DON GONYEA, HOST:
It has been a month since President Trump announced his worldwide tariffs. Since then, there have been escalations and tariff retribution from other countries, then tariff pauses, and now some of the pauses have run out, including the end of a loophole that allowed Americans to buy cheap goods directly from China and not pay tariffs. So that's a lot. But what data do we have so far? Well, the GDP in the U.S. contracted last quarter. The unemployment rate is holding steady, and employers added 177,000 jobs last month. Amid these mixed signals, we asked NPR's Scott Horsley to help us understand how things are going. Hi, Scott.
SCOTT HORSLEY, BYLINE: I will do my best. It's not easy.
GONYEA: So Scott, the economy shrank. Is that tariff related?
HORSLEY: Indirectly, yes. A big reason the GDP contracted in the first quarter was because there was a flood of imports, and that's because businesses and customers were trying to stock up ahead of the tariffs. Imports count against GDP, its gross domestic product. We also saw a general slowdown in consumer spending during the quarter, and that's, of course, the biggest driver of economic growth. And there's also just a lot of uncertainty right now. You know, economist Michael Pugliese of Wells Fargo says, it's hard to know from day to day where this economy is headed.
MICHAEL PUGLIESE: It's been quite the roller coaster ride over the past month. The Liberation Day tariffs were announced, and then they were paused for 90 days. There's been exemptions for certain goods. There's been discussions of trade deals with specific countries. You know, I think it's still really uncertain where the actual policy change is going to land in another 60, 90 days.
HORSLEY: There was a survey of factory managers that came out this past week, and one of the managers talked about supply chains being paralyzed because of all that uncertainty. Meanwhile, the cost of imported parts and raw materials has been going up, and factory orders have been going down.
GONYEA: I was talking to some union autoworkers at a Trump rally in Michigan this week, and many of them say that tariffs are long overdue, so unions like tariffs. What about among American businesses? Any of them on the tariff bandwagon?
HORSLEY: Yeah, some are. I think most businesses are not, but some businesses certainly are cheering for these tariffs. I talked to Tom Barr, who runs a company called TK Mold & Engineering in Romeo, Michigan. He makes injection molding equipment used by automakers and others. This is highly skilled work. His father and grandfather were in the same business.
TOM BARR: I'd say about mold makers or anybody in the dye business or anything like that - we're the guys that coach the kids teams. We're the guys that usher a church. We're the people that are, like, passionate about what we do.
HORSLEY: And Barr would very much like to pass the business on to his kids. But, you know, in recent years, he's been facing increased competition from mold makers in China. He's seen what they can produce. It's good quality, he says sort of grudgingly. But even after crossing the ocean and being trucked to the Midwest, it is significantly cheaper than what he can make right there in Michigan.
BARR: So by the time they put it in the crate, put it on a boat, brought it to the Detroit area, it was $80,000. And that would have cost, in U.S. funds, $150,000. So how are we supposed to compete with that, right?
HORSLEY: To Barr, Trump's triple-digit tariffs on Chinese imports are a lifeline that could help put him back in the game. Since those tariffs took effect last month, his phone's been ringing with potential customers calling about work they might send his way. But you hear those numbers he's talking about. These are big investments, so it's not a switch a company is going to make casually if they think these tariffs might go away in a month or two.
GONYEA: So Scott, just quickly, are we in wait-and-see mode, or are we in crisis mode?
HORSLEY: You know, it varies, Don, from day to day. Consumers are pretty gloomy. They're worried about higher prices, they're worried about possible layoffs. Consumer confidence is about as low as it's been since the beginning of the pandemic, but that is not always a reliable guide to people's spending behavior. If people keep spending, then the economy will probably keep chugging along. If their spending droops as much as their mood has, well, then look out.
GONYEA: All right. That's NPR's Scott Horsley. Scott, thank you.
HORSLEY: Don, always great to talk to you. Transcript provided by NPR, Copyright NPR.
NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.