Introduction
The text discusses the impact of President Trump’s tariffs on small businesses in the U.S., particularly a South Carolina-based company called Gabby Bowes that manufactures barrettes. The company’s co-founders, Rosalind Goodwin and her daughter Gabby, explain how the sudden increase in tariffs from 25.3% to 145% has put their business in jeopardy, as the tariffs now exceed the cost of their entire order. Despite efforts to move production to the U.S., they have found it unrealistic due to the higher costs. The uncertainty around Trump’s trade policies has left small businesses like Gabby Bowes in a precarious situation, unsure of the future. The text also highlights the broader economic impacts, with analysts warning that investors should “prepare to be fooled” as Trump’s trade strategy continues to evolve unpredictably.
Main body
So, new whiplash tonight over the fate of the global economy. The major U. S. stock index has ended the day up a little less than 1%. They were up. Investigators appear to be encouraged by news over the weekend that President Trump would exempt some tech products, including smartphones, computers, and components like semiconductors, from his new tariffs. But would the market have had an even better day if the president himself hadn’t subsequently poured cold water on the whole thing. Mr. Trump posted online yesterday that nobody is getting off the hook and that additional tariffs on what he calls the whole electronic supply chain are still a possibility. And late tonight, breaking news from Reuters and the New York Times that the administration is indeed taking formal steps to impose tariffs on the pharmaceutical and semiconductor sectors. Here to make sense of it or try, Richard Quest, editor at large at CNN Business and anchor of Quest Means Business and CNN International. And Ana Swanson, reporter on trade and international economics for the New York Times. And Ana, let me just start with you. On this news because it was a formal step taken by the Secretary of Commerce investigating the national security impact on pharmaceuticals and semiconductors, what exactly does this mean and how quickly will terrorists follow?
Yeah, so this starts a process where the Trump administration is going to investigate whether imports of both drugs and computer chips and products that have computer chips in them are a threat to U. S. national security. And then that could result in tariffs at some point down the line. We don’t know exactly how long that investigation will take, whether that will take, you know, just a matter of weeks or longer. Are going to result in tariffs. So that is certainly something we expect to see.
Yeah, to that end, Richard, let me play something the President said in the Oval Office today.
We don’t make our own drugs, our own pharmaceuticals. We don’t make our own drugs anymore. The drug companies are in Ireland and they’re in lots of other places, China. And all I have to do is impose a tariff. The more the faster they move in. The higher the tariff, it’s inversely proportional. The higher the tariff, the faster they come.
Is that the way it works?
Well, it’s straightforward economics. If it’s more expensive to make it there, you’ll make it here. I mean, if the pain is greater there, you’ll bring it back. What’s interesting about this is, I think the president’s got a valid point, that the amount of pharmaceuticals made outside of the United States is quite vast, but for valid reasons, because economically, it was cheaper. Under the idea of, you know, where do you manufacture that is the most economically efficient? So it was in India, and it was on the part like Ireland and those sort of places. But the U. S. has woken up to the fact that they do need to onshore or friendshore more of the pharmaceuticals back. But I’m not sure this is the right way to do it.
Ana, what does China think about all this? Specifically, the carve-out for phones and electronics over the weekend, then saying, oh, it’s not a carve-out. What are they supposed to take from this?
Well, there has been a lot of changes to tariff policy, really, you know, very substantial and kind of extreme moves unfolding over the past week. And I think, you know, what China might take away from it is that the pain points in the United States and for the presidency are now quite obvious. It seems like the president has moved in response to turmoil in the bond market, you know, the stocks and financial markets. Tech CEOs’ concerns potentially about raising the cost of electronics for consumers. So, you know, the president has been very resolute, very ambitious about his tariffs. But, you know, clearly he is willing to walk them back if he’s under enough pressure. And that could be a lesson for China as well.
That’s an interesting point that he may be showing them where the United States is telegraphing, where they can apply some of this pressure. Richard, a new survey, more than 300 CEOs released today found that 62% are expecting a recession or an economic downturn in the next six months. You think it’s already happening, basically.
Oh, look, recession inevitability? I don’t know. Serious downturn? Yes. Highly likely for a recession? Very probable. Because the ingredients of this are now in there. I mean, the big mixture has been put in there. Tariffs, slowdown, confusion, chaos, federal government layoffs, worries about jobs. It’s all now being mixed in. This is actually baking life. HE SAID THE ECONOMY IS ALREADY SLOWING. IT’S GOING TO BE VERY DIFFICULT NOW TO REVERSE IT BECAUSE CONSUMERS ARE SEEING WHAT’S HAPPENING. A DOWNWARD SPIRAL HAS BEGUN THAT’S GOING TO BE VERY DIFFICULT TO REVERSE. AND AT SOME POINT THAT RECESSION BECOMES INEVITABLE. I DON’T KNOW WHETHER WE’RE THERE YET. I DON’T THINK ANYBODY DOES. BUT WE ARE WELL AND TRULY on the track to it.
Richard Quest, Donna Swanson, thank you both so much for being with us.
Senator Kennedy, always good to have you. Thank you, sir. Your state exported $10 billion worth of goods to China just last year, more than it shipped to any other country. In 2023, Louisiana’s overall export of goods accounted for more than 30% of your GDP. This is all according to the Office of the U. S. Trade Representative. How worried are you about this trade war with China and its potential impact on the jobs of hardworking families in your state?
Well, we don’t know yet. I listened to your prior guest, the gentleman you interviewed, predict that civilization is going to melt, and I don’t see any indication of that. I heard you comment about Mr. Dalio saying that the world economic structure is going to break down. I don’t see any indication of that. The dollar’s a little bit weaker and interest rates have gone up. Here’s what I see. I see a lot of uncertainty. And I think to some extent it’s intentional. If you listen to the president’s aides weekend before last and then listen to them this weekend, you don’t have to be Einstein’s cousin to figure out they were saying things that were inconsistent. Now, that raises one of two possibilities to me. Either it’s intentional or these folks aren’t competent to manage a food truck. Now, I know them. They’re intelligent people, whether you agree with them or not. So I think the administration, for whatever reason, is obfuscating a little bit. Maybe it’s part of the president’s negotiating strategy. I just don’t know. I do know this: Tariffs are important, but so are high prices. The trade balance is abstract. The price of eggs is concrete, and we need to be spending a lot of time on reconciliation, redesigning the tax code, deregulating the economy, reducing spending to get prices down. That is at least as important as tariffs, in my opinion.
Well, let’s talk about the so-called big, beautiful bill President Trump is urging Congress to pass, which will lay out most of the president’s agenda, including tax cuts that you just mentioned, additional border security and more. The House of Representatives passed its framework last week. You’re now calling for a 60-day deadline to hash everything out before calling in President Trump. Senator Graham, Lindsey Graham of South Carolina, he wants to get the bill to the president by Memorial Day. Are you confident that the House, the Senate, and the White House can make a deal on what should be included?
Here’s what I think will happen for what it’s worth. And before I leave the subject, just remember, Jake, there’s no tariff ferry you can go to. to get instructions on how to do this. This stuff’s more art than science, and I think we’re living that experience. Now, to answer your question, Mike Johnson did a great job getting the House on board. Here’s what I predict will happen. Mike and John Thune in the Senate will give their bodies 30 to 60 days and try to come to a consensus on what’s going to be in the bill. We won’t. It’ll be like herding butterflies. We’ll end up having to go to the President, and this isn’t necessarily a bad thing, and say, Mr. President, arbitrate this. Tell us what you think should be in, what should be out. And then President Trump is going to have to go sell it. Otherwise, I think we could spend a year on this and get nothing done. Sometimes we do spend a year and get nothing done. And that’s not a good thing. I mean, the economy needs a little boost right now in light of all the tariff uncertainty and the reconciliation bill and designing a tax code to stimulate growth and designing a tax code that looks like somebody designed it on purpose can fit that bill, in my opinion.
So you just talked about the need for President Trump to explain whatever is agreed upon. I have heard from Republicans on this show and others saying that they didn’t think President Trump, as great as a communicator as they think he is normally, fully explained what he is trying to do with these tariffs. In other words, yes, he has talked a lot about tariffs, but the idea that he is seeking to reshore manufacturing to the United States and that this is going to be a difficult period and that there are going to be higher prices and on and on, that that has not been, in their view, in their view, adequately communicated to the American people. What do you think?
Well, here’s what I think. I see what you see. I think I know what’s in the president’s heart, but I don’t know what’s in his head. The people you’re talking about are right. The administration has not given one clear rationale for its tariffs. I think that’s intentional. I don’t know, but my guess is it’s intentional and that it is part of the president’s negotiating strategy. But, Jake, I don’t want to feign understanding here. I don’t know. But that’s my best guess, knowing how the president operates.
I mean, the president believes.
Go ahead, go ahead. I was just going to say, the president believes if you’re going to be a bear, be a grizzly. Like him or dislike him, agree or disagree, right now he’s being a grizzly.
Republican Senator John Kennedy of Louisiana, thank you so much. Always good to have you on, sir.
Thank you.
Small businesses all across the U. S. are feeling the impact of rising tariffs, and that’s especially true for mom and pop stores, or in this case, mom and daughter stores like Gabby Bowes. It’s a South Carolina-based company which started off as an elementary school science project. It says it sold more than a million barrettes in the U.S. And 16 countries, but Trump’s new tariffs have put the future of the small company in doubt. And I’m joined now by the mother-daughter co-founders of Gabby Bowes. Rosalind Goodwin started the business with her then seven-year-old daughter, Gabby. Gabby is not seven anymore. That was 11 years ago. But it’s, yeah, she’s all grown up. But it’s so great to have both of you here with us. Thank you so much for being here. Rosalind, I just want to start first with you. We’re at 145% tariffs on imports from China. Walk us through what that means for your business and what the last few weeks have been like kind of trying to ride this wave.
Well, last fall, we got a dream retailer opportunity of a lifetime. When we started, our tariffs were at 5. 3%. And when we signed the deal, they were at 25. 3%. And just to give you an example, I woke up to an email from our manufacturer in China asking if they were ready for us to go ahead and proceed with mass production. I told them yes, in order to get these barrettes to our retailer in time. I got on social media and saw that it was 145%. I immediately emailed our manufacturer back and just said, wait, I have to look at these numbers again. It is, you know, we went from having to pay less than $1,000 in tariffs to now almost $6,000 in tariffs, which is more than our order. So it has just been very unpredictable. And that can be very stressful for a small business.
Absolutely. And so I just want to make sure I’m understanding your math, right? You’re saying $6,000 in tariffs. That’s more than you’re going to pay just to produce everything for your order itself.
Right. My order was just $3,800.
Yeah, wow, and Gabby, for you, you know I know you guys have grown this for 11 years now, I know you guys are talking about being in your dream retailer, it sounds like things are going in the right direction. You’ve worked really hard for this moment of uncertainty; this feels just like the worst timing for you, yes it definitely does.
I mean, being able to have this amazing opportunity, but having such limitations towards it is really sometimes unsettling. Like you want to be able to celebrate, but at times it’s like you don’t know if it’s going to work out and you don’t know if it’s taking a major risk. And obviously being able to manufacture overseas, we’ve been trying to get these barrettes, these double-faced, double-snap barrettes manufactured in the U. S. for about eight years. But it’s been so much hassle trying to get that. A lot of people, once we’re negotiating, start telling us that we need to continue to do it overseas. So it’s just a lot of back-and-forth for a lot of years that have kind of built up to this moment, which is kind of unsettling, as you mentioned, as we’ve been able to kind of grow this dream, but not necessarily know if it’s going to work out or not.
Yeah. And Rosalyn, as Gabby was saying about production. Obviously, one thing that the Trump administration wants to do is bring manufacturing and production of goods back to the U. S. It sounds like you all have been trying to do that for a while, but that it’s really difficult. What do you think of that proposition, and does that seem realistic for you?
Well, we’ve tried, as Gabby mentioned, for the last eight years. We’ve talked to U. S.-based manufacturers. I was just on the phone with one on Friday, who’s getting me quotes. The problem is everyone that we’ve talked to is getting those quotes that said that we have to increase the cost of this pack of our guaranteed anti-slip double-faced barrettes from $4 to $10 to $15. And we can’t pass that price increase onto our customers when our competition is usually about $1 or $2. So it’s unrealistic for a low-cost product. We are grateful that our retail partner is trying to work with us to try to get this first purchase order done, which is due in July. But it does leave a lot of uncertainty for any future purchase orders with this dream retailer.
Yeah, certainly. All right, so Gabby, what comes next? What do you guys do to try to kind of, you know, walk through this uncertain time?
Yes, I think just really being able to lean on our customer base, leaning on the connections that we have and making sure that we are not just worried about these products that we’re trying to come out with and manufacture, but also lean on the other amazing products that we have coming in store. I am about to be or am an author of my first book that comes out in May of ’27 with HarperCollins. So that’s something to be excited about. But just being able to continue to advocate for not just us as small businesses or small business owners, but so many small business owners here in the United States who are facing a lot of uncertainty because of these tariffs. Making sure that we are being that voice and being that advocate for people who are just like us as well.
Yeah, I think there are so many people out there, mothers, daughters, fathers, sons, companies that have been in families for a long time or brand new ones, small businesses that are facing exactly what you guys are right now. We wish you the best. Rosalyn and Gabby, thank you so much.
Prepare to be fooled. That is the warning tonight from Morgan Stanley as Trump may hand out new exceptions to his tariffs. First, electronics-now suggesting he might ease tariffs for some automakers.
I’m looking at something to help some of the car companies. Look, I’m a very flexible person. I don’t change my mind, but I’m flexible. And you have to be.
Sounds contradictory. Ever since Trump launched his trade war, he has, in fact, changed his mind, whether it’s on reciprocal tariffs, a pause on smartphones and computers, and now possibly cars as well. That is why a strategist for Morgan Stanley writes, quote, investors should prepare to be fooled many more times. If a master plan exists, it’s unlikely to work in the way the U. S. administration envisions. And Trump’s plan is evolving as the markets swing. Here was Trump today: ‘Stock market’s up.
The stock market’s up today. We had the largest gain in the stock market in history on every single category last week.
They went down a lot before that.’ The markets may have been up today, but they’re still down more than 4,000 points since Trump threatened his trade war. And today, China’s president sent Trump a message in a new editorial, writing, ‘quote, trade war and tariff war will produce no winner.’ and protectionism will lead nowhere. Out front now, Dan Ives, veteran tech stocks analyst, Peter Tuchman, longtime Wall Street trader, and Rana Foroohar, CNN economics analyst and Financial Times columnist. Good to have you all on. Peter, if I could begin with you. So the market went up today, but the dollar dropped again. Still those concerning signs in the bond markets. Is it correct to say, as Trump claims, that, well, the market’s fine with this now?
I don’t believe so at all. I really want to be upbeat. Last week, Dan and I were here with you, with Aaron, and it was a dismal week. I know Mr. Trump said the market did go up, and we did have one day in the midst of a down week, I would call it, where the market was in fact up. But if we go back to Monday, Tuesday, those days were down severely. And so I’d like to stay a little more upbeat. Yes, today was down, but that was after we started the day with a nice rally. And the market was up overnight. We came in this morning and the market had a reasonable rally. But by midday, we were we had we had broken. Right. And it’s a function of just, oh, look, I think the market has lost some confidence over the last six weeks, the last one week in the last couple of days. In this fact that we are sort of it’s a bit of a bipolar, you know, passive-aggressive approach to these things. We don’t really know. There’s still no clarity around the whole tariff story. We’re given it’s like a pull-in-a-pull. It’s like I was joking with Dan; it’s sort of like an old uncle who you used to drive around with when you were a kid, who used to drive with his foot on the gas in the brake. And you’re constantly going like this. That’s kind of where we are. And so the market is, you know, think about it. We’ve got traders in the market. Since COVID, 50 million new young traders, retail traders, their hedge funds, their institutions, you know, and so everybody’s trying to position themselves on how to navigate this market still. And, you know, I don’t know if there’s much confidence in this thing. People are, they’re trading. You know, the market is trading. This morning, we were up, you know, 800, 900 points. Then we sold off, broke down midday, and then we rallied back into the close. I think that’s what we’re in store for for a while until there’s some defined clarity of policy, which we’ve still yet to see. Right.
In fact, we’ve seen a lot of defined confusion. Rana, you’ve written that the U.S. Is taking on the qualities of an emerging market now because of that confusion and back-and-forth. Explain how.
Well, you know, typically in historical terms, emerging markets have been seen as markets that have difficult politics. They’re volatile. They’re less stable. There’s corruption. You don’t know what’s going to happen from one day to the next. And often they’re run by a kind of cult of personality figure. And frankly, that’s kind of what we’re seeing in this administration. It’s interesting, too, that quantitatively there’s data to show now that the U.S. Political risk level, as measured by a variety of analysts, are correlating with asset prices and with the dollar in the way that emerging market values often run. Typically, the fact that this was the USA and the dollar is the reserve currency kind of gave us a get out of jail free clause, even when politics were rough and more partisan as they have been in the last few years. But in Trump, too, that’s starting to change. And you really are seeing investors start to say, wait a minute, this is not the America we’ve known for the last half century. This is a different country.
Dan, hours after trade exemptions for electronics like laptops and smartphones were announced, the Commerce Secretary then said they’re only temporary, noting they’re still subject to a 20 percent tariff. I wonder how tech investors are seeing this, right? Because I’ve been reading about questions about Apple. I mean, Apple stock recovered, but it seems like some investors wonder what the long-term outlook is if these exemptions indeed are temporary only.
It was a dizzying weekend, right, in terms of news, because it started with exemptions. And then ultimately, you know, what Nick and others talked about in terms of the different brackets or buckets. Look, I think the reality is, is that the China reciprocal, the 145 percent, that would have been the gut punch, the Armageddon for tech names. They needed to separate them out. They did in terms of this other bucket. And that’s viewed as a net positive because it basically got them off the cliff. But now in terms of the next month or two, in terms of what those semi, what those tariffs are going to be, that’s a question. Mark, look, our view is you’re going to have to have negotiations. And the reality is the 10-year, you talked about the 10-year, and the weaker dollar and the markets are going to dictate ultimate policy, and they’re going to have to get some sort of negotiation.
The thing is, though, Peter. Businesses need clarity, not just for the next 72 hours, right? They need it for months and years so that they can figure out what it’s going to cost me to make a car, right? Like where am I getting the pieces for this and therefore I can figure out what to charge for it and what my profit margins are going to be, et cetera. I mean. How can investors settle with this kind of one day it’s this, next day it’s that? I may make 70 trade deals in the next 60 days. I mean, it just doesn’t add up for anybody who writes stock reports, I imagine.
Well, look, we started to see that last week. I think it was Delta Airlines. A number of these larger companies listed corporations are not able to give guidance. You know, and the last time we saw this was COVID. Right. Where there’s no way to predict the next quarter, the next half or what’s going to happen at the end of the year. For investors, this is a hard time. Right. For traders, this is the lifeblood of, you know, of day traders. And there are there are many millions of day traders who are taking advantage of this market. And, you know, we’re seeing that all the way to the top. where people are trading this market aggressively on the upside and the downside and making money doing it. But from an investing point of view and from guidance for big companies, I mean, that’s where you start to see things break down. Dan and I have talked about it for a number of days, where you’re seeing where the United States and China have been in a race for a while in AI and in tech. And for a while there, as NVIDIA was the flavor of the moment and the stock of the year, and Dan has been-touting it for the longest time, and he’s a master in the tech sector. There’s nobody like him. And you’ve been able to talk about CapEx and how that sector has been, you know, the high-flying master of the last couple of years. It’s not been the only thing, but it’s helped the market come through. 2023 and 2024 were up double digits, you know, respectively. And now, you know, we’re getting, I was joking with Dan, we were looking like we were going to head towards being, hanging out with the Jetsons. You know, anybody who’s my age will remember. The Jetsons flying around with George and Elroy, and now it seems like we may be hanging out with the Flintstones because we’re just getting knocked back down and not all the way to the-Yeah, I get it. So this clarity can be problematic for the investors and surely for the corporations.
I mean, it’s moving trillions of dollars in the market. Seems to be problematic to some investors. Before we go, Dan, Chinese President Xi Jinping, he’s in Vietnam signing deals. I mean, the concern has been that trading partners of the U. S. are, like, actually… I’d rather trade even with China under these circumstances. I mean, even the EU was talking to China about EVs. Is that where this is going? Does China fill that void? This is a game of high-stakes poker.
And ultimately, when you look at Vietnam and other countries, that’s what’s going to be playing out here between China and the U.S. And ultimately, it’s the economy and the consumers, and obviously these tariffs front and center. But this is going to be a volatile few weeks, few months. No company is going to really give guidance. Buckle up, that’s our opinion. But at least a step forward today versus some dark days last week.
Ronna, quickly, can Donald Trump kind of charm his way out of this one? Or does he need to announce some bill of goods, right, for how this is going to go going forward?
Oh, man, he definitely can’t charm his way out of it. I mean, you know, waging a trade war on the entire world, adversaries and allies all at once. The trust is gone. I mean, and the fact that, you know, you had him pulling back the tariffs as his USTR, Jameson Greer, was in Congress arguing for them. Other countries look at us and they just say, what the heck is going on? You know, they are moving. China is going to be the winner here-it’s the long and short of it. I mean, this is now their game to lose. And it’s, you know, I’m not optimistic about the U. S. economy right now.
Dan, Peter, Rana. Thanks so much. President Trump is defending his 25 percent tariff on steel imports, claiming they’re bringing trillions of dollars of businesses back to the U.S. This comes as the impacts of those tariffs are already being felt in places like Ohio, where many workers rely on the steel industry. Jason Carroll is out front.
I’m very optimistic, and I agree.
You’re optimistic? I am. I’m extremely optimistic. Optimistic? Not the word some might use to describe their outlook on the economy, given all the back and forth with tariffs. But here at Swanton Welding, just outside Toledo, Ohio, the company’s owner, Norman Zeider, says thanks to Trump’s tariff tactics, he and his workers are feeling good about the future of the business, despite all the ups and downs on Wall Street. Wall Street affects us to a certain extent, but not a lot. Welders like Ethan Sanderson also feeling bullish, hoping all that is happening with tariffs will eventually mean more work and income for people like him, which cannot come soon enough, given he’s about to be a new father. Once everything gets sorted out, that it’ll help us out in the long run. Swanton Welding has been a part of this community since Zeider’s grandfather, a World War II veteran, started it back in 1956 with just $100 in his pocket. Maintaining it has been tough. The U. S. steel and wide swaths of the manufacturing industry have been on the decline for decades due to factors such as declining demand and the inability to compete in global markets. Toledo once buzzed during the steel manufacturing heyday in the 1950s. Now the unemployment rate is 6. 6% compared to the national average of 4. 1%. We’re one of the last standing ones in this area. Still standing and getting a boost from Trump’s tactics. Zeider says five international companies have already reached out to do business.
We had Italy, we had France, we had Great Britain, we had a Canadian company reach out to us. You had a Canadian company? Yeah.
He says it’s the first time in 70 years a Canadian company has called wanting to work with them. Across town at Wursel’s bike shop, owner Jill Wursel also has heard from an overseas distributor.
I just got that a few minutes ago before you came in and I was reading it and I about had a heart attack.
Wursel received an email from a Taiwanese company informing her if tariffs do go into effect, she may have to pay an increase of up to 79 percent. That’s a huge, huge impact on a small business. She buys from China, Taiwan and Cambodia and worries how tariffs would impact cost to customers and her ability to maintain her staff.
Payroll would be reduced and somebody might lose their job or a full-time person will be part-time.
The Wursel family has been in the bike business for 80 years since her grandfather founded it in 1945. The threat of tariffs is now a concern for a new generation of employees. Wursel’s nephew and his wife just quit their jobs a few weeks ago to join the family business.
We’re a little bit nervous, but we trust in Jill. We know that she knows this business really well.
Back at Swanton Welding, also a new generation, one hoping Trump’s tactics will benefit their industry. Allison Fagerman is an 18-year-old welder who works with her father.
I’m hoping that it gets better, and I’m sure it will. I feel like we’re on a bumpy road, and eventually we’ll get to a smoother road.
Jason Carroll, CNN, Toledo, Ohio.
Lots of family ties through the years in those businesses there.
