SARAH MCCAMMON, HOST:
How much damage will President Trump's tariffs ultimately do to the U.S. economy? For months, that question has been hanging over the president's ongoing efforts to impose sweeping new taxes on almost everything Americans import. This week, we got some new answers, including a disappointing jobs report, which led to an extraordinary response from the president. NPR financial correspondent Maria Aspan is here to talk about it. Hi, Maria.
MARIA ASPAN, BYLINE: Hi, Sarah.
MCCAMMON: OK, help us make sense of this. It was an extraordinarily busy week for economic news, ending with that jobs report. Why was it so important?
ASPAN: Well, it was worse than expected, and it was one of the clearest signs we've gotten so far that President Trump's very dramatic economic policies are having a pretty dramatic impact on the economy. Unemployment ticked up to 4.2%, and U.S. employers created far fewer jobs than expected. But more importantly, the government revised its earlier data from the previous two months and said that with these revisions, there was almost no hiring in the spring and early summer. The cumulative message is that there are cracks emerging in the labor market, and a lot of signs point to the tariffs that President Trump has been imposing in fits and starts since early this year.
MCCAMMON: And yet, we are seeing more tariffs - more tariffs announced this week, in fact.
ASPAN: It is still full speed ahead for the White House. The jobs report came the morning after the president unveiled yet more tariffs on dozens of countries, all of which really spooked Wall Street. Now, investors had been shrugging off a lot of the tariffs noise in the last couple of months, but yesterday, the Dow dropped more than 1.2%.
MCCAMMON: And we mentioned President Trump wasn't happy about that jobs report. What's he saying?
ASPAN: He took an extraordinary step Friday of saying he would fire the head of the Bureau of Labor Statistics, which produces the monthly jobs report. In a Truth Social post, Trump made baseless claims that she had, quote-unquote, "rigged" the jobs numbers to make him look bad. But Sarah, a lot of experts have been warning that actually, it's the Trump administration that is undermining the integrity of government data through its cuts to the federal government and its efforts to change how some of that data is calculated. There's a through line here of President Trump openly pressuring the heads of government agencies, including ones that are supposed to be independent, like the Federal Reserve. Trump very much wants the Fed to cut interest rates.
MCCAMMON: Right, and despite that pressure, this week, we saw the Fed decided to hold those rates steady. Why?
ASPAN: Well, a lot of it comes back to the tariffs. On Wednesday, Fed Chair Jerome Powell explained it this way.
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JEROME POWELL: Inflation is running a bit above 2%, as I mentioned, even excluding tariff effects. The labor market's solid, historically low unemployment.
ASPAN: Fast-forward a few days, of course, and the labor market suddenly seems less solid. That's raising hopes for the Fed to finally cut interest rates when it next meets in September, and it's also giving ammunition to Trump and the other critics of Powell. But as Powell alluded to there, the Fed has been worried about inflation, which it can really only fight by keeping interest rates high. But now, with the jobs market weakening, it may have another problem on its hands.
MCCAMMON: Yeah, which kind of brings us back to where we started, Maria. What does all of this mean for the typical American, the typical worker, not to mention consumer of goods and services?
ASPAN: Well, for the typical worker, slow hiring is obviously not good, and for consumers, we're looking at higher prices. We already saw consumer prices rising last month, according to government data, and we're seeing more big companies warning that tariffs are eating into their financial results. That will eventually trickle down to the prices they charge us for their products. We just don't know how much and when.
Right now, automakers and other companies that rely on imports say they're trying to avoid passing on a lot of these new taxes to consumers. But economists don't expect that to last forever. So we don't know yet how much we're going to feel tariffs eat into our wallets or into the larger economy. But unfortunately, this week gave us some more warnings that more pain is coming.
MCCAMMON: Lots of things to watch in the markets and the economy - that's NPR's Maria Aspan, explaining it all for us. Thanks so much, Maria.
ASPAN: Thank you. Transcript provided by NPR, Copyright NPR.
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