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Brigid Bergin: It's The Brian Lehrer Show on WNYC. I'm Brigid Bergin, senior reporter in the WNYC and Gothamist newsroom, filling in for Brian today.

President Trump has paused some of his latest proposed tariffs, but one major levy remains firmly in place, a 125% tariff on goods from China with at least a temporary exception on cell phones and computers for now. For New York City, that could all mean big trouble. Wall Street is reeling. Small businesses are already feeling the sting of rising import costs. There are even some implications for tourism. As Greg David reports in his latest story for THE CITY, even with this so-called pause, the tariff damage is not theoretical, it's already happening.

We'll talk about what this trade war could mean for the city and state budgets for small businesses trying to stay afloat, and for all of us living in a city that runs on finance, tourism, and trade. Greg David covers fiscal and economic issues for the local news website THE CITY and directs the Business and Economics Reporting Program and the Ravitch Fiscal Reporting Program at the Newmark Graduate School of Journalism. Greg, welcome back to WNYC.

Greg David: Thank you. Always glad to be on.

Brigid Bergin: Listeners, we want to hear from you, especially if you're a small business owner, a retailer, or someone who relies on imported goods, international tourism, or the financial sector. How have you seen prices change, rise, or shipments delayed? Are you unsure how to plan for the next few months? Help us report the story. Call us at 212-433-WNYC. That's 212-433-9692. You can call or text at that number.

Greg, you have written that even with Trump's recent pause in some tariffs, the damage to New York City's economy may already be done. What are the warning signs you're seeing right now?

Greg David: Well, there are lots of warning signs. The most important one is on Wall Street with these incredible gyrations in the stock market. The stock market is substantially down from earlier this year when there were all these hopes about how great Trump was going to be for the economy, Wall Street, and stock markets. This is crucial for us because everybody needs to remember that the securities industry provides more than 20% of all the income in New York City and pays more than 20% of all the state taxes. This is a crucial industry for us to watch. We're supposedly going to do great in the first six months of the Trump administration. Not so.

Second major thing to worry about for everyone, well, tariffs are likely to mean rising prices. While you noted the reciprocal tariffs are off for 90 days, the 10% across-the-board tariff is still on. Imported goods are going to be 10% more than they were earlier this year.

Third thing we're watching, of course, is tourism. Will tourism weaken? There are lots of signs that it might. In some ways, it's our second most important or third most important industry, and we need to watch that. As you mentioned, I've been talking to a lot of small businesses. Many of them are paralyzed if their business involves imports. From one day to the next, they don't know what the cost of their goods is going to be. That's no way to run a business.

Brigid Bergin: Greg, one of the major tariffs that wasn't paused was on Chinese goods. There's a 125% tariff. I've also read you could interpret it as a 145% tariff because there are combined tariffs that, depending on the product you're looking at-- I was looking at a chart in The New York Times this morning. One of the examples they used was syringes that are something like 245% tariff because of this sequence of tariffs on the products. Can you talk about why this particular tariff is both confusing and concerning for New York's economy?

Greg David: Well, confusing for sure. I can't explain it. I would need a lawyer to explain this. Some of the small business people I talked to aren't sure. They don't know what the tariff will be. Concerning? Well, the big word here is uncertainty. We've been reading a lot about it because what's amazing about what's happened in the last two weeks or three weeks is that what is the policy here? What is the rhyme or reason? When there's a tariff one day and there's not a tariff three days later, and, "We're keeping big tariffs on China," "No, we're going to exempt computers and smartphones," "No, we're not going to exempt computers and smartphones," how do you plan a business?

Brigid Bergin: Right.

Greg David: This goes to the long-term supposed objective of the Trump administration, which is to bring back manufacturing to the US. Well, who's going to decide to invest hundreds of millions of dollars or billions of dollars in building a plant in the US if they don't know what the economic tariff cost situation is, and they have no confidence that what will happen today will be in effect in a couple of weeks? What's happened this week is a direct contradiction to a policy which would suggest that we want to bring manufacturing back.

You mentioned The Times in Paul Krugman's piece. There was this great little three-point chart. If you make a computer in Vietnam with a battery from China, your tariff is zero. If you make that computer in the United States with imported tariffs from China, the tariff rate is 145%. It's just incredulous.

Brigid Bergin: Wow. Not surprisingly, we have some listeners who want to weigh in on what they are seeing. Klaus in Norwalk, Connecticut, you're on WNYC.

Klaus: Good morning. Thank you. As I mentioned, I am an architect, an older architect. I work as an owner's representative for large developers. Most of the projects are in the South. A couple of things. Most plywood comes from Canada, most lumber comes from Canada. Gypsum comes from Mexico and Canada. Steel comes from Mexico and South America. It's too early for me to tell from my clients what's likely to happen to prices for all these things.

In addition, a large percentage of the workers in Texas, Florida are immigrants. They're already seeing a lack of labor in finish trades, which is painting and sheetrock and stuff. Like I said, it's too early to tell with what's happening with all these tariffs. Like I said, most building materials now come from Canada, Mexico, or South America.

Brigid Bergin: Klaus, can I ask you, you said it's too early to tell, but for some of the kinds of projects that you do, I don't know if you do residential or large commercial, but when would you anticipate starting to see the impact of some of these, both increased costs and then potentially slowdowns in projects? Could this delay the actual building of projects that are in plan?

Klaus: Yes. Like I said, it's too early for me to tell. I traveled to Texas, Florida, and Virginia to look at what are large residential projects, 300-400 apartments at a time. The first concern was simply about labor. Like I said, most of the laborers in the South are immigrants. Like I said, this is all very new so I haven't seen any specific impact on any of these projects yet. I do know that a couple of the projects that are near completion, they're already lowering the rents. These are all rentals.

Brigid Bergin: Wow.

Klaus: Particularly in Texas, I think it's slowing down. I've already seen concerns in Texas about materials and labor.

Brigid Bergin: Klaus, I want to thank you for sharing that perspective. Greg, I'm curious your reaction to that. Someone who's working in residential construction, certainly we will see an impact, but too soon to tell?

Greg David: Well, I don't know about, "Too soon to tell." There are two things happening here. First of all, we have a great housing crisis in America and in New York. The Trump policies are clearly going to raise the cost of building. How's that going to help with the housing crisis? We know that's going to be a major issue going forward. Yes, if you've got a project that's being completed, you're there, but how do you cost out the next project? People don't know. I think that's going to lead to delays.

Remember, we haven't gotten to the other point here, which is that all this uncertainty has changed the odds on the US and New York City economy from a year of solid growth to the potential for a recession. The recession itself is going to have lots of implications. We'll see. A recession would change everything about the economic assumptions we've made. It'll have a huge impact on the budgets. New York State and New York City are adapting. The ramifications are impossible to overstate.

Brigid Bergin: Let's talk some more about that. You've already talked about how Wall Street plays an outside role in the city and state's economic health, generating over 20% of the city's income and tax revenue. We've seen this market turmoil now going into a second week. We haven't seen dramatic shifts in those budget projections. Do you have concerns about how exposed New York's budgets are, both at the city and state level?

Greg David: Yes. How about completely exposed? As a matter of fact, maybe Liz Krueger's listening. She's the head of the Senate Finance panel and a Manhattan Democratic senator. This quote from her from last week just caught my eye. This is about the fact we don't have a state budget.

"People are frustrated because particularly this year, a late budget just makes it more and more likely that there's less money available to spend as the world burns outside." This quote seems to say, "Let's pass a budget that involves spending money we're pretty sure we're not going to have." I don't know. That quote caught my attention a lot. As far as I can tell, the state and to a large extent the city, especially the city council, are on course to adopt budgets, assuming a really good economy.

Kathy Hochul wants to give a $3 billion tax rebate to taxpayers to offset the added sales tax they pay because of inflation. Spending is projected to go up 3, 4, 5%. City council says there's a couple more billion dollars to spend at the local level. Well, maybe that was fine a month ago, but clearly, we will be lucky to escape a recession. I don't think so. We'll get to talk about tourism, which is clearly weakening and a huge source of tax revenue. I don't know, are we really going to do this? I guess at the moment the answer is that we appear to be wanting to do that. I'm pretty sure that when the budgets are finally passed, there'll be lots of people saying, "This is a dumb thing to do."

Brigid Bergin: If you're just joining us, you're listening to The Brian Lehrer Show on WNYC. I'm Brigid Bergin, filling in for Brian today. My guest is Greg David from the local news website, THE CITY, and the Newmark Graduate School of Journalism. We are talking about the local impact of the tariff policy of the Trump administration. You have some local business examples in your story, Greg, but we have a listener who I think has an example of her own. Let's talk to Christine in Brooklyn. Christine, thanks for calling WNYC.

Christine: Hi, thank you for taking my call. I'm sure this is going to resonate with a lot of people who are in the design industry or who work in packaging. Everything that we manufacture, it goes through drop tests and packaging. Almost all of it is done in China. For me, personally, right before COVID, I was placed on-site at a very prominent home goods company. I was in the office nine days before we got sent home for COVID. Then I did everything for two years off-site. Every day I spoke to China. They did all of our drop testing. They did all of our manufacturing.

When I worked in publishing, all of our books were printed in Canada. We would go to Canada to do press checks. When we shipped stuff for packaging back in the day, I used to put it on a disc, and it would take the slow boat to China. Then they would package it, they'd print it, they would do the drop test. Everything that we get that happens to be on a shelf, 9 times out of 10, it's probably not printed here in the United States because it's too expensive, and we don't have the factories for it.

Brigid Bergin: Christine, thank you so much for that call. That does help set up some of the reporting that you did, Greg, in terms of a Harlem-based company, Top3Games, which is also facing a spike in import costs due to tariffs from China. What do you think, both the example Christine talked about and the example that you described, about the position small businesses are in?

Greg David: It's called impossible. It's just simply impossible. This company I talked to, Top3Gmes, they're going to have a shipment coming in. It's going to cost about $9,000. They have no idea what the tariff is going to be. If it's going to be 20% of $9,000 or 145% of $9,000.

For an earlier story, I talked to a wellness beverage company based in the Navy Yard. It's got about nine people. They get their bottles from China. They're going to have to raise the price if the cost of those bottles more than doubles. I said to them, "Well, can't you find the bottles in the United States?" The owner said to me, "Well, the bottles in the United States cost three times as much and we have to order a multiple of what we can get from China." The reverberations are amazing.

Of course, there are two things that are really important to make at this point. One of which is the manufacturing capacity can't be resurrected tomorrow. We can't suddenly create this great manufacturing infrastructure to provide these goods. Secondly, even if some areas of the United States benefit, New York City will not. We do not have land for manufacturing. We do not have a workforce for manufacturing. We have much too high costs for manufacturing to come. Maybe there could be some gains upstate in New York. There are some gains elsewhere in the country. New York City and its suburbs will not see any gains even if the Trump policy succeeds, which I also doubt. Even if that were to be true, New York City would not benefit.

Brigid Bergin: We have a listener who texted, "Obviously this is the wrong way to enact tariffs, but would New York business owners benefit from better trade conditions with China?"

Greg David: I don't see how particularly. Look, there are two groups that have benefited enormously from the situation with China. The first group are low-income New Yorkers because the cost of goods has been held down. This is a group that has benefited enormously from trade with China. Small businesses with very small margins are not going to benefit if the cost of their goods goes up. I don't see any benefit here in New York City from higher tariffs.

If you cared about the auto industry and if you thought the right auto tariffs would bring more auto manufacturing back to the US. There are places that could benefit, places in the Midwest, certainly places in the South where a lot of auto manufacturing is done now, but we're not going to get an auto manufacturing plant in New York. Auto dealers in New York are going to have to be selling cars that cost a lot more money.

Brigid Bergin: We're going to go to the phones. Let's go to Jerry in Paramus, New Jersey. Jerry, thanks for calling.

Jerry: Oh, thanks for taking my call. I was involved with a company for 25 years. We imported consumer electronic products from various countries in the Far East. One of our major costs was customs duty. We had to know it because basically, at the Las Vegas Consumer Electronics Show, we presold our products to the big box stores, so we had to make sure that our costs were solid and firm so that we would be able to deliver the products according to all of the sales agreements that we made with these chain stores. I don't know how an importer today can basically sell his products in advance if he doesn't know his costs. I'm just curious to know how they manage it today.

Brigid Bergin: Thanks so much for that call, Jerry. Greg, you have talked about it. It is nearly impossible for businesses to be able to plan. Any reaction to the issues Jerry's raising there?

Greg David: Most of the businesses I talk to have their fingers crossed. That's one way you manage it. You hope that when the goods-- There are goods in transit. You could have goods on a ship. You're going to have to take delivery of them, and you don't know what the tariff is going to be. The other thing, I don't have much local evidence for this, but there's a lot of it in the national coverage. People are just putting a halt on their business. They're delaying orders. They're just freezing their businesses. Now, that's Step 1.

Step 2 will be when they have to cut costs, when they have to lay off people, et cetera. The person said, "I don't know how they're managing their businesses." They wake up every day and say, "What do I do today? I don't really know what's the best course for me at the moment."

Brigid Bergin: Greg, of course, we're having this conversation, talking to our listeners about the local impact, but another listener writes, "Of course, Trump couldn't care less about how this hurts New York specifically, can Greg David (wonderful report, by the way) address how the hit to New York will affect the country as a whole?"

Greg David: Well, we're a big part of the national economy, and if things turn down here, that's not going to be good for the economy. We're not the only place. The place actually which has the recession target on its back is Washington, DC. All those layoffs are going to have the possibility of devastating the Washington, DC economy. We'll see how it plays out.

New York does not always go the way the rest of the country does in the economy. In 1989, there was a very mild national recession, and we had a terrible recession that lasted from '89 to '93. We'll have to see.

Brigid Bergin: Greg, another listener writes, "How are these tariffs actually collected? Is there a guy standing on a pier with a calculator? How do we know these tariffs are even being gathered?"

Greg David: Some version of that. The goods hit the US, and there's somebody there to assess the tariff. That's right. We know, for example, that last month the US collected a billion dollars more in tariff fees than it did in the same month the year before, so there is somebody there collecting the tariff. Can they keep up with the changes? That's a good question. I think good reporting will see whether they are competent enough.

There's a little twist here that's been going on back and forth. We used to have what was called "de minimis exemption," that products worth $500 didn't get hit by the tariffs because they're so hard to collect. At first, the Trump administration ended that exemption. Then the chairman of FedEx flew to the White House and convinced Trump to put it back, and so the exemption went back in. Now it's out again. How they're going to assess a tariff on every small package that FedEx and UPS is bringing from China is a little beyond me.

Brigid Bergin: Greg, we have a couple of callers who want to push back a bit on the manufacturing in New York City statement you made before. Let's go to John in Babylon, Long Island. John, you're on WNYC.

John: Hey, great to speak to you. Greg, great to speak to you. You're making great points. I do want to push back a little bit on this idea that New York and the New York City tri-state area does not have a strong manufacturing base that could benefit from this. I'm not saying they will, but this idea that there's not manufacturing in this region is false. It's one that a lot of people have because it's overshadowed.

I can tell you, in the aerospace and defense area arena only, this region is the fourth largest industrial base for the defense industrial base in the nation. That's behind California, Texas, and Philadelphia. That's only in aerospace and in defense products. Most of those suppliers also supply into commercial. There are vast other manufacturing programs in this region in southern Connecticut, southern New York, Long Island, and northern New Jersey are loaded with manufacturers.

Part of the reason they can't compete in a lot of commercial markets is because of pricing. That seems to be directly the effect-- an improvement through tariffs. I'm not saying the tariffs will work, but I just want to be clear that this idea that there is no one in this region who would benefit might be mistaken just because we misunderstand the size of the manufacturing industry in this region.

Brigid Bergin: John, thanks so much for that call. Greg, any response?

Greg David: There is some manufacturing outside the city. That's true. There is virtually no manufacturing inside the city. We're well down below 50,000 jobs. The numbers go down every year. Are there some people in the region that could benefit? Yes. How many times do we hear how high taxes are in New York State, how high property costs are in New York State? If you're going to build a big factory, this is not a place where you're going to do it.

As a matter of fact, when we do get opportunities, even upstate, we pay a fortune for them. We're giving more than $100 million in state and local tax breaks so Micron will build a semiconductor plant outside Syracuse.

One of the great scandal stories of New York of the last decade is the enormous subsidies we've given what is now Tesla, but once was SolarCity, to build a plant in Buffalo that the state actually owns, for reasons that completely escape me, that has never brought a major benefit. I'll grant that there are exceptions to what I said, but New York City will not benefit. The New York region, I think, will benefit very little.

Brigid Bergin: Greg, before I let you go, the one area that we haven't talked about really at all yet is, of course, the issue of tourism and how the drop in tourism could impact our economy, whether it's in hospitality, the hotel industry-- Where are you expecting to see those changes show up and how deep could that hit be?

Greg David: Remember, tourism accounts for more than 300,000 jobs in the city? It's really rebounded sharply. The number I'm going to watch is hotel occupancy. Actually was strong in March, we were at 83%, which was the same amount the year before. Room rates were $30 higher than a year ago. Room rates are very high for reasons we would have to spend a whole show on. That's the number I'm watching.

The hard data says that the tourists remain. The soft data says we need to worry. The Delta Air Lines CEO said his bookings had plunged sharply for the rest of the summer. Surveys show that Canadians, the second largest group of international travelers to New York, are mad at the US and mad at Trump for good reason, and they're not going to come this year. Every month on the fifth or sixth day of the month, I'm going to call up this company called STR and say, "What do the hotel occupancy and room rates numbers show for the last week?" That's the number I'm going to watch because that's going to tell us what's happening in tourism.

Brigid Bergin: Interesting. If you had to pick a number like that for small business owners and for consumers, what are the metrics you're going to be watching there?

Greg David: Well, there's no good number for small business owners. The other metrics we're going to watch are sales tax revenue. We don't have a good retail sales number, but we can watch sales tax revenue to see what it tells us about retail sales. We have to watch the Consumer Price Index. Inflation is worse in New York than the rest of the country. The rest of the country is right under three. We're in the high threes or at four. What's the impact of higher prices going to be?

The other number that is always the most important one to watch is the jobs number. It comes out this Thursday, comes out the third Thursday of every month. Will we see weakness there on Thursday? I'm especially going to be paying attention to federal employment to see if there is any impact from the federal employment cuts here in New York. We got about 50,000 federal jobs in the city. Then, each month, the way we find out if there's a recession in New York is we track the jobs numbers, and that's going to be my obsession the third Thursday of every month.

Brigid Bergin: Well, we are grateful to know that you will be focused on it so that we can call you up and check in again. I want to thank Greg David. He covers fiscal and economic issues for THE CITY, and he directs the Business and Economics Reporting Program and the Ravitch Fiscal Reporting Program at the Newmark Graduate School of Journalism. Greg, thanks for joining us this morning.

Greg David: My pleasure.

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