Caught in the Canada trade war crossfire

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1:27In Los Angeles, I'm Kyle Rizdal. It is, as I just said, Friday, the 18th of September is what this one is good as always. Have you along, everybody? So look, let's just start. Katharine Rampell is at the Bullwork and also MS. Now Heather Long is the Chief Economist at Navy Federal Credit Union. Hey, you too. Okay. Okay. Ms. Rampell, we begin with you. And I would like your take, your sense of how Chairman Worsh is doing in his promise not to let people know what the Fed is going to do. The whole Ford guidance thing. Because, you know, regional presidents are doing their speaking and there is the dot plot. So we kind of do know, no? Well, we certainly know what other members of the Fed, of the Federal Open Market Committee are thinking and how they're digesting the data because they are providing their own form of Ford guidance, as you point out, making speeches and, you know, planting those dots on the dot plot. So, I think, as it pertains to Worsh, I think he is trying to not give a hint of where

2:33he expects policy to go, but he kind of can't help but give a hint of where he expects policy to go. I mean, part of the reason why the Fed was sort of boxed into raising rates this week is because of things that Worsh had said at Jackson Hole, where he basically said, inflation's too high and kind of conveyed that unless we had unusually, miraculously good inflation reports between then and the Fed's meeting this week, that markets should anticipate that the Fed would act. And so the Fed had to act. So there's that. There was also his comment about how they removed a dose of accommodation, which I think a lot of people heard as maybe there will be another dose of something or other that is coming soon. So there's only so much he can, he can like, corral the other members of the Fed, the FOMC, but there's also only so much that he can withhold from markets if he opens his mouth. Right, right. Which, you know, I mean, he's not a man of many words, but he does sort of have to speak

3:35in public sometimes. Heather Long, let me ask you this on that removing the dose of accommodation thing. He also said policy is not restrictive yet. And while I do not want to get into a discussion of the neutral rate, what do you think he means by policy is not restrictive yet? That clearly means something's going to happen, right? Yeah, it clearly means that he thinks that there's no straight jacket on the economy yet and that he can, this hike is not going to slow growth. He went out of his way many times to talk about the strength of the economy. His final answer was what's probably the one that shocked me the most, which is when he flat out came out and said, I don't believe that we need to harm labor markets to achieve our objective, but we can do, you know, forget a macular conception. We can do a macular disinflation, the holy grail of economics. And so that's what he means by not yet restrictive that we are not in a place where hiking rates is causing people not to take out loans or not to start businesses or to really

4:35change their objectives. Yeah. Sorry, Heather, keep going with the labor market bit, right? Does that answer struck me as well? And it does seem that that gives some room to the chairman and the rest of the committee. Well, there's a lot of tension there. That seems to be where he has tension with the rest of the committee, right? Because in the rest of the committee and that dot plot they release was projecting it could take a long time for inflation to come back down. 2029, right? 2029, which is not soon. Not soon, that is not timely. And so it seemed like that's honestly, I wasn't sure when he gave this answer and he gave it the very last question asked. He could have cut off, run off the stage and instead went out of his way to say this. And I'm really, I think it's hard to know. Was he saying it to appease the president and calm him down? Don't worry, we're not going to ruin the economy over this. Or was he truly saying my belief is that the benefits of AI and the productivity gains

5:36are so great that the real, the normal rules of economics won't apply and we can do a rate hike or even several and not harm the economy. I will say he did walk off the stage with some alacrity right at that half hour mark. Catherine Pell, let me pick up on that whole thing she said about the president. So it took him, I don't know what like an hour or two, but president Trump did of course respond and he said, interest rates ought to be below 1%, which I mean, come on. He did not name Warsh as he was dumping all over the central bank. And we also found out later that day when he spoke to the press, the president did. He said he talked to Kevin to the chairman, I don't call him Kevin, before the meeting. We don't know if it was a week for the meeting or two hours for the meeting. I thought that was kind of interesting. I definitely thought it was interesting. Chair Warsh would not say when asked when he had spoken with the president. There has been plenty of reporting suggesting that they talk somewhat regularly and I believe Trump has said as much publicly.

6:36Yeah, what I thought was interesting about this is I have been wondering for months, how does Kevin Warsh avoid the J-Powell fate by which I mean, angering the president so much by doing what he thinks is right for the economy that potentially he gets cyber bullied, harassed and even criminally investigated, which is among the things that have happened to J-Powell, his predecessor. So, I don't know how that gets navigated. I think it's a really hard position. It's sure sounded like from what Donald Trump said that he thought Kevin Warsh wanted to keep either rates flat or to even cut them. He certainly said before that he thought Warsh wanted to cut them and that he had no choice because the rest of the Fed board was hostile and political. Those are the words that Donald Trump used. So I'm very concerned that Trump's takeaway from all of this, the president's takeaway from all of this may be the only thing standing in my way of getting the interest rate policy

7:39that I want or the other annoying people on the board. He's already been going after Powell. He's already tried to fire Lisa Cook multiple times even after the Supreme Court said that he couldn't. And this report that came out today about what happened with the Silicon Valley bank failure has led plenty of people to worry that maybe this will be used as some sort of pretext for firing Michael Barr, who was also now a Fed governor previously, the vice chair, supervision. So I don't know how all of this is going to turn out, but I'm very concerned about how the president is viewing what's going on at the Fed and to what extent he may believe that he has these hostile actors who are trying to thwart him as opposed to the Fed just doing what they think is for the economy. Yeah, it's the whole he believes thing. Heather, I want to take a turn here on him, give you 45 seconds to do it. Let's talk about the consumer here for a minute. Retail sales were in. They were surprisingly strong. You have all kinds of data and Navy federal credit union.

8:40Where do you see the consumer sitting in this economy since we are, as we all know, so important? It's certainly been a heck of a hot summer for the consumer and we certainly saw that in our data too, where the overall picture is really robust. But I got to tell you at the same time, obviously credit card debt, sitting at a record high and personal loans are also increasing. And here's the interesting one, Kai. The real question is what happens to the middle class? And here's something that we saw that I thought stood out to me. We are seeing the average ticket. So the average purchase when you get your receipt is down at a particular store, but people are still spending a little bit more overall because they're shopping at more stores. And what I think is happening is they're bargain hunting. It's not just, hey, honey, don't worry. I went to one store. I got everything. And now I'm home. I went and I looked for the best price on the meat and then the best price on the pumpkin spice. So I think that's that early sign of tension.

9:47And we are certainly projecting, as many others are now, a consumer slow down and a pretty tepid holiday season. I will not take pumpkin spice for free. Catherine, Paladin MS now in the board. Heather, long, and maybe federal. Thanks you too. Have a nice Friday. Thanks, Kai. Thanks, Kai. Wall Street today, kind of a mixed bag and equities, little up, little down, bond yields, drifted higher. Again, details numbers when we get there. Every time treasury yields move around as they have been, there is always a little bond math that you got to do. It goes like this. When yields go up, the value of existing bonds goes down.

10:48So with bonds paying higher interest rate today, investors aren't really as excited about bonds they bought last month or last year, because if they're not paying today's rates, they are just not worth as much. Banks, as it turns out, tend to own piles and piles of treasuries whose values are now shrinking. So marketplace is just an hoe. Talk with some bankers to see how they are feeling about things. The reason why banks buy treasuries in the first place is because they can't just lend out all their depositors' money. You have to have enough of a buffer to be able to return your depositors' money when they ask for it. That's Dominic Miartin, CEO of American Pride Bank in Macon, Georgia. He says banks often invest that buffer in treasuries, since they're safe. They pay some interest and they're easy to sell, at least for whatever buyers are willing to pay. Even new bonds start paying more interest. Miartin says that can affect how many loans a bank is comfortable making, because if that buffer of treasuries is suddenly worth less, higher rates on treasuries are also starting

12:00to make lending out their money less attractive to banks. And we balance those things out. Does it really make sense to make a loan or is it better to put it into a treasury? David Riling is a CEO of Sunrise Banks in Minnesota. He expects higher rates to slow down lending, especially since many borrowers are struggling with inflation. As we start to see a little bit of maybe some stress in the credit quality, we'll have a tendency to be a little bit more conservative where you know your alternative is a treasury and you can get a pretty decent risk-free yield. Still, banks aren't planning to load up on treasuries either. Andrew Silzby is CEO of Kennebec Savings Bank in Augusta, Maine. He says he's reluctant to buy too many treasuries because rates are so volatile. We might buy a little bit more right now while rates are higher, but you're just not in the business of trying to predict where interest rates are going. After all, today's bonds could fall in value too, if rates rise even more. I'm Justin Howe from Marketplace. Here's your update on President Trump's trade war with Canada.

13:04He has promised to ban in just a couple of weeks imports of some Canadian products into the United States. Beer and wine, motorcycles, way protein among them. At the moment, each country has tariffs as high as 50 percent on about $20 billion worth of goods coming from the other side over the border. All of that subchange, of course, depending on the president's mood. Those tariffs though, while big and absolute dollar terms affect just a tiny fraction of the overall trade between the two countries. But if you're a small business, even that fraction really matters as Marketplace's Henri App reports. Ben Clark's company makes cookie cutters in Rutland, Vermont. It's the classics that everybody wants. The gingerbread boy, the angel, the star, the heart, the Christmas tree. His company, Anne Clark Limited, was started by his parents in the late 80s and about 15% of the company's sales, he says, are to Canada. A couple weeks ago, we got a couple of big Canadian orders and they actually said we want to get this in before the tariffs potentially hit. Nice for him in the short term to get some big orders, but he's worried that won't continue

14:08if tariffs make his cookie cutters more expensive. Plus, his company markets their products as made in USA. In Canada, we've actively taken the made in USA off of everything we can because that's no longer a positive marketing pitch, which is crazy. He's also bracing for tariffs on his supplies. Anne Clark also makes food coloring using dyes from a Canadian company. The thing is, he says it's hard to know for sure if he'll be charged more until those goods cross the border. Waiting for a possible tariff hit is also worrying Mike DeMaris. He runs a company called Track Inc with offices in Vermont, Wisconsin, and Quebec. They sell snow grooming equipment, mostly for cross country ski areas and snowmobile trails. He's got an order for two machines that are supposed to ship from Vermont to a snowmobile club in New Brunswick next month. It's unclear whether his products are subject to the Canadian government's latest import taxes, but if they are, the charge could be steep.

15:12So if we have two machines at $500,000, Canadian dollars and they apply a 50% tariff, well, we can't sell them. Even though we have a purchase order, we have a deposit. Because he says there's no way his business can eat a 50% tariff and he doubts his customer will want to pay it either. Already the fear of tariffs, DeMaris says, has weighed on his cross border business for nearly two years now. The customers in Canada don't want to buy American products. The customers in the US don't want to buy Canadian products. On the West Coast, Ron Willie's company All American Marine builds aluminum boats in Bellingham, Washington. He's just a few miles from the Canadian border and relies on suppliers in British Columbia for propellers, rudders, and steering systems. We have a very valued supplier and it's funny. They're probably only 30 miles away from us and the tariffs that have come across have really hit them. Here this year, he says the US changed its interpretation of tariffs affecting that supplier's steel rudders and propellers.

16:12And in that case, the cost of those parts and pieces went up 25% overnight. A cost he's had to pass on to his customers. Beyond added costs, interpreting and processing ever-changing tariffs takes more time. Joanne Couture sees this firsthand. She runs her own trucking business in eastern Ontario and frequently crosses the US Canada border. Even if the products she's hauling aren't tariffed, she has to wait in the customs line behind products that are. So there's been times throughout these rounds of tariffs where I've had to wait longer to get my shipment processed to be able to cross the border. And in the trucking business, she says time is money. US regulations limit her to 14 hour days behind the wheel. That clock don't care what you're sitting for. Whether it's traffic, whether it's having a leisurely lunch or whether it's customs paperwork that you're in a lineup to get processed. Arguably the largest effect of the ongoing trade war might be on the relationship between the US and Canada.

17:14For Ben Clark, the cookie cutter maker, that relationship is personal. My wife's grandparents are from Newfoundland. I have several friends who are Canadians. I'm not Canadians, but I'm kind of like we're friends with them. We go back a long way. Why are we doing this? This fear is that even if the trade war is resolved soon, the damage to US Canada ties won't go away. I'm Henry App for Marketplace. I opened up my bank account. There was $90,000 in it. That's a pretty good day. Let's do the numbers. Down dusters off 95 points on the day, 2.10% 51,682. The NASDAQ added 104 points. That is 4.10% 26,522. S&P 500 crept up about 12 points, 2.10% 7650.

18:19Four of the five days gone by the Dow, ended down 1.7%. The NASDAQ gained 7.10% S&P 500 slipped by the 10th 1%. The average per gallon up 3 cents from yesterday to $4.46 diesel you ask? $6.44. That is a new record you are listening to Marketplace. You didn't start your business dreaming about payroll tax deadlines. Yep, there they are. Every quarter sitting on your desk. Gusto handles that part quietly in the background so you can stop dreading the calendar. Gusto is online payroll and benefits software built for small businesses. It's all in one, remote friendly and incredibly easy to use so you can pay, hire, onboard, and support your team from anywhere. With automatic payroll tax filing, simple direct deposits, health benefits, commuter benefits, workers comp 401k you name it, Gusto makes it simple and has options for nearly every budget. And you'll get direct access to certified HR experts to help support you through any

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20:25Get started with shipstation today and get 60 days free at shipstation.com with code marketplace. That's shipstation.com code marketplace. Shipstation.com code marketplace. Taxes and fees apply. Support comes from wise, the smart way to manage the currencies you need around the globe. Bed up with losing out to hidden fees when you send money abroad with your everyday bank, choose the smart way. You can count on the exchange rate you'd usually find on Google. No unwelcome surprises. Plus, ditch that, where's my money feeling? Both transfers arrive in under 20 seconds. Join millions saving billions on hidden fees. Be smart, get wise, download the WIZAP today, tease and seize, apply. This is Marketplace, I'm Kai Rizdal. Think to in says that its user base has grown from 875 million in 2022 to 1.3 billion people today. It is not Facebook scale, no, but it is basically 15% of everybody alive.

21:30Not only is everybody on it, they're not even posting just about their careers. Why is a job site getting all this action? Amanda Hoover is a senior correspondent at Business Insider. She wrote the other day about how posting things that aren't about your job could maybe help get you one. Amanda, good to have you on. Thanks so much for having me. So what's the current state of play with LinkedIn just as a sort of a socially, professionally network, just to establish some ground truth here? Yeah, anyone that's spent time on LinkedIn recently, I think, sees that the number of posts that they're reading are probably up, you know, it's not just what it used to be where you see somebody announcing a new job change or a promotion. There's lots of people sharing about their personal lives, their professional lives, their accomplishments, their thoughts on the news of the day. People are posting more and more at a time when it's become very frustrating to find jobs for a lot of people. Exactly, which is why we got you on the phone. Tell me how it works now if you are, let's take this from two sides.

22:30One, looking for somebody to hire and number two, looking for a job, right? What's the, what's the, if you're looking for a job thing to do? You got to post a lot, I guess? You have to post, you know, job experts are telling me, job coaches are saying, you got to post regularly, you know, you don't have to be on there all day, every day. You don't have to react to everything, but it does seem to be useful to be, to show that, you know, you're a person with expertise in the space that they might be looking to hire someone in. Right. Now, those would be high errors. Used to be, you write in this piece, that they would actually post an opening and sort of be active about it. Now you say they just kind of graze and look around for people? That's, there seems to be a shift from what is called loud hiring to quiet hiring. So that's why the recruiters have somewhat shifted to really looking for people, reaching out to them, DMing them on LinkedIn. And the, you know, unfortunately or fortunately, you know, whoever is perhaps more active, might get seen quicker.

23:32So if you are really active on there and you're showing what you know, maybe you'll have a recruiter reach out to you for a job that feels like a great fit that, you know, you hadn't even been able to see. But, but as you said a minute ago, be active, but don't be too active because then people will legitimately say, what, don't you have a job that you have to work at? And come on, you have time to post all the time. There, yeah. And as well, you know, previously, LinkedIn had made it easier to enhance your posts with AI. Yeah. Yeah. Now it's turned out to be a lot of what people see as slop. That's not good to engage with. That doesn't look appealing to recruiters if you're just posting a bunch of slop all of the time. You want to be human and you probably do want to engage with your network in some way. But you're also doing this in theory to build like a body of work that a recruiter can happen upon. So you have to write a post that can resonate with two different audiences to do well. Man, it's hard out there. So, so brass tax, let's say you were looking for a job.

24:34Not that you are, I'm sure you're very happy at Business Insider, but what would you do? I mean, it's almost, it's interesting when people have told me, you don't really want to wait until you need a job. You don't want to wait until you're looking, you don't want to wait until you've been laid off unexpectedly. And we know that's happening to people. Me personally, I don't really do this because I'm looking for a job or anything. But I post all of my work to LinkedIn. It's a place where I find that I connect with a lot of readers and I connect with a lot of sources there as well. The advice that I was told by for cruders and job coaches was you don't want to wait until it's too late. You want to build up a presence that feels like natural and organic for yourself on there. Note to self, Amanda Hoover, she's a senior correspondent at Business Insider. Amanda, thanks a lot. I appreciate your time. Thank you. The most recent data from the Federal Reserve Bank of New York shows total household debt in this

25:46country comes to $18.8 trillion of which 1.2 trillion is on our credit cards. Heather was just talking about this a second ago. Credit cards can extend purchasing power for a whole lot of people. Yes, but the debt can also linger for years. So paying it off means making some choices. Here's today's installment of our series, Adventures in Housing. I'm Jillian Vantile. I work as a public educator outside of Chicago. In May of 26, I sold my house to somebody that wanted to rent it to me and me and my family. Now live in the house that I just sold. I'm a single mother by choice with two children. And when COVID happened, child care costs really skyrocketed. So at that point, I decided to take out a bunch of credit cards. And at the same time, I decided to get a doctorate so that I could put off student loan payments as well. And I incurred about $60,000 worth of debt that year. Fast forward to 2024. My credit card payments were $2,500

26:59a month. And I realized this was not a sustainable financial situation for my family to be in. I looked at bankruptcy, but that wasn't really an option. My house had $150,000 worth of equity in it. And so I thought I should refinance this. And people were very hesitant to support me because my interest rate was 3.75. And everybody's like, you're going to refinance into an 8% mortgage. Nice and large, it's better than 25% credit card interest. So I pursued that. They said, you're in eligible because the debt to income. And I thought, all right, if I'm selling the house, we're going to have to live somewhere. But my credit is so terrible, I can't rent an apartment. And I thought, too bad, I can't sell my house to someone who would rent it to me. Turns out you can, because I'm in charge of who I sell my house to. The house was appropriately listed at 3.25. And I sold it for 300. My rent is 2,500 versus a $1,400

28:04mortgage. I gave them 7 months' rent up front at closing. We've only met in person once. They got a great deal on a house. And I have no more credit card sets. On the day that we were closing. And in my bank account that morning, there was under a dollar of cents. And then at some point in the afternoon, I got a call from the title company. And then in about 20 minutes, I opened up my bank account. There was $90,000 in it. I think my credit score on the day of closing four months ago was 547. And today it's 685. So yeah, I gave up a lot of equity. But we have a ton of stability. I am not hounded by people that want to offer me personal loans on my phone 9,000 times a day. And I'm so happy that I no longer own 13 drains and two spigots. That's not my problem.

29:10Dr. Jillian Van Tyle just outside Chicago, Illinois. All right, we got to go too much talking not enough time. Our theme music was composed by B.J. leaderman, Marketplace's executive producer is Nancy Fargali. Joanne Griffith is the chief content officer, Neil Scarborough's vice president and general manager. And I'm Kyle Rinsdale. Have yourselfs great weekend everybody. We will see you back here on Monday. All right. This is APM. I'm Lee Hawkins, host of Must Be the Money, a podcast for Marketplace. Each week I speak with inspiring entrepreneurs and business leaders about their lived experiences. And they share tangible insights to help guide your path to success. Here from icons like Angelica Nwandu, Van Lathan, Angela Yee, Matt Farms, and more about how to

30:12seize opportunity, manage money, and meet challenges with resilience. Listen to Must Be the Money, wherever you get your podcasts.