--:-- [Sound of a podcast intro fades out]
--:-- Ryan Knutson: Welcome to The Journal, our show about money, business, and power. I'm Ryan Knutson.
--:-- Jessica Mendoza: And I'm Jessica Mendoza. It's Tuesday, April 8th.
--:-- Ryan Knutson: Today, we're going to talk about one town that benefited from Trump's tariffs and what it meant for everyone else.
--:-- Jessica Mendoza: Our colleague Chao Deng covers the economy and has been following Trump's tariff plans. Chao, what is his policy goal with these tariffs?
--:-- Chao Deng: Okay, so there are a whole bunch. His administration says that tariffs can raise revenue for the U.S. They can protect American businesses. They can move manufacturing back to the U.S. They can create jobs for American workers.
--:-- Ryan Knutson: Do you have a sense of what he's envisioning? I mean, he has talked about the U.S. manufacturing glory days.
--:-- Chao Deng: So by that, he's essentially pointing to decades back when we had these American towns that revolved around like a single factory. You remember like when one town revolved around steel making or another town revolved around furniture making or textile making.
--:-- Ryan Knutson: At that point, to have a good manufacturing job that was well-paying was really a way to become a middle-class American family.
--:-- Jessica Mendoza: Newberry was one of those towns. It had a long-cherished manufacturing history tied to the textile industry.
--:-- Chao Deng: If you walk around, especially down its main street, you can see its legacy of being a booming textile town back in the day. If you drive around enough, you can actually see some of these dilapidated buildings that used to be cotton mills.
--:-- Ryan Knutson: And then when the textile industry in the U.S. fell back, residents of this town began to flow out. There was some farming left, but there really wasn't much going for it.
--:-- Jessica Mendoza: Rick Farmer's job as Newberry's economic development officer is to keep jobs in town and bring in more.
--:-- Chao Deng: Which is why it was such a gut punch when Caterpillar said in 2016 it was moving out and leaving Newberry with an empty factory.
--:-- Rick Farmer: I knew there would be a lot of concern because it was our number one brand. It was the most recognized brand that was here in Newberry County. They were some of the best jobs in the community.
--:-- Ryan Knutson: And I remember standing on the floor of Community Hall explaining to the Rotary Club why this is not the end of the world.
--:-- Rick Farmer: But at the same time, I just wondered how much of that I really believed and how much of that I was just trying to keep folks from panicking.
--:-- Jessica Mendoza: But Newberry was about to get an assist from a presidential hopeful who was promising to revitalize American manufacturing.
--:-- Chao Deng: I am going to bring back our jobs to Ohio and Pennsylvania and New York and Michigan and all of America. And I am not going to let companies move to other countries. Donald Trump.
--:-- Rick Farmer: His main tool to bring those jobs back was tariffs.
--:-- Ryan Knutson: And for Newberry, that would bring in a new employer and chart a new path to growth.
--:-- Jessica Mendoza: This is the playbook that Trump is now trying to replicate today on a much larger scale.
--:-- Chao Deng: But Newberry's good fortune came at a cost.
--:-- Rick Farmer: Welcome to The Journal, our show about money, business, and power. I'm Rick Farmer.
--:-- Jessica Mendoza: And I'm Jessica Mendoza. It's Tuesday, April 8th.
--:-- Rick Farmer: Coming up on this show, one town that benefited from Trump's tariffs and what it meant for everyone else.
--:-- Jessica Mendoza: Our colleague Chao Deng covers the economy and has been following Trump's tariff plans. Chao, what is his policy goal with these tariffs?
--:-- Chao Deng: Okay, so there are a whole bunch. His administration says that tariffs can raise revenue for the U.S. They can protect American businesses. They can move manufacturing back to the U.S. They can create jobs for American workers.
--:-- Rick Farmer: Do you have a sense of what he's envisioning? I mean, he has talked about the U.S. manufacturing glory days.
--:-- Chao Deng: So by that, he's essentially pointing to decades back when we had these American towns that revolved around like a single factory. You remember like when one town revolved around steel making or another town revolved around furniture making or textile making.
--:-- Rick Farmer: At that point, to have a good manufacturing job that was well-paying was really a way to become a middle-class American family.
--:-- Jessica Mendoza: Newberry was one of those towns. It had a long-cherished manufacturing history tied to the textile industry.
--:-- Chao Deng: If you walk around, especially down its main street, you can see its legacy of being a booming textile town back in the day. If you drive around enough, you can actually see some of these dilapidated buildings that used to be cotton mills.
--:-- Rick Farmer: And then when the textile industry in the U.S. fell back, residents of this town began to flow out. There was some farming left, but there really wasn't much going for it.
--:-- Jessica Mendoza: Rick Farmer's job as Newberry's economic development officer is to keep jobs in town and bring in more.
--:-- Chao Deng: Which is why it was such a gut punch when Caterpillar said in 2016 it was moving out and leaving Newberry with an empty factory.
--:-- Rick Farmer: I knew there would be a lot of concern because it was our number one brand. It was the most recognized brand that was here in Newberry County. They were some of the best jobs in the community.
--:-- Ryan Knutson: And I remember standing on the floor of Community Hall explaining to the Rotary Club why this is not the end of the world.
--:-- Rick Farmer: But at the same time, I just wondered how much of that I really believed and how much of that I was just trying to keep folks from panicking.
--:-- Jessica Mendoza: But Newberry was about to get an assist from a presidential hopeful who was promising to revitalize American manufacturing.
--:-- Chao Deng: I am going to bring back our jobs to Ohio and Pennsylvania and New York and Michigan and all of America. And I am not going to let companies move to other countries. Donald Trump.
--:-- Rick Farmer: His main tool to bring those jobs back was tariffs.
--:-- Ryan Knutson: And for Newberry, that would bring in a new employer and chart a new path to growth.
--:-- Jessica Mendoza: This is the playbook that Trump is now trying to replicate today on a much larger scale.
--:-- Chao Deng: But Newberry's good fortune came at a cost.
--:-- Rick Farmer: So tell us about Newberry.
--:-- Rick Farmer: First of all, it's a great little community. The city's motto is the city of friendly folks. It is, in a lot of ways, it's similar to other small South Carolina towns, or small cities, actually. The population's about 10,000.
--:-- Ryan Knutson: Are there grumpy folks in Newberry?
--:-- Rick Farmer: Oh, sure. They're everywhere.
--:-- Jessica Mendoza: Back in 2016, Rick got some bad news. I remember it like it was yesterday. April of 2016, I got a phone call. Hey, Rick, did you hear the news?
--:-- Rick Farmer: And the news was our local Caterpillar plant was closing. Caterpillar, the iconic American manufacturer of construction equipment. It was leaving its factory in Newberry, and that meant losing over 300 jobs.
--:-- Ryan Knutson: When you first heard that news that they were moving out, how would you describe it?
--:-- Rick Farmer: Well, I knew there would be a lot of concern because, again, it was our number one brand. It was the most recognized brand that was here in Newberry County. They were some of the best jobs in the community.
--:-- Jessica Mendoza: And I remember standing on the floor of Community Hall explaining to the Rotary Club why this is not the end of the world.
--:-- Rick Farmer: But at the same time, I just wondered how much of that I really believed and how much of that I was just trying to keep folks from panicking.
--:-- Ryan Knutson: But Newberry was about to get an assist from a presidential hopeful who was promising to revitalize American manufacturing.
--:-- Chao Deng: I am going to bring back our jobs to Ohio and Pennsylvania and New York and Michigan and all of America. And I am not going to let companies move to other countries. Donald Trump.
--:-- Rick Farmer: His main tool to bring those jobs back was tariffs.
--:-- Ryan Knutson: And for Newberry, that would bring in a new employer and chart a new path to growth.
--:-- Jessica Mendoza: This is the playbook that Trump is now trying to replicate today on a much larger scale.
--:-- Chao Deng: But Newberry's good fortune came at a cost.
--:-- Rick Farmer: So how has this deal been for your community?
--:-- Rick Farmer: It's been great. It's been a very large economic impact on the community. But even more importantly, I think what it did is it created sort of a bridge. You know in an ideal situation a worker will start off with no experience. He at the bottom of the ladder. He works his way up a little bit. He gains skills and experience. And then at some point he can take a different job because he now got the training. He's now got the experience.
--:-- Jessica Mendoza: So it created another pathway for people to kind of leap to the middle of the pack instead of having to just grind your way up.
--:-- Rick Farmer: Trump's washing machine tariffs expired in early 2023. The Samsung factory now employs more than 1,500 workers, and it brings in more than a million dollars of annual tax revenue to the city.
--:-- Ryan Knutson: You know, when I was in the town, I talked to some of the restaurants that were near the factory, and they remember when the factory opened, and they noticed they had more customers, and it just seemed to be a very hopeful moment for the town.
--:-- Jessica Mendoza: And then, you know, months past, you saw more Korean firms come in. So you had at least two Korean firms that were supplying washing machine parts to Samsung come in. And they then created hundreds more jobs.
--:-- Ryan Knutson: So there was a bit of a ripple effect on the local level.
--:-- Jessica Mendoza: But on the national level, things were more complicated.
--:-- Chao Deng: Samsung's interest in a U.S. factory was influenced by Trump's election. He had vowed on the campaign trail to bring more manufacturing jobs back into the country.
--:-- Rick Farmer: He was talking a lot about trade. He didn't have the specificity as he has today, but he was basically threatening tariffs.
--:-- Ryan Knutson: And if you were Samsung or any other major multinational, you would know that tariffs would have been coming.
--:-- Jessica Mendoza: And then early on, when he became president, he started talking about industries like steel, aluminum, solar panels, and washing machines.
--:-- Chao Deng: Washing machines. In Trump's first term, he took specific aim at imports of these everyday household appliances.
--:-- Rick Farmer: I am taking action to impose safeguard tariffs on imported residential washing machines.
--:-- Ryan Knutson: What was the situation with washing machines in particular?
--:-- Chao Deng: Trump basically slapped tariffs on this industry after a complaint by Whirlpool, which is an American manufacturer.
--:-- Rick Farmer: The complaint was that its competitors overseas were unfairly selling their cheap washing machines to U.S. consumers. And that this was threatening U.S. industry and threatening firms like Whirlpool.
--:-- Jessica Mendoza: My administration is committed to defending American companies, and they've been very badly hurt.
--:-- Ryan Knutson: Samsung has previously said that the U.S. is one of the fastest-growing markets for home appliances and called building an American facility a, quote, natural choice.
--:-- Chao Deng: A spokeswoman for Samsung declined to comment on how tariffs affect the company.
--:-- Rick Farmer: But those washing machine tariffs from Trump's first term had some downsides.
--:-- Ryan Knutson: What did these tariffs do to overall U.S. washing machine prices?
--:-- Chao Deng: So this is where it gets a bit tricky. And we had to turn to an economic study that came out around 2020.
--:-- Rick Farmer: And the authors of that study essentially did some math to show that prices of washing machines in the U.S. went up about 12 percent after Trump imposed his tariffs.
--:-- Ryan Knutson: And that averages out to about $86 per washer.
--:-- Jessica Mendoza: I mean, that's what economists say tariffs do, ultimately, raise prices.
--:-- Rick Farmer: Right. And the rationale for that is that the firms importing the tariffs might be the ones to bear the burden initially but they're going to do the math and say well we can really stomach all the costs. We need to pass on some of this cost to the consumer.
--:-- Ryan Knutson: And you know that how these tariffs ultimately filter through an economy and hit American families.
--:-- Jessica Mendoza: That same study found that the prices of dryers also went up, even though dryers weren't tariffed. Because washing machines and dryers are often sold as pairs.
--:-- Rick Farmer: So companies raise prices on both.
--:-- Ryan Knutson: Now, our reporting shows that the price of washing machines in the U.S. has been going up.
--:-- Jessica Mendoza: So in some ways, it feels like there's a tradeoff between prices and jobs.
--:-- Rick Farmer: I absolutely paid more for my washing machine because when the tariffs were instituted, everybody raised their prices.
--:-- Ryan Knutson: Now, here's the thing, though. The American manufacturers could have decided to keep their prices where they were and take market share from their competitors.
--:-- Jessica Mendoza: But no, they decided to just take the extra profits.
--:-- Rick Farmer: So I'm sure there's some truth to the notion that, you know, for every tariff-related job created in America, there are some costs.
--:-- Ryan Knutson: My position is, well, we're not bearing those costs here in Newberry County. We're actually finding a way to profit off of the environment.
--:-- Jessica Mendoza: Would you call yourself pro-tariff?
--:-- Rick Farmer: Me? I am pro whatever improves my community. Within reason, of course.
--:-- Ryan Knutson: Do you feel like that kind of policy, though, helps bring manufacturing to the U.S. and to your community?
--:-- Rick Farmer: Well, I've heard various different argumentations on tariffs, tariffs good, tariffs bad.
--:-- Jessica Mendoza: But obviously, if you have a facility in your community that, you know, is here because of tariffs, you're going to get some benefits out of that.
--:-- Ryan Knutson: But, you know, if you're coming here to avoid tariffs, that doesn't concern me.
--:-- Rick Farmer: I want to talk about jobs and wages and that kind of stuff.
--:-- Jessica Mendoza: Samsung says it's considering moving dryer production to Newberry from Mexico, but it hasn't yet made a decision.
--:-- Ryan Knutson: Are there other Newberries?
--:-- Rick Farmer: The Newberry example is just a very rare example where we can say that tariffs did help create jobs.
--:-- Jessica Mendoza: It's, you know, very difficult to find other examples like this.
--:-- Ryan Knutson: I mean, if you look hard enough, you may be able to find instances where a certain company decided that it didn't want to pay tariffs. And so therefore it made sense to create jobs in America.
--:-- Rick Farmer: But the examples are few and far between.
--:-- Jessica Mendoza: What do you think is the lesson from Newberry?
--:-- Rick Farmer: I think the lesson is that the impact of tariffs is very complicated. And whether they help or hurt is sort of in the eye of the beholder.
--:-- Ryan Knutson: You know, as we can see with these washing machine tariffs, there was a different impact for businesses, for the local economy, for the industry, for the nation.
--:-- Jessica Mendoza: And so, you know, like that's why tariffs I think are so controversial.
--:-- Rick Farmer: I mean, they just ripple out in all sorts of unpredictable ways.
--:-- Ryan Knutson: Before we go, do you have any questions about the Trump administration?
--:-- Jessica Mendoza: If you do, email us and let us know. Please send a recording of your question to thejournal at wsj.com.
--:-- Ryan Knutson: That's thejournal at wsj.com.
--:-- Jessica Mendoza: That's all for today, Tuesday, April 8th.
--:-- Ryan Knutson: The Journal is a co-production of Spotify and The Wall Street Journal.
--:-- Jessica Mendoza: If you like our show, follow us on Spotify or wherever you get your podcasts.
--:-- Ryan Knutson: We're out every weekday afternoon.
--:-- Jessica Mendoza: Thanks for listening. See you tomorrow.
