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going today. From American

0:39

public media, this

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is Marketplace. In

0:50

Los Angeles, I'm Kai Rizdal. It is

0:52

Wednesday today. That's what the third

0:54

of April is always to have you

0:56

along everybody. Take

0:58

145. Cut

1:01

it in half. More than half,

1:03

actually. What do you got?

1:05

What you've got according to reporting today in

1:08

the Wall Street Journal is that perhaps soon

1:10

to be new tariff rate on most Chinese

1:12

imports to this economy. The journal stresses President

1:14

Trump hasn't made an actual decision yet. but

1:17

the paper says the new

1:19

rate could be somewhere between

1:21

50 and 60 percent. To

1:23

be clear, that would still

1:25

be an astronomically high tax

1:27

on imports, just less astronomically

1:29

high. The response

1:31

from Chinese officials today, and I'm paraphrasing

1:33

here, kind of goes like this, we

1:35

can talk or we can fight Beijing says,

1:38

it's up to you. The

1:40

reason, of course, that these tariffs matter

1:42

so much is that we are fundamentally

1:44

a services economy. The services sector, and

1:46

this is according to the Bureau of

1:48

Economic Analysis, it accounts for

1:50

more than 70 % of gross domestic

1:52

product, which I mention because this

1:54

month, services grew at

1:56

its second weakest pace in

1:58

the past year. That's according to

2:00

S &P Global this morning. And

2:02

the weak growth is thanks in part

2:05

to weaker demand. And the businesses surveyed

2:07

by S &P pinned the blame for that

2:09

on tariffs. So Marketplace's

2:11

Justin Ho looked into how vulnerable the

2:13

U .S. services sector might be to

2:15

the ongoing trade war. The

2:18

U .S. exports about a trillion dollars

2:20

worth of services each year. That's about

2:22

a third of all U .S. exports. Abby

2:25

Samp is with Oxford Economics. This

2:27

would be things like law,

2:29

consulting, accounting, financial

2:32

services. Services like these

2:34

are not directly subject to retaliatory tariffs

2:36

right now. says Robert Johnson, an

2:38

economics professor at the University of Notre

2:40

Dame. But he says the services

2:42

sector will be indirectly affected by retaliatory

2:44

tariffs on goods. That's because goods

2:46

producers rely on the services sector. A

2:49

car producer will use lawyers, accountants,

2:51

and bankers in order to produce

2:53

that car. And so all

2:55

of the services that those car

2:58

firms use ought to be also worried

3:00

about retaliatory tariffs on US exports

3:02

of goods. Johnson says China and other

3:04

countries have plenty of other tools

3:06

they can use to crack down on

3:08

American services. So for example,

3:10

they could announce restrictions on

3:12

the ability of US consulting firms

3:14

to do business in China

3:16

or restrictions on US financial firms

3:18

in selling financial services into

3:20

various markets. The big concern for

3:22

the services sector as a

3:24

whole, both those that export and

3:26

those that do all their

3:28

business here, is what will happen

3:31

if the tariffs cause the

3:33

whole economy to contract, says Megan

3:35

Schoenberger, senior economist at KPMG.

3:37

Because when economies either slow or

3:39

enter a recession, spend on

3:41

services tends to decline. That's

3:43

something Matt Hettrick has already noticed. He

3:45

runs an accounting firm called Harmony

3:47

Group, and many of his clients are

3:49

restaurant owners who are especially vulnerable

3:51

to tariffs on imported goods. Hettrick says

3:53

many of them are trying to

3:55

cut back on accounting services. There

3:57

are people who have reduced the scope of

3:59

their work with us, looked to move to a

4:01

lower package or something of that nature, a

4:03

lower service level to help save some money to

4:05

offset their input costs. Hettrick

4:07

says other clients are scaling back

4:10

expansion plans, also not a great

4:12

sign. We think there's going to

4:14

be a slowdown in the

4:16

speed in which there are new

4:18

restaurants basically built. So,

4:20

Hedrick says that the restaurant industry

4:22

contracts his business could too. I'm

4:24

Justin Howe for Marketplace. You

4:26

know, sometimes in this job, you look at the

4:29

headlines, and then you look at the markets, and

4:32

then you wonder aloud to

4:34

nobody in particular, what

4:36

are those people thinking? Because,

4:39

yes, stocks rally today on that

4:41

tariff walk -back news, but 50 or

4:43

60 percent, that is still

4:45

serious sand in the gears

4:47

of this economy. We will

4:49

have the details when we do the numbers.

5:20

With the hopefully unnecessary caveat

5:22

that pretty much any economic data

5:24

collected before the April 2nd

5:26

Tariff Palooza should be taken with

5:28

a grain of hopefully not

5:30

imported salt. We got some numbers

5:32

today on new home sales. The Census

5:35

Bureau says sales were pretty strong last

5:37

month, up almost 8 % year on

5:39

year. And the median price to get

5:41

that new home smell was about $404 ,000.

5:43

Not cheap, but about 30 grand cheaper

5:46

than it was a year ago. Marketplace

5:48

of Matt Levin. has more on the present

5:50

and future of the new home market. If

5:52

you're wondering who was buying newly built

5:55

homes last month, especially with mortgage

5:57

rates edging near 7 % on a

5:59

30 year fixed, picture a

6:01

couple of disheveled looking parents touring a

6:03

model home with a couple kids in

6:05

tow. The ones with that desperate

6:07

look on their faces that says, I

6:09

will pay absolutely anything to live in a

6:11

home with more than one bathroom. They've

6:13

accepted that interest rates are going to be

6:16

elevated. They've accepted the current environment that

6:18

they're in. Kara Lavender is with

6:20

John Burns Research and Consulting. They can't

6:22

wait any longer. They're out of space.

6:24

She says new construction has some advantages

6:26

right now over older homes. Rising

6:28

renovation costs make those affordable

6:30

fixer -uppers not so affordable. But

6:33

the biggest advantage? With a new

6:35

home, you actually may not have to

6:37

pay 7 % on that 30 -year

6:39

fixed after all. So one of the

6:41

main things that's pushing people to

6:43

new homes over resale are the interest

6:45

rate buy downs. And it's something

6:47

that the large builders, the public builders

6:49

really have the ability to buy

6:51

down pretty significantly. Of course, those

6:53

interest rate buy downs cost home builders

6:55

money. Home builders that are seeing other

6:57

costs start to rise. Justin

6:59

Wood builds mostly town homes in

7:01

Portland, Oregon. Here's an email he

7:03

got earlier this month from one of his

7:06

suppliers. A

7:18

lot of HVAC components are made

7:20

in China. But what says

7:22

even more than the tariffs themselves? It's

7:25

not knowing what headlines he'll see tomorrow

7:27

that's really weighing on his business. I'd

7:29

really like Washington DC to figure out

7:31

how to get things in just our

7:33

economy to calm down a bit. and

7:36

just kind of move past some of the uncertainty.

7:39

Wood says that uncertainty really hurts

7:41

the buyers, the ones willing to

7:43

share that crowded bathroom a little

7:45

while longer. I'm Matt Levin

7:47

for Marketplace. Seems

8:08

like a long time ago now,

8:10

but it was April just two years

8:12

ago that the banking sector was

8:14

one of the big economic stories. Silicon

8:16

Valley Bankring and Bell, small and

8:18

regional bank bailouts. Here in

8:20

the spring of 2025, banking is doing

8:23

better. It's the whole economy that's the

8:25

challenge, all the uncertainties specifically. So

8:27

we've called our favorite community banker, Lori

8:29

Stewart, of Sound Community Bank in Seattle to

8:31

see how things are going. Lori, it's

8:33

good to talk to you again. Great to

8:35

talk to you again. I was thinking,

8:38

Kai, we started these conversations more than five

8:40

years ago before COVID. Oh my goodness.

8:42

Did we really? Yeah. We

8:44

talked about things like PPP loans. The

8:48

good old days, the bad old days,

8:51

I don't even know. But, well, look,

8:53

you have guided us in the banking

8:55

world through thick and thin. And as

8:57

we look at this economy right now

8:59

and all that's going on, how

9:02

you feeling? Well, you

9:04

know, uncertainty is like

9:06

a fog descending on

9:08

us, right? Our employees

9:10

are uncertain, worried about their

9:12

401ks, our clients are uncertain,

9:14

they don't know whether to

9:17

go vertical on construction projects.

9:20

The news cycle is 24 seconds

9:22

instead of 24 hours. So

9:24

that uncertainty really impacts

9:26

productivity and what gets

9:28

going. The good news

9:30

is banks are resilient and we're here

9:33

and we want to be here for

9:35

our clients as they get more comfortable. The

9:37

catch, of course, is that your job, no

9:40

small part of it anyway, is managing risk.

9:42

And how does one running a community bank

9:44

like yours manage that risk when the fog

9:46

is so thick? And honestly, you don't know,

9:48

you know, most times when there's fog, you

9:50

kind of know when it's going to lift,

9:52

sort of. Now we just don't know. That's

9:55

right. I feel like I'm that

9:57

big ship out in Puget Sound

9:59

But you know what I know

10:01

about those ships out in Puget

10:03

Sound when the fog comes is

10:05

they slow down, but they don't

10:07

stop They're cautious, but they're not

10:09

frozen So we continue to keep

10:11

our ears to the market to

10:13

hear from our folks and try

10:15

and address each risk as we

10:17

can Remembering that we've built up

10:19

capital for uncertain times so we

10:21

can take a little bit of

10:23

risk when things are in the

10:25

state they are like now. And

10:28

you know, Kai, another risk we

10:30

think about is fraud risk. And

10:33

so there's lots of different things

10:35

to think about, interest rate risk, credit

10:37

risk, and now fraud risk. How

10:40

are your depositors acting? Are they saying, Lori,

10:42

what's going on? Are they saying, should I

10:44

leave my money in the bank? I mean,

10:46

you know, we're not that far removed from

10:48

Silicon Valley Bank and all that. And now,

10:50

you know, there's all this. You

10:53

know my my email and my

10:55

voicemail box just has lit up this

10:57

quarter with lots of clients at

10:59

lots of different phases of their life

11:01

being anxious and wanting to talk

11:03

about you know what should I do

11:05

I talked to a very mature

11:07

client. that said his dad used to

11:09

bury money in the backyard and

11:12

that's what he was going to do.

11:14

It's going to take his money

11:16

and bury it in the backyard. We

11:18

talked about the fact that his wife was

11:20

in a wheelchair and I said it's going to

11:22

be really hard for her to dig up

11:25

that money and go to the grocery store, right?

11:27

But I mean, that kind of fear. But

11:29

the good news is when we talk through

11:31

most of these things, folks

11:33

get comfort with the

11:35

banking system. There's

11:37

never been a penny lost

11:40

in an FDIC -insured deposit

11:42

account. And then we always

11:44

say, it doesn't hurt to have a little cash around,

11:46

but not a lot. The safest

11:49

place is in the bank. But

11:51

again, I do talk to tons of

11:53

clients about this guy. When

11:55

you talk to your business clients,

11:57

what's their worry about growth? I

11:59

mean, look, the way this economy

12:01

grows is by businesses making investment

12:03

and businesses don't do that when there's

12:05

uncertainty. What's your vibe? Really

12:08

depends on the business

12:10

right depends on whether I'm

12:12

that small restaurant looking

12:14

for serving Mexican food and

12:17

looking for tequila and

12:19

avocados whether I'm a builder

12:21

of homes anxious about

12:23

supply chain and cost. And

12:26

in talking to our

12:28

contractors, they think a huge

12:30

number of their workers

12:32

are undocumented. So they may

12:35

have supply chain cost

12:37

and immigration issues. A

12:39

few of them have decided to pull back.

12:42

Another thing I hear is, you

12:44

know, we were excited about maybe

12:46

there would be a spring home

12:49

buying season this year and that.

12:51

I don't want to say it's

12:53

dried up, but certainly less interest

12:55

in the last couple of weeks.

12:57

And more concerned about, should I

12:59

make that transaction? Should I move

13:01

forward? Lori Stewart. She

13:04

runs Sound Community back up Sienna. Lori,

13:06

thanks a lot. It's always good to talk to you.

13:08

Sorry, it's been a while. It's great. Call me anytime, Kai.

13:15

Should you be in need of banking news

13:17

in the wee small hours, might I recommend

13:19

a little thing that we do around here

13:21

called the Marketplace Morning Report, David Brancaccio and

13:23

the gang. All the news you need to

13:26

start your business day. Coming

13:48

up I essentially just said

13:50

if you boycott fossil fuels you

13:53

can't do business with the

13:55

state of Texas sustainable investing or

13:57

not but first let's do

13:59

the numbers Yeah big rally evaporated

14:01

into kind of a medium

14:03

big rally by the close today

14:05

Dow Jones industrial average 419

14:07

points to the good 1 %

14:10

39 ,606 the Nasdaq grew 407

14:12

points that is two and a

14:14

half percent Hence the

14:16

really happy music, 16 ,708.

14:18

The S &P 500 added

14:20

88 points, 1 .6 %

14:22

5375. Matt Levin was

14:24

telling us some things about the state

14:27

of the home building industry. Toll brothers,

14:29

up 7 tenths percent. Lenard grew about

14:31

a tenth percent. Poltigroup, found about two

14:33

tenths of one percent. The counter Christians.

14:35

Elon Musk says he's going to spend

14:37

less time with Doge. And more time

14:39

with Tesla. You make the value adjustment

14:42

there. That did seem to cheer investors

14:44

even after the company announced disappointing earnings.

14:46

Tesla charged up 5 .3 % today. Learning

14:48

app company Duolingo ascended 10 % after Morgan

14:50

Stanley upgraded its stock. The Pittsburgh company

14:52

also recently announced is adding a new

14:54

learning course for the game of chess.

14:56

Also, how do you say tariffs in

14:59

a foreign language? You're listening to Marketplace.

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gusto.com slash marketplace. This

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is Marketplace. I'm Kai Rosdahl. There

17:35

might be a narrow slice of

17:37

one particular industry or another that's

17:39

not going to be touched by

17:41

President Trump's tariffs. Honestly, trying to

17:43

keep track is a lot. But

17:46

the fact is virtually every industry

17:48

that sells goods in this economy is

17:50

going to be hit. And the

17:52

tariffs are going to have an outsized

17:54

impact on apparel. Something like 98 %

17:56

of all the clothing sold in

17:58

the United States is imported. That's from

18:01

the United States Fashion Industry Association. And

18:03

the top supplier? Yeah, the

18:05

country that President Trump's tariffing at 145%,

18:07

or maybe 50 % or 60%. We

18:10

don't actually know right now. But

18:12

even companies that can find workarounds to

18:14

their Chinese supply chains, and even

18:16

if they do actually make their clothes

18:18

here, a lot of times fabric

18:20

and buttons and whatnot are still coming

18:22

from overseas. Marketplace's Kristen

18:25

Schwab has more. Andrew Chen's

18:27

signature product is jeans, specialty

18:29

pairs for denim nerds. And one

18:31

thing that makes them special is that

18:34

they're put together in the U .S.

18:36

Early on in the brand when

18:38

we were still learning how to make

18:40

jeans, there was a lot of

18:42

value that came with being able to

18:44

visit the factory to understand and

18:46

really get acquainted with that process. Chen

18:48

co -owns the menswear brand 316. His

18:50

CS100X jeans retail for $250. And

18:53

he says his company pays a premium

18:55

to have the garment assembled in San

18:57

Francisco. Note the word choice

18:59

here, assemble, because the actual denim

19:01

fabric is made in Japan. We

19:04

specified everything about it from the

19:06

number of dips of indigo that the

19:08

yarn gets to the hand feel

19:10

that we want to the way that

19:12

it's supposed to look two or

19:14

three years down the line after you've

19:16

been wearing it faithfully. Japan is

19:18

known for selvedge denim, made on old

19:20

-school looms that give the fabric a

19:22

finished edge. The process is tedious

19:24

and labor -intensive. There's a long and

19:27

storied, over a century's worth of history

19:29

of textile development, of denim development,

19:31

of indigo dyeing. It's a part of

19:33

their culture. It is not a

19:35

part of ours in the U .S.,

19:37

at least not anymore. Most enum, whether

19:39

it's specialty or mass made, is

19:41

produced abroad. In fact, most textiles are

19:43

made overseas, mostly in Asia, which

19:45

is a big reason why

19:47

a lot of clothing is also

19:49

manufactured there, says Phyllis Savachko

19:51

at Apparel Consulting Agency Stateless. They're

19:53

very good at what they

19:56

do in apparel manufacturing there. It's

19:58

skilled labor. They have all

20:00

of those process steps nailed down.

20:02

Chinese manufacturers are especially skilled

20:04

at something called vertical integration. Basically,

20:06

factories that do it all. Fabrics,

20:08

buttons, trim, in -house. There's no

20:10

calling one supplier over here to

20:12

check on a shipment or calling

20:14

another over there to make sure

20:16

the thread will match. Savachko says

20:18

this saves companies a lot of

20:20

time and money, but tariffs are

20:23

changing the equation. I've been

20:25

working on costing for clients and

20:27

I've seen it double and triple.

20:29

So some apparel makers are looking

20:31

to leave China and move production

20:33

to Vietnam or India or South

20:36

Korea. They are unlikely to come

20:38

to the U .S. anytime soon. For

20:40

one, that's going to cost companies and,

20:42

in turn, consumers a lot

20:44

more, mostly because of labor. Sonya

20:47

Lipinski runs the fashion retail practice

20:49

at Alex Partners. You know,

20:51

we've been trained that we can

20:53

get goods at such affordable prices

20:55

that it's going to be really

20:57

hard for consumers to kind of

20:59

swallow what it would take to

21:01

afford locally produced product. Even if

21:03

consumers are willing to pay higher

21:05

prices, it would take years to

21:08

move production to the US. Brands

21:10

have to buy equipment, train workers,

21:12

and open up factories specializing in

21:14

fabric, zippers, buttons, and sequins. That

21:16

takes a lot of capital. And

21:18

to get there, companies would need

21:20

trade policy certainty. And when

21:22

there's this much uncertainty, retailers are

21:24

unlikely to make a significant capital investment

21:26

until they are more sure about

21:28

how things are going to sort out.

21:31

For Chen at 316, there's no

21:33

way his small menswear company could

21:35

afford to run its own fabric

21:37

factory. He has just 15 employees. He

21:40

says they're expert designers, not experts

21:42

at turning cotton into denim fabric. to

21:44

open up our own manufacturing facility.

21:46

That is its own skill set. We

21:48

wouldn't know where to begin or

21:50

how to do it. So he says

21:52

he'll keep importing from Japan and

21:54

inevitably the price of his jeans will

21:56

have to go up. I'm

21:58

Kristen Schwab for Marketplace. ESG

22:23

investing, environmental, social and governance

22:25

issues, and how they can affect

22:27

portfolios has been a thing

22:29

for a while now. Climate change,

22:31

for instance, which poses both

22:33

risks and opportunities. The

22:35

past couple of years, though, ESG has

22:37

been getting some grief. So in

22:39

the most recent season of our podcast,

22:41

How We Survive, Marketplace's Amy Scott

22:43

digs into the backstory of the backlash

22:45

against ESG. Here you go. Okay,

22:49

a little vertigo here. Oh

22:51

my God. We

22:53

are in the, I guess this is

22:55

the Capitol Rotunda, right? There's

22:58

a star at the top

23:00

of the dome says T -E -X

23:02

-A -S, Texas. I'm

23:04

at the state Capitol building in

23:06

Austin to meet a man named

23:08

Jason Isaac who has a bit

23:10

of a reputation. It was

23:12

Congressman Raskin who called me the Carbon King

23:14

when I was testifying in front of Congress.

23:16

You've embraced it. I have. I love it.

23:18

It's my license plate. I've got it on

23:21

my business cards and my wallet and I

23:23

remind myself. Yes, absolutely. I wish

23:25

everybody else could be the

23:27

Carbon King too. Isaac is CEO

23:29

of the American Energy Institute,

23:31

which represents oil, natural gas, coal,

23:33

and nuclear companies. And

23:35

you should know he does not

23:37

accept the overwhelming scientific consensus

23:40

that human activity is causing catastrophic

23:42

climate change. I mean, if

23:44

we're living in a catastrophic climate

23:46

crisis, I want more of

23:48

it because people are prospering like

23:50

never before because of energy.

23:52

Before he became known as the

23:55

Carbon King, Isaac was working

23:57

at a conservative think tank, the

23:59

Texas Public Policy Foundation. He

24:02

says around 2019 he started to

24:04

hear complaints from oil and gas companies

24:06

that banks were turning them down

24:08

for loans and other financial services because

24:11

fossil fuels had fallen out of

24:13

favor. I didn't know what ESG was

24:15

at first. I just said they're

24:17

discriminating against politically unfavorite industries like oil

24:19

and gas and forestry and guns

24:21

and ammunition manufacturers. And so what did

24:23

you decide to do about it?

24:25

Well, it was interesting because one of

24:27

them kind of challenged me. It's

24:29

like, Jason, you've got to fix this.

24:31

And so I thought, well, gosh.

24:33

Isaac, who had previously served in the

24:35

Texas House of Representatives, decided

24:37

to write a bill. I essentially just said,

24:40

if you boycott fossil fuels, you can't do

24:42

business with the state of Texas. Texas

24:44

Senate Bill 13 prohibits

24:46

any government entity in Texas,

24:48

including cities, school districts,

24:50

and public pension funds, from

24:52

doing business with financial

24:54

firms that the state determines

24:56

are working against oil

24:58

and gas. After it

25:00

became law in 2021, the

25:03

state created a blacklist.

25:05

It includes huge companies like

25:07

BlackRock, HSBC, and UBS

25:09

that can no longer bid

25:11

for certain business in

25:13

Texas. There are real

25:16

victims here. Chris Hollins is

25:18

the city controller of

25:20

Houston. He oversees the

25:22

city's $7 billion budget. One

25:24

of the most important things

25:27

that financial firms do is help

25:29

towns and cities like Houston

25:31

borrow money to fix roads or

25:33

upgrade schools using the bond

25:35

market. Holland says when fewer firms

25:37

compete for that business Texans

25:40

end up paying more. That's

25:42

money that we're not spending on.

25:44

hiring more police officers. It's money

25:46

that we're not spending on fixing

25:48

potholes or beautifying our parks to

25:50

make this a better city to

25:52

live in and enjoy with your

25:54

family. A study from

25:56

the Federal Reserve Bank of

25:58

Chicago and the Wharton School estimates

26:01

a pair of anti -ESG laws

26:03

in Texas raised borrowing costs

26:05

by $300 to $500 million in

26:07

the first eight months they

26:09

were in effect. Meanwhile, Holland says

26:12

climate disasters keep pummeling the

26:14

state. We're the energy cap of

26:16

the world and just, you

26:18

know, in recent past, we

26:20

can't keep the lights on

26:22

during certain natural disasters. And the

26:25

recovery is getting more and

26:27

more costly. To Holland, who's

26:29

a Democrat, the ESG backlash

26:31

is another tactic to delay

26:33

action to address the crisis and

26:35

will cost Texas not just

26:38

money, but lives in the future.

26:40

But to conservative lawmakers, it's another

26:42

front in the broader culture

26:45

war. SB 13 in

26:47

Texas helped set off a

26:49

flurry of anti -ESG legislation across

26:51

the country. According to

26:53

climate research firm Pleiades Strategy, since

26:56

2021, legislators have passed

26:58

nearly 50 laws in 21

27:00

states. I'm Amy

27:02

Scott for Marketplace. There's

27:08

a tangled web of dark money

27:10

and interest groups behind the pushback against

27:12

ESG Amy and crew laid out

27:14

on the new season of how we

27:16

survive it is of course available

27:18

Wherever you get your podcasts just follow

27:20

us there This

27:31

final note on the way

27:33

out today brought to you by

27:35

the Federal Reserve's beige book

27:37

and the current state of this

27:39

economy the beige book this

27:41

time around It is of course

27:43

the feds region by region

27:45

anecdotal look at things this time

27:47

around it runs 51 pages

27:49

You do a little control F.

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You see the word tariff

27:53

is in there 107 times uncertain

27:55

or uncertain T 89 times

27:57

That's a lot Our media

27:59

production team includes Brian Jake

28:02

Justin Duhler, Drew Jonestant, Gary O 'Keefe,

28:04

Charlton Juan Carlos Tirado, and Becca

28:06

Weinman. Jeff Peters is the manager

28:08

of media production, and I'm

28:10

Kai Rizdal. We will see you tomorrow,

28:12

everybody. This

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is APM. If

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