We say it all the time: Tariffs are a tax, borne by the country imposing it. Which is to say, while a near century-high tariff rate imposed by President Donald Trump causes economic pain abroad, the record tariff revenue America is bringing in comes largely from Americans.
New data from Goldman Sachs backs this up. The bank found as of June, American businesses had absorbed nearly two thirds of tariff costs, but projected consumers would eventually take 67% of the burden. Price hikes can make a business less competitive and alienate consumers, so how are firms starting to shift their higher prices to you? We’ll break it down in this week’s newsletter.
Plus, we’ve got stories from the bleeding edge of AI,anime that can teach you economics, and a few unexpected mashups. Have a great weekend!
— Tony Wagner, newsletter editor
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Andrej Ivanov/AFP via Getty Images | Companies are finding ways to charge more without raising sticker prices |
Watch out for new shipping fees and tariffs surcharges. Marketplace’s Kristin Schwab reports. |
Earlier this year, Greg Shugar, owner of Beau Ties of Vermont, was deep into tariff strategizing when he had a thought: What if he added a small tariff charge to his products, kind of like sales tax? He floated the idea on LinkedIn. “You wouldn’t believe the political backlash that there was,” Shugar said. “It just seems to trigger people’s minds in a political way.”
The post got more than 600 comments, many of which were fraught enough for Shugar to abandon the idea. Instead, he raised prices and cut staff.
“I let go of a customer service rep. I moved two of my production staff members from full-time to part-time,” said Shugar. “I cut things that I really wanted to keep; that’s why I was paying for them in the first place. But these are the decisions we needed to make.”
Businesses are at a real turning point with tariffs. Inventory they’ve stocked up on is running out, and they can no longer afford to eat the cost of the import taxes — and are instead passing it on to consumers. Inklings of that became evident in July’s consumer and producer price indexes and, based on what companies are saying in earnings calls, more price hikes are coming soon.
The thing is, for businesses, increasing prices is usually a last resort. They’d rather streamline supply chains, automate, or even sell lower-quality stuff. And companies have to be smarter than ever about pricing, so they’re increasingly finding creative ways to do it. “The thing that doesn’t work is just a flat, sweeping price hike across everything,” said Marty Anderson, a principal at The Parker Avery Group, a consulting firm that’s worked with Aldi, PetSmart, and Lululemon.
Consumers are more sensitive and suspicious of corporate greed, especially after years of inflation. So companies are looking for targeted ways to raise prices
that can sometimes seem sneaky. They might cut free shipping or add return fees; they might tack on charges at checkout. That’s become so popular that the point-of-sales company Square has a new feature to help businesses charge customers credit card fees. But Anderson warns that these tactics don’t always go over well with consumers.
“I think when they catch on to those things, you just kind of get a bad taste in your mouth,” he said. “You know, tell me what it costs. Just, like, be clear with me and transparent. Like, I just want to know what I’m paying for.” | | | |
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Kids these days Local economies Food | |
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Is climate change an economic crisis? |
As the climate crisis accelerates, so does the risk of economic disruption, with massive consequences for jobs and entire industries. Join Amy Scott, host of Marketplace’s "How We Survive," and Pulitzer Prize-winning science writer Elizabeth Kolbert in conversation with Marketplace host Kai Ryssdal as they discuss how these shifts are poised to unfold, the impact to our daily lives, and how true solutions may be at odds with how our economy functions. Plus, we’ll dive into the solutions that are giving us all hope right now. Presented by Odoo with additional underwriting support from The Economist. |
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Spencer Platt/Getty Images | Vision AI, explained |
Large language models, or LLMs, are the AI engines behind Google’s Gemini, ChatGPT, Anthropic’s Claude, and the rest. But they have a sibling: VLMs, or vision language models. | At the most basic level,
large language model AI works by predicting the next word.
“Each word stands on its own and then you can, you can build a model on top of that, what word comes next?” Siva Reddy, professor of computer science and linguistics at McGill University, told Marketplace’s Sabri Ben-Achour. What, then, are pictures made of? They might be worth a thousand words, but they aren’t made of actual words. So researchers had to figure out how an AI is supposed to understand them.
“An image has so many details in it, what would you focus on? It’s a much, much harder problem than generating language or anything else,” Reddy said. The answer, researchers figured out, was smaller images — little tiny patches of an image.
“You might say it's a sky, which has tree leaves, some leaves in it, and some clouds in it. And you break this image into these patches and you treat each patch as a word.” Once images become words, the power of language model AI could start to be unleashed on them, and we get what are called vision language models — vision AI. “We've just seen a proliferation of usage in areas that I don't think we ever would have had the imagination to think of,” said Jay Allen, CEO of m87 labs, which created an open source vision language model called Moondream.
“There was a rancher who owned just an incredible amount of tracts of land, and once in a while, cows would get lost, and the rancher used Moondream to have a drone fly around and to try to identify errant cows,” Allen recalled. |
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Madhouse via IMDB | 10 anime series that will teach you about economics |
Who says you can’t get smarter about the economy while binging a great show? “Make Me Smart” host Kimberly Adams is at Anime NYC this weekend, and she curated this watch list for you. |
“Trillion Game”
The sad truth about the business world is that sometimes the liars, the cheats, and the schemers do come out on top. In this series, two young men, the charismatic Haru and shy computer programmer Gaku, become friends in middle school and make a pact to one day become trillionaires. After finishing college, Haru drags Gaku along on a wild ride of schemes, scams, bluffing, lying, and the actual hard work of starting and running businesses that sends them racing up the income ladder to at least become billionaires by the end of the series. (This show does have some adult moments and themes, so may not be appropriate for younger viewers). Available on:
“Dahlia in Bloom”
Kimberly’s favorite! After literally working herself to death as an office worker in Japan, the main character is reborn as Dahlia, the daughter of a “magical artisan” in a new world. Raised to take over the family business of creating magical devices that can ease day-to-day life, Dahlia aspires to use her memories from her previous life to create commercially successful products. She uses her magic skills to develop items like waterproof fabrics, a portable stove, and a blow dryer. But after the sudden death of her father and the betrayal of her fiancé, Dahlia finds herself needing to start over as an independent person and a businesswoman. She leans into her new life,
starting her own company, making powerful allies, and building new friendships along the way. Available on: |
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Charles Zhang/Marketplace | FOLLOW @MARKETPLACEAPM |
Go inside China’s AI industry |
China’s move to adopt AI in business comes all the way from the top, with the State Council agreeing to “vigorously promote the large-scale commercial application of artificial intelligence” and integrate AI into various industries.
Yet, unlike in the U.S., there hasn't been as much public discourse in China about what happens to the humans replaced by AI. Our China correspondent Jennifer Pak spoke to some Chinese AI firms at the recent World AI Conference in Shanghai to get their takes. |
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"Believe In Ya" by Girl Talk, T-Pain and Yaeji |
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