So we've been calling the Trump era unprecedented for a while now, but these past few weeks, there's no comparison.

'Are we still in the great unknown? I mean, this China-U.S. Situation is kind of undescribable.

This is huge. This is a massive, massive drag on global trade as the United States unilaterally rewrites the rules.

'The fallout from President Trump's so-called liberation day with its on again, maybe off again, no actually still on again global tariffs and the resulting rising tensions with China. It all has the financial markets bouncing like a yo-yo and the rest of us wondering what is happening? Of course, some say the answer couldn't be simpler.

I don't know how to say it politely. I mean, we're just getting screwed. You know what I mean? There's no way around it.

Okay, this is a coffee shop owner in LA, Matthew Shodorf.

I'm not sure if this is specifically our coffee or not, but we work with this importer a lot.

'He spoke last week with CNN reporter Julia Vargas-Jones, one of my many colleagues reporting on tariffs here.

And those price increases you haven't passed on to your consumers, to your customers at your coffee shop.

No.

Are you reconsidering that now with the tariff?

I mean we have to at some point in time, right? I mean, we need to make a living. We lost one of our shops in the fires in Altadena in January, so we've already lost a significant amount of our income, our personal income from that. I kind of understand on some level, like we're going to raise prices on imports so that we try to guide people towards buying domestic, right. You can't do that with coffee. There is no domestic version. It's just... Tariffs on top of price hikes.

Like he said, tariffs on top of price hikes. Shocks that are also hitting with home builders. So here's a man named Dan Mitchell.

We work between the 5 and 8 percent margin on all the construction that we do, and so if there's any impact at all on that margin, it makes it less affordable for us to even be able to put homes on the market.

A Farmer, Ryan Marquardt

We could lose our entire generation of farmers if this continues.

And small business owners, like Cason Crane.

Big businesses have the resources and access to capital to wait it out. But a small business like mine will be out of business before the end of the year, if things continue on this path.

So yeah, what exactly is this path that we're on? What does this mean for you and your finances? And is it possible to get clarity in the chaos? I'm Audie Cornish, and this is The Assignment. OK, here's the state of play. We are about a week into the president's 90 day pause on tariffs, which, despite the name, didn't actually suspend all tariffs. It just reduced most of them to 10 percent across the board on everyone except China. The president has slapped a 145 percent tariff there, and the Chinese have responded with a 125 percent tariff of their own. It's a lot to process. And to help us make sense of all this, is CNN senior business writer, Alison Morrow. She's the author of the Business Nightcap Newsletter. Hey there, Alison. Welcome to the assignment. So you are like technically the busiest person in the office right now, which is saying something.

I'm one of the busier ones, yes. I think that's fair.

I feel like this is the kind of gig that nobody is. Like clamoring, you know, to hear what you have to say until it's like a crisis. And then they're like, please explain all of this to me.

I don't find it to be a boring beat, but it can be a less general interest beat until there's a crisis and then we're called in and it's a five alarm fire.

'Then it's everyone's interests, right? I was thinking about the last time I covered an economic crisis, it was coming out of the 2008 presidential campaign and that sense of like, can I sell my home? What's happening to my retirement? What's going on? There was a real kind of panic and even, and with banks collapsing, it really felt like this very striking moment. In this situation, it also is striking, but you have someone like Janet Yellen saying, hey, this was self-inflicted. Basically, this is a self-own. So talk about what's the difference between what happened then in terms of leading us to this moment and what has happened now.

'It's a really interesting historical comparison because you could argue that the 2008 crisis was a bit of a self-own in the way that a lack of regulations and a kind of laissez-faire political attitude toward huge financial institutions, allowing them to kind of dip into very complex, you know, the words collateralized debt obligation.

I never want to hear them again. I covered it. And I remember. But yeah, the idea was like, the banks are lending too much. Everyone says it's good to buy a home, but no one seems to be like on the up and up about how much money you should be able to take out it to do that. They stepped on a financial rake and it threatened the economy. Um, but this is weird. Like Trump brought his own rake.

He brought his own rake and this is not a systemic problem that's built over years. The economy was in really technically good shape nearing the end of the Biden administration. Inflation was a little higher than we liked and there were some cracks starting to form in the labor market. But in general, the labor market was good. Unemployment was low. We're still growing at a solid clip. Consumers are spending money. There was good confidence in the economy and all of that almost overnight has shattered. And we're starting to see those, those cracks widen and it's causing a lot of alarm, you know, we've seen recession forecasters say the odds of a recession have gone up tremendously since Trump came into office and these tariffs that he was campaigning on have been so much worse than anyone could have predicted.

Worse in how he put them in place, worse in just how high they were, worse in market reaction?

Yes, all of the above.

Oh my God, Allison.

'Not to alarm you, but, you know, we knew going in what Trump says his tariff plan is going to be and how he views tariffs as a kind of economic catch-all policy. And he's going to bring industrialization back to America while also bringing other nations to heel. Never mind that those two goals are completely in contradiction to one another. But once they were actually announced, and that was just two weeks ago, if you can believe that. The levies were higher than analysts, economists, investors expected. That's why we've seen the markets freak out the way they have. And the haphazard nature, not only of the way that they were calculated, but the way the way have been implemented and communicated from the White House. Markets are hanging on every word the White house says and they are getting conflicting messages every other day from trade advisors, from the commerce secretary, from the president himself.

I actually got a letter from the company that deals with my 401k that was like, hello, you may have heard there are tariffs. You know what I mean? It was like explaining the volatility in the economy because I think it was a little bit of saying like, look, it's not our fault that when you open this letter, it is going to be bad.

A lot of people were getting those letters.

Yes. And that was not talked about enough that like, it wasn't just like, I'm seeing something bad on the news. Like even if you ignored it. And so many more, I think I was reading in Gallup, two thirds of Americans have some kind of stock investment of some kind, right? Whether it be through their pension, through 401k, and even just the introduction of apps like Robinhood that people who are dabbling in the market, there's just, while the wealthy own the majority of the wealth in the markets, it's not like the average person isn't participating.

Truly, and the average person works for a company that is in the S&P 500, you know? Like these market movements can often seem remote, especially if you're wisely not looking at your 401k right now.

I should not have.

No, yeah.

Should have stopped at the letter. The letter told me. and still yeah

'I never give financial advice, the only thing people, I will tell people is like, if, especially if you are not about to retire, like just don't look at your 401k right now, set it and forget it. But yeah, it, everyone is exposed in some way, whether it's owning stocks or working for a company that may have to scale back its growth and potentially do layoffs, You know, we don't need to get into the details of the bond market because that is a murky and complicated place, but the upshot for most people is that it affects your credit card rate what you get charged for a car loan your mortgage rate all of those things are influenced by the Long-term us treasury market and that is the market that is flashing the biggest warning signs right now saying hey, we don't like this and us assets are getting scary and that and that's why we're seeing rates go up.

You talked about the bond market. There's other kinds of tea leaves that people pay attention to when they look at the stock market. But here's the thing, I'm one of those people that's like, the stock is not the economy. It may be, I think, the pain nerves, it's particularly sensitive, but it is not the economy, but one of the things we do here at CNN that I found fascinating is a fear and greed index, which is this, it looks kind of like, you know, the car meter and it's either all the way on extreme fear or all the way on extremely greed, which is amazing because neither of those sound good. But this is the chart you have given us. Talk about this chart. First of all, what goes into it and why would this be a way to understand what's happening in terms of the mood of the market at any given time?

I'm so glad you asked about the fear and greed index because more people don't

People don't ask? Every time i see it i'm like how is this not a thing

Well, I actually just wrote a story about it two weeks ago, because it's gotten so much attention on social media and elsewhere lately, and I was like, where did this, it's been around for a while, but it's important to note fear and greed are not our construction. That is like a common measure of market sentiment. But I think they're instructive. When you think about greed, okay, people are buying, investors want more and more more. That is driving the market forward. And when people are scared, they're fearful, they're selling, selling, and selling. So those two kind of opposing forces are often the thing pulling stocks one way or another. And lately, it's been very firmly in the extreme fear territory because we've seen tariffs take hold and make investors really scared of a recession.

Is the recession thing real? The fears? I ask because a few years ago we were waiting and waiting and waiting and waiting for a recession that everyone said would come during the Biden administration and it didn't.

It never came. Yeah, we were a lot more, the economy was a lot more resilient in 2022 than a lot of people estimated. By a lot people, I mean the people whose jobs it is to predict recessions. They are notoriously hard to predict.

Yeah so now you know I'm casting doubts on your assertion here yeah so given that track record now are all these same people again looking at us and saying winter is here

'Whether it's here or not, and you will find people who say we're already in it, or it's coming or whatever, the market is behaving as if we are slowing down significantly. May not be a recession, ultimately, but the behavior is one guided by and anticipation of a slowdown, which can have a self-fulfilling prophecy element to it because if the market continues to slow down, economic growth will stagnate as a result. Businesses will grow less because they'll have less capital investment. You will see economists being a bit conservative and saying, well, it's basically a coin flip at this point. It went from maybe at the start of the year, a remote. 15% chance or 20% chance, depending on who you ask. Now, a lot of mainstream economists, they're saying it's basically a coin flip. It's like 45, 50%.

'We're talking with Alison Morrow, senior business writer at CNN. Stay with us. You know, in the Atlantic, somebody was writing that this whirlwind, right, of all of these different tariffs, that it's paralyzed businesses, rattled markets, et cetera. But the line that drew me was most of the damage will not be undone by Trump's tariff pause, referring to the fact that he put a 90-day pause on these tariffs. It says the world has seen things it cannot unsee. What do you hear when you hear that sentence? Because you've been in this business world for a long time covering what has been revealed in this moment that was startling for everyone about the, I don't know, whether the American financial emperor has no clothes.

The word unprecedented gets overused so much in this administration. But it's not just the tariffs. It is also the perception of an erosion of the rule of law in this country. And it is hard to overstate how important stability and predictability is for global investment and how much the US has benefited from America historically being the responsible adult. Who always pays its bills, who manages its economy responsibly. The turmoil that we saw in the bond market, again, without getting into the technicalities of it, was a shaking of trust with the world. Suddenly the world doesn't trust that America knows what it's doing.

And that's not just like a partisan talking point. You're saying that they're showing with their money that that's how they feel.

Yeah, I think markets have political elements, but globally the US Treasury bond market is so massive, its size effectively makes it apolitical because it's just people looking to put their money in the smartest place. I don't think that you can call that reaction just a rebuke of Trump's politics. It's really a rebuke of his policies and really like the management of the American economy.

'All right, so let me move to one more headline from CNN Business. Trump has 90 days to do 150 trade deals. Financial markets aren't buying it. So let's talk about this because now this is when we hear about the various meetings between the Trump White House and other countries and what that's supposed to mean for their tariffs. But like when you guys put it that way I was like, oh yeah, that's a lot of deals to make one-on-one. And what are you, again, seeing that shows, like people don't have faith he can do it, or that they do, because a lot of people, Trump supporters, lept to his defense to say, you don't understand, this has brought everyone to us, everyone to the table, they all want to make a deal. He's doing what he said he would do and it's working.

90 days is just not that long of a time. And a lot of investors that I spoke to last week said, well, what's gonna happen in 90 days when they haven't secured trade deals with all of these countries that they say they're gonna have trade deals with? We're just gonna sit this one out. Like, investors, put your pencils down. We are taking our money out of the stock market. We are not making any big moves because we don't know where the risk is here and we don' have a lot confidence. That the Trump administration can pull off what it claims to be trying to pull off.

'One of the things I have come to understand about US history is that post-World War America, there were lots of deals we made sort of societally. And one of them was, we're going to buy. Like, we have more money. We're going buy more things. And over time, that is actually going to become part of our economy. To the point where when I was like in my twenties and 9-11 happens and the president comes out to speak, like one of the things he says is like, keep shopping.

We cannot let the terrorists achieve the objective of frightening our nation to the point where we don't... Where we don't conduct business, where people don't shop.

Right? Like in this epic moment of like terror and military, you know, like the thing was like, oh, no, actually, if we want to make sure everything is okay, you got to keep shopping. And that is so built into what our economy is. And what makes it strong is like every one of us just buying stuff. And when Trump and his Treasury Secretary talk about I think it's Scott Bessent t basically said like, the American dream is not cheap goods. And I was thinking like, yeah, it is actually. I think like that is how this has all been sold. Like you can't buy a house, but you can get a TV. You know what I mean? You can't, like maybe it's gonna take you a while to buy a car, but you will have a Nintendo. And we were all like okay with that social contract. And is there something about this moment that is actually disruptive to that very contract.

'I think that's such a good point. Because it is true. Buying stuff is not only like something that we culturally identify, but it is also quite literally an engine. It's the biggest engine of the US economy. Something like two-thirds of GDP is tied to consumer spending. So when that falters, it's a real problem and governments historically have bent over backwards to try to prevent. Americans from losing confidence so much that they, you know, I think during COVID was a great example. In some ways, it felt like the world was ending and everything was chaotic, but we kept shopping.

Send it to the house, keep it rolling.

We got on Amazon and we bought our cheap baubles made overseas, which had all kinds of supply shocks that were later bad for inflation, but that's another story. And now it's interesting to hear the government actually say we need to culturally shift our perspective about what value is and how we want to conduct our affairs. You know, the cheap baubles line, I was like, it's the bulk of what most Americans are buying, you know, I think it's interesting from the millionaires and billionaires in the Trump administration to lecture Americans about cheap baubles and prioritizing cheap goods over American industry.

Because we keep throwing around this phrase, cheap goods, and it's really rolling around in the back of my mind. The idea that like, okay, that is no small thing. And to say you're going to rearrange that agreement and that social contract is actually a really different question to me than whether or not a factory is gonna be built here.

And just to be very frank about it, what they're talking about with reindustrialization, no serious economist believes can actually be done. If he had a 10 year administration to work on it exclusively, it still wouldn't undo the decades of globalization that we have witnessed that's put our manufacturing overseas.

And is hinged on our buying right like it's it's a machine like it is a snake eating its tail

'Right. I just think it's good to be candid about the likelihood of that happening is more or less non-existent and it's unclear that the administration understands the rupture that will take place in American homes over not being able to afford basic necessities.

Okay, we're coming to the end of the conversation, and here's where the rest of us are gonna get some advice, Allison. I'm sure you have friends and family who are wondering what they should be doing. And some of the things we joked about don't look at your 401k, you know, fair. But people are starting to, for instance, there were more people buying cars, I think, last month, you saw that in the retail sales numbers because they hurt. Cars are going to be more expensive. What do your friends and family ask you about? Like what is your group chat right now?

I was at the gym the other day and my friend was like, oh my God, should I just sell my whole stock portfolio? And I was like no, absolutely don't do that. It is a scary time when you see like the Dow, the S&P, the NASDAQ all like plummeting.

Like on late night television, they're showing it, right? Like it's an inescapable conversation. Though I wouldn't take advice from someone at the gym about just wholesale financial decisions.

Yeah, I mean, I guess she knows I'm a business reporter, so she was like, what should I do? And I was like talk to a professional, you know, that might be a money manager and or a therapist, like these are tough times. And you know I would say as like an elder millennial who my career started at the beginning of the financial crisis, and we lived through that, and there was a lot of pain. And then there was COVID. And we don't know the long effects that this is going to take. You know, I read something this morning that really stuck with me in Semaphore's newsletter where Liz Hoffman talked about the financial shock is not measured by its immediate impact. It's measured by the blast radius, right? Like in 2008, it started with subprime mortgages, which no mainstream people had ever heard of that. And then it had all these ripple effects that took months and months and even years to play out. And it took a long time to recover. COVID was a much shorter, sharper shock, lots of externalities, but ultimately a quick recovery. Sometimes these things happen and they are massively scary and they ripple out for years. And sometimes they happen and nothing much happens afterward. And it's impossible to know in the moment, in the shock, what we're going to get at the end of it. So I would just keep that in mind. It can be easy. I fall into it when things are so tumultuous. It's like, oh, we're all doomed. But that's a bad spiral, I think, for personal mental health and for society at large.

Well, Alison Morrow protect your health, protect your peace. Allison Morrow is a senior business writer at CNN. She's also the author of the very good CNN Business Nightcap newsletter. I highly recommend that you subscribe and there's going to be a link in our show notes. The Assignment is a production of CNN Audio. This episode was produced by Jesse Remedios and Madeleine Thompson. Our senior producer is Matt Martinez. Dan Dzula is our technical director. And the executive producer of CNN Audio is Steve Lickteig. We had support from Dan Bloom, Haley Thomas, Alex Manessari, Robert Mathers, John Dianora, Leni Steinhardt, Jamis Andrist, and Nicole Pesaru, also Lisa Namarow. I'm Audie Cornish, and I wanna thank you for listening.