion next year. All of which in the short term translates into more activity for the US economy regardless of how these investments ultimately pan out.

But the point is that the economy has seemingly been performing in spite of tariffs, not really because of them. Again, most empirical research points to a net negative impact on economic activity and a rise in unemployment when tariffs are imposed. And most forecasts are calling for a 1 percentage point impact to US GDP as a result of Trump's current tariffs. And yes, the US may be able to use tariffs to negotiate better trade deals and that could ultimately still benefit the US economy. And that's where the discussion does get a bit more complicated because you would then have to factor in what's ultimately agreed upon. But over the long term, when you ignore the negotiation aspect of this and if you look past the distortions in the short term, it's very likely that tariffs will dampen overall economic activity. And while it may benefit some and the US may still avoid a recession in spite of these tariffs, it doesn't

mean that the tariffs are a contributor to economic growth. Now, with all that being said, hopefully it does go to show that we don't face a clear picture here. Uh, despite all the factors we're looking at, we can't really know for certain whether things will move one direction or the other. Whether tariffs will allow the US to negotiate better trade deals that ultimately benefit the economy, if it then leads to say dropping the tariffs, or if the tariffs stay in place and hurt the economy overall. But hopefully it emphasizes the importance of going beyond just individual data points to try and understand what's actually happening behind the scenes rather than taking individual uh charts or what have you at face value. It's important that when you look at figures like inflation, you dig a little bit deeper. Thank you guys for joining me today. If you like this video, please do make sure to like,

subscribe, all that good stuff. It does help the channel tremendously. Let me know your thoughts on the topic as well as any other topics you'd like me to cover on the channel. I've been trying to branch out from just tariff related stuff, but I wanted to give a quick update on what we've seen to date. And of course, if we see a a major update, I'll cover that as well, but hopefully we'll be diversifying a little bit. Anyway, thanks again for joining me and as always, be safe out

Questions about this episode

What is discussed in "Are Trump's Tariffs Working?"?

In order: 0:00 Cynthia Aribo; 3:00 Goldman Sachs; 6:00 Goldman Sachs; 9:00 Institute of Supply Management's Manufacturing Index, S&P Global US Manufacturing PMI; 12:00 European Union.

What is mentioned in this The Plain Bagel episode?

8 people, works and ideas are mentioned, including Donald Trump, Goldman Sachs, European Union, Apple Inc., Cynthia Aribo, S&P Global US Manufacturing PMI. Each one on this page links to its own page with every episode that mentions it.

How long is "Are Trump's Tariffs Working?"?

The episode runs 18 min; the transcript is about 3,414 words in 25 timestamped sections.

More from The Plain Bagel

About this transcript: the episode's spoken words as captioned on YouTube, split into timestamped sections. Reclip.Me locates every person, work and idea in the text, keeps the time it is first named, and quotes the words around it verbatim. Last updated January 24, 2026.