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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.

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Speaker 2: Hello and welcome to another episode of the Odd Lots podcast.

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Speaker 3: I'm Jill Wisenthal and I'm Tracy Alloway.

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Speaker 2: Do you think you and I are gonna start getting

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Speaker 2: checks because they strike down the tariffs?

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Speaker 4: Right?

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Speaker 2: And according to economists, consumers pay the tariff. So if

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Speaker 2: consumers pay the tariffs and they strike out on the refund,

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Speaker 2: shouldn't we get the money?

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Speaker 3: I have often said Joe, I buy a lot of stuff, Yeah,

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Speaker 3: especially from abroad, a lot of weird stuff. Sometimes I

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Speaker 3: feel like I'm running a small logistics company. Yeah, And

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Speaker 3: I will say so, I know it's the importer of

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Speaker 3: record who actually pays the tariffs and is supposedly supposed

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Speaker 3: to get the refund. However, I've had a few instances

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Speaker 3: where like the postal service will deliver something to my house,

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Speaker 3: especially in Connecticut, and while they're there will say you

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Speaker 3: owe us like fifty dollars in cash as a teriff payment.

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Speaker 3: And I'm literally standing on my door really paying out

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Speaker 3: cash and it's going somewhere. So I feel very much

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Speaker 3: like I actually have paid the tariffs pretty much directly

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Speaker 3: to the Trump government. Like there is something.

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Speaker 2: Very I have some bad news too. I know, I

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Speaker 2: know the person who did that was a con artist

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Speaker 2: who it was, as they said, and they duped you

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Speaker 2: into think of that, because I have never heard of

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Speaker 2: someone having to bake.

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Speaker 3: You're not buying enough from abroad. No, it's definitely true.

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Speaker 3: I got the bill online and then you can either

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Speaker 3: pay online or you can pay the postal guy. And

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Speaker 3: it's very strange.

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Speaker 2: I've never heard of that.

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Speaker 4: Anyway.

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Speaker 2: Everyone wants their money back. How that's gonna happen, what

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Speaker 2: the timeframe is is going to be major court fights.

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Speaker 2: It was an article in the Wahreet Journal this morning

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Speaker 2: and it said that the scale of the suits to

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Speaker 2: recover it is going to be quote the same level

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Speaker 2: is at his bestest levels, which famously was you know,

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Speaker 2: multiple deckses of lawsuits.

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Speaker 3: Also gave birth to an entire portion of the legal industry,

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Speaker 3: lots of mesothelioma lawyers out there.

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Speaker 2: Some time later, I'll tell you I was briefly part

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Speaker 2: of that industry as a data collector for it. That's interesting, Yeah,

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Speaker 2: it's fun. Anyway, we got to figure out how it's

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Speaker 2: all going to happen. Because we know all these big

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Speaker 2: companies they want their money back. Of course, you know

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Speaker 2: there's new tariffs already and the Trump administration after losing

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Speaker 2: one tariffs, they're like putting in a different one that's

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Speaker 2: probably gonna have court fights, et cetera. We also know

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Speaker 2: that there was a popular secondary market in claims that

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Speaker 2: Wall Street banks were facilitating, and so this is going

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Speaker 2: to be a mess. It's probably going to stand for years.

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Speaker 2: We got to figure out how companies are actually in

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Speaker 2: the process of getting their money back and whether they'll

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Speaker 2: ever see it or whether it all go to the lawyers.

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Speaker 3: Well, this is the other thing. I know, you and

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Speaker 3: I live in perpetual fear of paperwork and bureaucracy, and

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Speaker 3: this in particular just strikes me as like the biggest

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Speaker 3: nightmare of paperwork and bureaucracy. You know, for some of

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Speaker 3: the tariffs, you were like calculating them by like the

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Speaker 3: proportion of like the tariff item in the thing you're buying,

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Speaker 3: So like steal an aluminum, how much of this thing

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Speaker 3: is actually steal It just seems like a nightmare. The

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Speaker 3: whole thing of customs seems like a nightmare. Is still

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Speaker 3: very antiquated.

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Speaker 2: We got to learn more about this nightmare about this chaos,

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Speaker 2: and who do we talk to when we want to

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Speaker 2: learn more about not the theoretical stuff that about trade

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Speaker 2: and you know economists talk to talk about, which I

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Speaker 2: love them too, but the actual nuts and bolts of

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Speaker 2: moving things of course.

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Speaker 4: Uh.

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Speaker 2: Perfect guest Ryan Peterson, thunder and CEO of Flexport, joins

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Speaker 2: us today. So Ryan, thanks for coming back on odlaws.

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Speaker 4: It is great to be with you and Tracy.

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Speaker 5: That person may have been an impersonator of a postman,

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Speaker 5: but it is illegal to impersonate a postman. I tried

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Speaker 5: to be one for Halloween, and you can't buy a

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Speaker 5: postman's out for that borrow one. I made friends with

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Speaker 5: the mailman and he gave me his the borrow, but

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Speaker 5: he was like, I will get fired if anyone finds out.

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Speaker 3: Guys, I'm just gonna be very clear. It wasn't a scap.

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Speaker 3: The guy had my package, I had the bill, I've

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Speaker 3: received the package. Customs isn't going after for unpaid bills.

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Speaker 3: It's just weird. It's weird, but I think it speaks

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Speaker 3: to like a lot of Americans will feel like they

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Speaker 3: have paid these tariffs extremely directly.

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Speaker 2: All right, Ryan, let's just start a big picture you

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Speaker 2: work with a lot of companies, et cetera. February twenty six,

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Speaker 2: What are they all up to right now?

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Speaker 5: Everybody wants to figure out if they're going to get

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Speaker 5: a refund, that's the big question, and if so, when

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Speaker 5: and how and my what we've.

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Speaker 4: Been telling you.

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Speaker 5: So Flexport is one of the bigger customs brokers in

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Speaker 5: the United States, and I think the most automated, one

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Speaker 5: of the best systems for calculating this stuff and all that.

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Speaker 4: That's the only sales pitch I'll do here the still out.

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Speaker 5: So that is the giant question. And then they also

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Speaker 5: want to, hey, can I sell this now? You know

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Speaker 5: you mentioned the secondary market that the very interesting fact

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Speaker 5: fun fact there is that that was those were trading

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Speaker 5: it about twenty five cents on the dollar three weeks ago,

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Speaker 5: and it went to fifty two cents on the dollar

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Speaker 5: on Friday, at the same day of the Supreme Court.

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Speaker 4: Markets move very fast on this stuff.

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Speaker 5: So a lot of the companies I talked to in

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Speaker 5: the last week have said the CEOs, it's yeah, they

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Speaker 5: would sell it seventy cents on the dollar today and

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Speaker 5: they're considering it at fifty two cents. So I think

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Speaker 5: that market's really going to heat up. Yeah, those are

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Speaker 5: the big questions to ask, and I do have opinions.

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Speaker 5: I think I believe I have a very high degree

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Speaker 5: of certainty, like bordering on certainty, conviction, bording on certainty,

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Speaker 5: that there will be refunds. And I don't think it's

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Speaker 5: going to take that long. I think you're going to

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Speaker 5: see refunds this year. Would be I'm gonna put my name,

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Speaker 5: I'm put my reputation on the line with that prediction.

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Speaker 3: Well, okay, so the Supreme Court not for you, Tracy.

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Speaker 4: Sorry, I don't know, no, no, no, I know.

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Speaker 3: I've already resigned myself. I need to hire a customs broker, actually,

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Speaker 3: is what I need to do, someone like Ryan. But okay,

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Speaker 3: so the Supreme Court struck down the majority of the tariffs.

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Speaker 3: But the thing they didn't do is say, like what

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Speaker 3: happens next? How do refunds actually work? Do you get

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Speaker 3: a sense of like did they have any idea of

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Speaker 3: how it should work that they just didn't say, or

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Speaker 3: like they're just leaving it open to who exactly to

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Speaker 3: decide the process of how this actually happens.

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Speaker 4: Yeah, so little backgrounds here.

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Speaker 5: So this started in as a case in the Court

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Speaker 5: of International Trade which the administration lost. It then went

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Speaker 5: to the Appellate Court, which is the level below the

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Speaker 5: Supreme Court. In the appeal there at the appellate Court,

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Speaker 5: the plaintiff is a company called Voss Vos something but

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Speaker 5: I forget I should other day.

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Speaker 4: But the plaintiff is a small business that was suing it.

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Speaker 5: And they actually asked for a stay, an administrative injunction

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Speaker 5: to stay to say, hey, you have to stop collecting

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Speaker 5: these tariffs while this gets worked through.

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Speaker 4: You lost the case, you need to stop now.

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Speaker 5: And the DOJ in that appellate court filed emotion that

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Speaker 5: said if we lose this case, if the government.

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Speaker 4: Loses this case, there will be refunds.

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Speaker 5: Like that's from the DOJ. They filed the motion. You

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Speaker 5: can read it in the docket. They then lost the

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Speaker 5: case there, it went to the Supreme Court. They lost again.

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Speaker 5: The Supreme Court has sent it back down to the

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Speaker 5: original first court, the Court of International Trade, and said, okay,

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Speaker 5: you decide if there's you know how the refunds are going. Well,

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Speaker 5: they didn'tay anything about reform, so it just goes back

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Speaker 5: to them. It's just if you read the thing and

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Speaker 5: I'm not a lawyer, okay, but I can read it

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Speaker 5: and I make my own opinion. But the more the

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Speaker 5: reason I really have certainty is I talked to three

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Speaker 5: different international trade attorneys who all told me one hundred

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Speaker 5: percent certainty that there would be refunds. And I've never

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Speaker 5: heard in lawyers say one hundred percent certainly of anything

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Speaker 5: before in my whole life.

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Speaker 2: So, by the way, the company that filed I'm looking

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Speaker 2: at up Voss Selections. It's a wine importer in New York.

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Speaker 2: It looks like they have a nice website. Their website

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Speaker 2: is very funny because it has all these beautiful pictures

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Speaker 2: and it says wines and then saki and other spirits,

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Speaker 2: and then there's a big thing called fighting the tariffs.

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Speaker 2: It sort of looks ugly on their webs.

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Speaker 4: That's e big, I gotta buy some wine from this guy.

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Speaker 2: They've done everyone to big solid here by taking this on.

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Speaker 4: It's a future odd Lot's guest right there. Yeah, case,

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Speaker 4: you should actually talk about it.

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Speaker 2: This Court of Trade, it's not like some UN court.

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Speaker 2: It's a New York based US court. Yeah, it sounds

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Speaker 2: like it would be like the WTO or something like that.

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Speaker 4: But this is a lot.

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Speaker 5: No, it's a US court where they send these types

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Speaker 5: of cases. In fact, there was another case that was

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Speaker 5: brought in the DC Circuit case Seek Circuit Court, and

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Speaker 5: they bundled them together into the Court of International Trade.

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Speaker 4: Now currently there are over.

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Speaker 5: Two thousand cases before the courts before the court challenging

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Speaker 5: AIPA sorry requesting refunds effective challenging that they should get

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Speaker 5: a refund. So I think those will likely all get

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Speaker 5: rolled into one and it will go to court. Now,

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Speaker 5: the Court of International Trade has only thirty days from

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Speaker 5: February twentieth was when the Supreme Court came out, and

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Speaker 5: they have thirty days to make a ruling of what

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Speaker 5: happens next. So I think we're gonna know pretty quick

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Speaker 5: how the refunds. You know that there will be refunds, just.

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Speaker 2: To be clear. Is part of the reason that there

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Speaker 2: is this confidence. I mean, the law is the law,

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Speaker 2: I guess, but is because of that DOJ comment prior

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Speaker 2: to the Supreme Court pre indicating that if you guys

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Speaker 2: reverse this, we're gonna have to make refunds. It is

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Speaker 2: that part of the reason.

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Speaker 4: Yeah, the lawyers have So that's.

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Speaker 2: Confidence because they've already stated that as part of their

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Speaker 2: arguments against exactly.

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Speaker 5: I mean, you just think about Look, I'm not a lawyer,

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Speaker 5: and you're always gonna find some lawyers that'll show some

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Speaker 5: gray area.

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Speaker 4: But I've talked to three that just pure a certainty.

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Speaker 5: And you know, just imagine that you're going back to

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Speaker 5: the same judge and you're saying, hey, you know where

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Speaker 5: you're trying to fight the refunds, and your judge's going

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Speaker 5: to get like, well, you filed this paper, you know,

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Speaker 5: this motion in my court that said you would give

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Speaker 5: a refund if you lost, Like, why are you not

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Speaker 5: honoring that thing?

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Speaker 4: So, but there's there's complexities here.

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Speaker 5: I'm not a legal expert. I'm more of a customs

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Speaker 5: tariff's expert.

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Speaker 3: So maybe before we go any further, let's just talk

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Speaker 3: about who actually is paying the tariffs when, like you know,

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Speaker 3: an item gets made abroad and then it gets imported

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Speaker 3: by I don't know, a shipping company, and then it

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Speaker 3: goes through a customs broker and then it actually ends

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Speaker 3: up at a store and then it gets bought by

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Speaker 3: whoever who is the entity that is actually paying the tariffs.

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Speaker 3: So the importer of record that supposedly is going to

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Speaker 3: get this refund.

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Speaker 4: Yeah, it is.

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Speaker 5: That's the legal term for it is the importer of record,

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Speaker 5: and it's generally a US business. In your case, you

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Speaker 5: did as an individual. You may or may not have

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Speaker 5: been the importer of record on that trend.

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Speaker 3: Yeah, I'm pretty sure it was like the actual shipping company.

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Speaker 5: But yeah, with small parcel that's what happened. And that's

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Speaker 5: very relevant because FedEx this week sued the government for

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Speaker 5: a refund. And my initial reaction was like, wait, I

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Speaker 5: don't understand, like FedEx doesn't pay the tariffs their customers do.

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Speaker 5: But it turns out for a small parcel what I did,

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Speaker 5: I'm not in the small postal business, a small parcel business.

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Speaker 5: I didn't realize this really, but is that if you're

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Speaker 5: getting a parcel delivered although you are sent to tariff

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Speaker 5: bill by FedEx, FedEx is the importer of record.

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Speaker 4: They pay the tariff, so the refund comes to them.

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Speaker 4: They don't have to give it to you legally.

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Speaker 5: Until they'll probably get class action lawsuit by a bunch

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Speaker 5: of traces and your friends and everybody else out there,

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Speaker 5: or you know, it's also just brand damage.

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Speaker 4: If they don't. If they get the money from the

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Speaker 4: government and don't do it. I don't know. It seems

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Speaker 4: like a bad look.

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Speaker 5: So that's the case of small parcel in your important containers.

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Speaker 4: That's the business that we're in ship large volume stuff.

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Speaker 5: The import of record is a US entity, but it

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Speaker 5: doesn't have to be in Actually United States, the UK

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Speaker 5: Hong Kong are the only countries in the world, if

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Speaker 5: we want to count Hong Kong as the country, the

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Speaker 5: only places in the world that allow non resident importers.

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Speaker 5: So it's a foreign importer of record. Until April of

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Speaker 5: last year, that was about nine percent of US trade.

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Speaker 5: Since April it went to twenty percent. Has it been

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Speaker 5: an explosion of companies? Eleven percent of trade flipped to

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Speaker 5: where the foreign company imports it. And so actually about

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Speaker 5: twenty percent of the refunds I don't know in dollar value,

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Speaker 5: but twenty percent of the companies getting a refund will

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Speaker 5: be foreign companies. And that nothing is going to piss

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Speaker 5: Trump off worse than that, we're literally going to wire

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Speaker 5: this money overseas.

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Speaker 2: Can you explain what changed since Liberation Day such that

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Speaker 2: it made sense for a lot of foreign companies to

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Speaker 2: establish themselves as importers in the US.

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Speaker 5: Yeah, So what changed was a massive incentive to commit fraud.

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Speaker 5: And if you're a US company that was buying goods

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Speaker 5: from overseas, you have to pay the tariffs, right and

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Speaker 5: you declare your goods, you pay the tariff as a

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Speaker 5: percent of the value of those goods. If instead you say, hey,

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Speaker 5: I'm just going to buy the goods in the United

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Speaker 5: States from my factory and they'll take care of the tariffs,

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Speaker 5: and that foreign company can just undervalue the goods and say, hey,

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Speaker 5: this thing that you know, it's actually only ten thousand dollars,

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Speaker 5: not one hundred thousand, and you just reduced your duties

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Speaker 5: by ninety percent. And the US companies are doing this

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Speaker 5: in mass and washing their hands and saying, hey, you know,

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Speaker 5: I didn't know any better.

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Speaker 4: I didn't know they I didn't see any of that.

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Speaker 5: I'm just buying the goods from this foreign company and

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Speaker 5: it's not my problem. And so we've seen a huge

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Speaker 5: explosion of that. And all those people are not those

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Speaker 5: US companies. By the way, they don't import anything, so

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Speaker 5: they're not getting any refunds at all.

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Speaker 4: And I don't feel bad for them.

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Speaker 3: Uh yeah, you got to imagine when you have something

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Speaker 3: like these tariffs come into play, you're going to see

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Speaker 3: some creative work around creative you know, with for listeners,

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Speaker 3: with air quotes around there.

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Speaker 5: Yeah, And where we started, Tracy was you were talking

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Speaker 5: about an individual case where you actually bought something from abroad.

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Speaker 5: But of course the massive things is how you just

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Speaker 5: buy it domestically from a company They did raise their

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Speaker 5: prices for the tariffs. In a lot of cases, you're

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Speaker 5: not going to get any refunds. But the really interesting

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Speaker 5: shakedown that's happening is, Okay, let's say you actually are

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Speaker 5: a wholesaler and you sell to Walmart target these types,

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Speaker 5: your tariffs went up, you raised prices Walmart. I talked

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Speaker 5: to a company last night who's a big seller on Walmart,

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Speaker 5: wholesaler to Walmart, and they said Monday morning, Walmart called

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Speaker 5: and said, Hey, we need to talk about this teriffree fund.

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Speaker 4: Oh how we get because you.

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Speaker 5: Know, they don't have a legal obligation to give money

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Speaker 5: to Walmart. But Walmart also doesn't have a legal obligation

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Speaker 5: to keep carrying their product in the stores, right.

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Speaker 3: So there's some influence they could exert. Actually, this reminds

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Speaker 3: me so one of the things I was wondering and

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Speaker 3: again this comes from my personal capacity of bringing strange

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Speaker 3: items into the US. But I bought like an antique

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Speaker 3: box recently, and antiques, I'm pretty sure are supposed to

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Speaker 3: be exempt from the tariffs. But I still got slapped

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Speaker 3: with the tariff charge because the exporter, the person sending

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Speaker 3: it to me, did not label it as an antique.

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Speaker 3: They labeled it as box, which was very There was

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Speaker 3: a box within a box. It was very annoying, and

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Speaker 3: so I got a big tariff. How much flexibility do

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Speaker 3: importers in the US have over like the actual labeling

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Speaker 3: of the items that they're bringing into the US. Is

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Speaker 3: that one way that you could potentially, you know, try

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Speaker 3: to lower your your tariff burden.

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Speaker 2: Fraud advice, Yeah, it is, it is.

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Speaker 4: It is illegal.

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Speaker 5: So you each product has one and only one harmonized classification.

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Speaker 4: We call it harmonized schedule code.

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Speaker 5: It's a classification that said, it is not always obvious

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Speaker 5: that what the right one should be, and there's a

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Speaker 5: whole art of classifications are very difficult, and but it

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Speaker 5: is illegal to choose your classification based on duty rate.

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Speaker 5: You know, you got to choose it based on what's correct. Now,

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Speaker 5: if the correct duty rate should happen to be lower

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Speaker 5: than the incorrect one, then you're doing a.

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Speaker 4: Great job at life.

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Speaker 5: And so that's a whole that's a whole art and

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Speaker 5: science is how do you make the case prove it

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Speaker 5: that you did in fact get the right HS code classification.

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Speaker 2: I want to talk more, obviously about the logistics of

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Speaker 2: the next several weeks and months about how this is

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Speaker 2: going to be, but just in terms of maybe not

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Speaker 2: necessarily fraud per se, although that was very interesting. What

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Speaker 2: else have you seen basically since last April in terms

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Speaker 2: of companies re routing any of their you know, one

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Speaker 2: of the big trends in terms of restructuring the direction

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Speaker 2: of the supply chain. Because part of the question, to

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Speaker 2: my mind, is going to be with ongoing uncertainty about

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Speaker 2: the future of tariffs, and there's already a new tariff

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Speaker 2: and Trump may try to restore the old tariffs and

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Speaker 2: aggregate through other means and so forth. Have there been

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Speaker 2: changes in trade flows that you expect companies are just

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Speaker 2: going to keep because at this point this is the

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Speaker 2: new normal and it's not sort of worth going back.

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Speaker 4: For sure.

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Speaker 5: Lots of manufacturing has been moving towards Southeast Asia, and

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Speaker 5: Latin America kind of the two big winners. Turkey a

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Speaker 5: few other locations where you're seeing stuff that can shift move.

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Speaker 5: I think the most interesting and not immediately obvious. The

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Speaker 5: most interesting trend has been that it's actually, in many

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Speaker 5: cases Chinese companies setting up factories in these countries, and

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Speaker 5: so it's like literally you're working with the same company

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Speaker 5: you worked with before, and they've cloned the line. In

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Speaker 5: many case they've sent Chinese workers to manage the line. Yeah,

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Speaker 5: and so it's not that as far as the money

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Speaker 5: flows like it's still kind of going straight.

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Speaker 4: Back to China.

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Speaker 5: In a lot of those cases, people are frustrated because

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Speaker 5: the quality is just a lot worse. It's not easy

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Speaker 5: to just pick up shop and move the manufacturing when

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Speaker 5: you're just adding layers of cost here. And a lot

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Speaker 5: of what's happening is in order to change the country

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Speaker 5: of origin. It's not just that you can't just ship

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Speaker 5: it to that country and then ship it to the US.

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Speaker 5: That would be called transshipment, and the US one of

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Speaker 5: these recent executive orders did this, like new tariffs on transshipments,

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Speaker 5: but it was just a ridiculous concept that shows that

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Speaker 5: the government doesn't understand their own rules, because if you

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Speaker 5: just ship it to Vietnam and then ship it to

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Speaker 5: the United States, it's still a product of China, so

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Speaker 5: there's no tariff on transhipments. It's just the tariff on

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Speaker 5: the Chinese goods. So that law was nonsensive. That executive

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Speaker 5: order was totally nonsensical. You have to actually create and

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Speaker 5: show that you have trans It's called substantial transformation. You

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Speaker 5: have to show that like, Okay, I've assembled products in

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Speaker 5: this country, I've added enough value, whether it's through labor

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Speaker 5: or other components, to make it a product of Vietnam.

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Speaker 5: But of course by definition that's just adding costs. And

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Speaker 5: then transit times too. Because Vietnam is further away than China,

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Speaker 5: there are less direct ocean sailings, etc.

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Speaker 4: So it's been very difficult for people to navigate.

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Speaker 5: I said that would be my last sales pitch earlier,

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Speaker 5: but we do have a free tool for this as well.

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Speaker 4: It's at atlas dot flexport dot com.

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Speaker 5: You can see that a transit time between any two

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Speaker 5: ports in the world, like the actual like how it moves.

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Speaker 5: So this has been quite helpful for people to go

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Speaker 5: navigate and tariff Ssoupflexport dot com helps you see what

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Speaker 5: the tariff rate is.

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Speaker 3: Always be pitching it's fine.

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Speaker 4: I don't feel like service.

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Speaker 3: So one of the reasons the story is so interesting

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Speaker 3: is obviously there's a logistical element, there's an economics element,

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Speaker 3: but there's also this political element. I feel like all

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Speaker 3: of economics nowadays is pretty political. But in any case,

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Speaker 3: you know, Trump has said that the American consumer doesn't

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Speaker 3: pay the tariff, and yet it seems we are very

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Speaker 3: much about to talk a whole lot about how much

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Speaker 3: money American consumers might be owed from tariff refunds. Do

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Speaker 3: you get the sense that any companies are sort of

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Speaker 3: caught between a rock and a hard place, where, you know,

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Speaker 3: like maybe they would like to pay out some of

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Speaker 3: their refund to their customers, but at the same time,

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Speaker 3: they also don't want to make huge announcements about returning

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Speaker 3: money that Trump says was never taken away in the

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Speaker 3: first place.

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Speaker 5: Yeah, I mean, it's definitely those the FedEx ups dhls

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Speaker 5: of the world that are in that condition.

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Speaker 4: USPS will be an interesting one. I'm not sure if

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Speaker 4: you know, it'd be interesting to go look at those parcels.

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Speaker 4: He didn't see.

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Speaker 5: Was it actually USPS or was it FedEx, Because if

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Speaker 5: it was USPS, presumably you are the importive record.

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Speaker 4: But maybe it's USPS. That'd be kind of a crazy case.

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Speaker 5: Actually, if USPS doesn't give back the money that they

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Speaker 5: charged you, that would be a great class action. Yeah,

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Speaker 5: those are probably the one, but it's really just like

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Speaker 5: a brand in.

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Speaker 4: Business question more so than a legal one.

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Speaker 5: I think you didn't want to piss off the Trump administration.

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Speaker 2: By the way, I might just spend the rest of

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Speaker 2: this conversation only half paying attention because I'm now playing

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Speaker 2: playing at Atlas dot flexport dot com. It's really cool,

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Speaker 2: like clicking all these ports and seeing all the routes

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Speaker 2: and seeing how long it typically takes from one route

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Speaker 2: to another.

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Speaker 4: Like I know, it's amazing.

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Speaker 2: I think you've done this is very helpful. This is

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Speaker 2: really fun website.

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Speaker 4: You built it.

436
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Speaker 5: Global trade has been this mysterious black box for cool centuries.

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Speaker 4: And now you can just see how it actually works.

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Speaker 4: Where do the ships go? It's like the bus routes,

439
00:20:07,320 --> 00:20:09,160
Speaker 4: you know, what's what? Ports do? Stop bad? How long

440
00:20:09,200 --> 00:20:09,680
Speaker 4: did they take?

441
00:20:09,880 --> 00:20:12,240
Speaker 2: No, this is a really fun website, So thank you

442
00:20:12,280 --> 00:20:15,800
Speaker 2: for plugging it. So okay, tell us actually about I

443
00:20:15,840 --> 00:20:19,760
Speaker 2: guess because you're a highly automated and digital et cetera.

444
00:20:20,400 --> 00:20:23,080
Speaker 2: Do all companies have really good records on this stuff?

445
00:20:23,160 --> 00:20:25,440
Speaker 2: Is it very clear just from a sort of over

446
00:20:25,480 --> 00:20:28,399
Speaker 2: the last year, would you say the vast majority of

447
00:20:28,440 --> 00:20:32,720
Speaker 2: companies know exactly how much they've paid? Unambiguously, I would.

448
00:20:32,560 --> 00:20:34,960
Speaker 4: Say they do not, but they can very easily.

449
00:20:35,200 --> 00:20:39,440
Speaker 5: So the US customs technology system is called ACE Automated

450
00:20:39,440 --> 00:20:43,359
Speaker 5: Commercial Environment, and customs brokers love to complain about this

451
00:20:43,520 --> 00:20:45,720
Speaker 5: is like healthcare dot gov, like times a million in

452
00:20:45,800 --> 00:20:47,679
Speaker 5: terms of debacle of engineering problem.

453
00:20:47,680 --> 00:20:49,760
Speaker 4: But it works. It took them like a decade longer

454
00:20:49,760 --> 00:20:51,040
Speaker 4: than it should have to launch the thing.

455
00:20:51,520 --> 00:20:56,439
Speaker 5: And you can every importer that does entries like commercial

456
00:20:56,480 --> 00:20:59,199
Speaker 5: customs entries, not the traces of the world shipping a

457
00:20:59,200 --> 00:21:02,680
Speaker 5: package to themselves, like real customs entries of formal entry.

458
00:21:03,000 --> 00:21:04,959
Speaker 5: All those entries are available to you so you can

459
00:21:05,000 --> 00:21:07,240
Speaker 5: see your past history. You have to just go to

460
00:21:07,480 --> 00:21:09,160
Speaker 5: and you hell have an ACE account. If you don't,

461
00:21:09,160 --> 00:21:10,960
Speaker 5: you got to go create one. And if you want

462
00:21:10,960 --> 00:21:13,399
Speaker 5: a refund, you must have an ACE account. They've until

463
00:21:13,600 --> 00:21:17,520
Speaker 5: about two months ago, No, until February sixth, all refunds

464
00:21:17,560 --> 00:21:21,240
Speaker 5: were done via paper checks. From the Treasury Department from customs,

465
00:21:21,240 --> 00:21:23,920
Speaker 5: and we Flexboard has gotten over nine hundred million dollars

466
00:21:24,000 --> 00:21:25,920
Speaker 5: or the refunds for our customers in the last five

467
00:21:26,000 --> 00:21:28,960
Speaker 5: years from customs. One of my most proud life achievements.

468
00:21:29,520 --> 00:21:31,800
Speaker 5: And all of those came to be up paper checks.

469
00:21:31,920 --> 00:21:33,760
Speaker 5: Many of them got lost in the mail, some of

470
00:21:33,760 --> 00:21:35,440
Speaker 5: them got cashed by scammers, et cetera.

471
00:21:35,520 --> 00:21:37,160
Speaker 4: So this was on February sixth.

472
00:21:37,200 --> 00:21:39,800
Speaker 5: They updated so that now refunds will be electronic, which

473
00:21:39,840 --> 00:21:42,040
Speaker 5: was actually maybe a sign that they kind of had

474
00:21:42,080 --> 00:21:43,280
Speaker 5: a sense of what was here to come.

475
00:21:43,920 --> 00:21:47,320
Speaker 4: But yes, your ACE account does show you your entire past.

476
00:21:47,119 --> 00:21:49,960
Speaker 5: History of all your imports, and if you go to

477
00:21:50,160 --> 00:21:52,080
Speaker 5: tariffs at flexwar dot com at the top, you can

478
00:21:52,160 --> 00:21:54,239
Speaker 5: upload that and we will just show you exactly how

479
00:21:54,280 --> 00:21:55,119
Speaker 5: much money you're owed.

480
00:21:55,760 --> 00:21:57,000
Speaker 4: And we got about.

481
00:21:56,680 --> 00:22:01,120
Speaker 5: Seventy fortune five hundred companies signed up in the last week. Wow,

482
00:22:01,280 --> 00:22:03,960
Speaker 5: starting to calculate these tariffs and cfo's are coming to

483
00:22:04,040 --> 00:22:05,359
Speaker 5: look again, it's a free service.

484
00:22:05,359 --> 00:22:07,119
Speaker 4: You can just go look up your tariff free funds.

485
00:22:07,800 --> 00:22:10,600
Speaker 3: Do you get any sense from your clients of, you know,

486
00:22:10,720 --> 00:22:14,159
Speaker 3: I'm pretty sure they're excited about potential refunds, but do

487
00:22:14,160 --> 00:22:15,720
Speaker 3: you get any sense of what they're going to do

488
00:22:15,840 --> 00:22:18,520
Speaker 3: with them. Is it just you know, fill the whole

489
00:22:18,680 --> 00:22:20,720
Speaker 3: that was left from paying the tariffs in the first place,

490
00:22:20,800 --> 00:22:23,840
Speaker 3: or does this count as like a windfall payment that

491
00:22:23,920 --> 00:22:27,360
Speaker 3: they could potentially hold onto and use to invest or whatever.

492
00:22:27,800 --> 00:22:30,959
Speaker 5: Yeah, these are sick and demented people who have an

493
00:22:31,000 --> 00:22:33,399
Speaker 5: addiction to just buying inventory, and they're going to just

494
00:22:33,400 --> 00:22:35,760
Speaker 5: buy a lot more stuff and try to grow their business. No,

495
00:22:35,960 --> 00:22:38,000
Speaker 5: I'm joking, but I assume that that's what will happen.

496
00:22:38,080 --> 00:22:40,280
Speaker 5: Is you everyone's an optimist. You get a lot of money.

497
00:22:40,320 --> 00:22:43,080
Speaker 5: Most lottery winners go broke, although that might not be

498
00:22:43,160 --> 00:22:45,359
Speaker 5: it might be an urban legend, but I think they

499
00:22:45,400 --> 00:22:48,280
Speaker 5: will go reinvest in their business in ways that may

500
00:22:48,320 --> 00:22:50,040
Speaker 5: not make sense. And I've been advising people, you know,

501
00:22:50,160 --> 00:22:52,720
Speaker 5: keep put it in your bank account, buy something.

502
00:22:52,520 --> 00:22:55,880
Speaker 3: You know, say that for the next round of terrible. Well, yeah, this.

503
00:22:55,880 --> 00:22:57,639
Speaker 2: Is a So this is actually what I was going

504
00:22:57,720 --> 00:23:00,480
Speaker 2: to ask, which is so already there's this new ten

505
00:23:00,520 --> 00:23:02,640
Speaker 2: percent terra. One of the things I think I saw

506
00:23:02,840 --> 00:23:06,040
Speaker 2: was that in his latest truth social post he said

507
00:23:06,080 --> 00:23:09,600
Speaker 2: fifteen percent, but that actually it's ten. Like the actual

508
00:23:09,720 --> 00:23:12,399
Speaker 2: formal thing is ten percent. What is the current state

509
00:23:12,760 --> 00:23:14,080
Speaker 2: of tariffs as you see them?

510
00:23:14,560 --> 00:23:17,480
Speaker 4: It's currently ten percent. That Section one twenty two is

511
00:23:17,520 --> 00:23:18,040
Speaker 4: ten percent.

512
00:23:18,119 --> 00:23:21,919
Speaker 5: They was a legal limit of fifteen, and that's what

513
00:23:21,960 --> 00:23:23,679
Speaker 5: he did the next day. First he announced ten on

514
00:23:23,720 --> 00:23:26,480
Speaker 5: Friday after the Supreme Court, like an hour or two after.

515
00:23:26,560 --> 00:23:29,080
Speaker 5: Then the next day on Saturday, went to fifteen. I

516
00:23:29,119 --> 00:23:32,080
Speaker 5: thought he was gonna wait at least until the hockey

517
00:23:32,160 --> 00:23:34,560
Speaker 5: gold medal match and just like if Canada won, then

518
00:23:34,640 --> 00:23:35,760
Speaker 5: put the fifteen percent in.

519
00:23:35,840 --> 00:23:37,080
Speaker 4: But like he jumped the gun on that.

520
00:23:37,200 --> 00:23:39,280
Speaker 2: But did he put the fifteen percent on? Cause what

521
00:23:39,440 --> 00:23:40,120
Speaker 2: is the he did?

522
00:23:40,200 --> 00:23:42,240
Speaker 5: But he did it be a I think truth social

523
00:23:42,400 --> 00:23:45,160
Speaker 5: or some other post. That's not how the laws work.

524
00:23:45,240 --> 00:23:47,120
Speaker 5: So you have to actually publish it through the Code

525
00:23:47,119 --> 00:23:49,399
Speaker 5: of Federal Regulations, and they haven't done that yet. So

526
00:23:49,440 --> 00:23:53,640
Speaker 5: we're waiting for like official word, which you know usually

527
00:23:53,680 --> 00:23:56,240
Speaker 5: it's a couple of days lag from when he says something.

528
00:23:56,320 --> 00:23:58,320
Speaker 5: So it's still ten percent as of today, but I

529
00:23:58,359 --> 00:24:00,000
Speaker 5: would expect, you know, maybe by the time this episod

530
00:24:00,200 --> 00:24:01,280
Speaker 5: air as it goes to fifteen.

531
00:24:01,680 --> 00:24:04,959
Speaker 2: Tracy, did you know, speaking of the gap between announcement

532
00:24:05,000 --> 00:24:07,680
Speaker 2: and formal thing, that technically Kevin Warrish hasn't been nominated

533
00:24:07,760 --> 00:24:10,800
Speaker 2: yet because there's a part he has like send to

534
00:24:11,119 --> 00:24:14,239
Speaker 2: it hasn't been sent. And his odds on polymarket were

535
00:24:14,240 --> 00:24:16,600
Speaker 2: at ninety nine percent the day after the announcement, and

536
00:24:16,640 --> 00:24:19,359
Speaker 2: they're now like ninety six percent. So people are wondering,

537
00:24:19,400 --> 00:24:20,720
Speaker 2: what's anyway just throwing.

538
00:24:20,560 --> 00:24:22,480
Speaker 3: That out there, I should just say we're recording this

539
00:24:22,520 --> 00:24:25,359
Speaker 3: on February twenty six, because again, all of the stuff

540
00:24:25,359 --> 00:24:28,080
Speaker 3: seems to change day by day, if not hour by hour.

541
00:24:28,200 --> 00:24:29,760
Speaker 4: So that's it's very fluid.

542
00:24:29,800 --> 00:24:33,040
Speaker 5: And the section one twenty two, it's the Section one

543
00:24:33,119 --> 00:24:35,960
Speaker 5: twenty two of the Trade Act of nineteen seventy four,

544
00:24:36,000 --> 00:24:38,959
Speaker 5: and that's what gives the That's one of the several

545
00:24:39,000 --> 00:24:42,160
Speaker 5: tools I would say that Trump probably he lost AIPA

546
00:24:42,240 --> 00:24:43,119
Speaker 5: in the Supreme Court.

547
00:24:43,600 --> 00:24:44,520
Speaker 4: He has at.

548
00:24:44,400 --> 00:24:48,199
Speaker 5: Least four other Acts of Congress that have delegated trade

549
00:24:48,320 --> 00:24:52,600
Speaker 5: a tariff authority to the president under certain conditions. A

550
00:24:52,720 --> 00:24:55,800
Speaker 5: EPUL was the one that they'd never been used before

551
00:24:55,840 --> 00:24:59,359
Speaker 5: for tariffs, always for sanctions and outright bands on trade.

552
00:24:59,600 --> 00:25:02,160
Speaker 4: The reason they liked it it was, under their.

553
00:25:02,000 --> 00:25:05,960
Speaker 5: Interpretation, it gave them blanket authority just to do what

554
00:25:06,000 --> 00:25:08,560
Speaker 5: they wanted whenever they wanted on demand, like he could

555
00:25:08,640 --> 00:25:10,239
Speaker 5: just wake up in the morning and just like you

556
00:25:10,240 --> 00:25:11,959
Speaker 5: get a terror if you know, you look at them

557
00:25:11,960 --> 00:25:13,240
Speaker 5: the wrong way and you get a terror.

558
00:25:13,440 --> 00:25:15,960
Speaker 2: It seems like it wasn't Switzerland specifically, right, didn't he

559
00:25:16,040 --> 00:25:17,360
Speaker 2: say specifically? It was just annoid?

560
00:25:18,119 --> 00:25:19,639
Speaker 4: But I forgot it.

561
00:25:19,720 --> 00:25:24,040
Speaker 2: Yeah, exactly they were describing. It was not actually a hypothetical.

562
00:25:23,600 --> 00:25:25,280
Speaker 5: No, I mean that was basically what he was doing

563
00:25:25,400 --> 00:25:27,920
Speaker 5: Canada a couple of times, et cetera. So the other

564
00:25:28,040 --> 00:25:31,160
Speaker 5: ones require they have much more formal mechanisms that will

565
00:25:31,200 --> 00:25:34,439
Speaker 5: require like the Commerce Department or USTR to do some

566
00:25:34,520 --> 00:25:37,640
Speaker 5: re you know, do something and go run a report,

567
00:25:37,720 --> 00:25:40,760
Speaker 5: go demonstrate that in fact, this country and this sector

568
00:25:40,880 --> 00:25:43,280
Speaker 5: or being anti competitive and they're doing something, and then

569
00:25:43,320 --> 00:25:45,840
Speaker 5: punish them. Now, one twenty two is the one that

570
00:25:45,880 --> 00:25:49,560
Speaker 5: he put in. It has relatively blanket authority, but it

571
00:25:49,560 --> 00:25:51,600
Speaker 5: has it has two limits on it. One is that

572
00:25:51,600 --> 00:25:54,520
Speaker 5: it's a maximum of fifteen percent, which we just talked about,

573
00:25:54,560 --> 00:25:55,840
Speaker 5: and the other is that it's a maximum of one

574
00:25:55,920 --> 00:25:59,360
Speaker 5: hundred and fifty days and that'll go until July twentieth

575
00:25:59,440 --> 00:25:59,960
Speaker 5: of this year.

576
00:26:00,640 --> 00:26:01,399
Speaker 4: And so then what you.

577
00:26:01,359 --> 00:26:04,320
Speaker 5: Should expect is like between now and July twentieth that

578
00:26:04,400 --> 00:26:06,880
Speaker 5: he was he'll be using these other mechanisms, of which

579
00:26:06,880 --> 00:26:10,040
Speaker 5: there's section three oh one. That's the famous China tariffs

580
00:26:10,080 --> 00:26:12,240
Speaker 5: from his first term was section three oh one tariffs.

581
00:26:12,240 --> 00:26:14,560
Speaker 4: Those have not been challenged. He's been able to maintain those.

582
00:26:14,720 --> 00:26:17,920
Speaker 5: And then section two thirty two and two thirty two

583
00:26:17,920 --> 00:26:20,080
Speaker 5: is on national security grounds. That's what the steel and

584
00:26:20,119 --> 00:26:23,679
Speaker 5: aluminum tariffs have come in on. That's not getting challenger.

585
00:26:23,720 --> 00:26:25,440
Speaker 5: If it has they won the case or will win

586
00:26:25,480 --> 00:26:28,560
Speaker 5: the case. It's reasonable to say that steal and aluminum

587
00:26:28,600 --> 00:26:32,640
Speaker 5: are not important national from a national security perspective. However,

588
00:26:32,680 --> 00:26:37,000
Speaker 5: he also used section two thirty two to impose furniture

589
00:26:37,040 --> 00:26:39,720
Speaker 5: tariffs on national security grounds, and I think that's a

590
00:26:39,720 --> 00:26:40,760
Speaker 5: little bit of a stretch.

591
00:26:40,960 --> 00:26:44,840
Speaker 3: Personally, couches, comfy couches are a security issue. I to argue,

592
00:26:44,920 --> 00:26:47,359
Speaker 3: I imagine on July twentieth, what's going to happen is

593
00:26:47,359 --> 00:26:49,760
Speaker 3: we'll have like a one day tariff jubilee or a

594
00:26:49,760 --> 00:26:52,600
Speaker 3: fifteen minute tariff jubilee, and then they just get re

595
00:26:52,680 --> 00:26:54,960
Speaker 3: extended for another one hundred and twenty days, right.

596
00:26:55,359 --> 00:26:56,240
Speaker 4: That was my prediction.

597
00:26:56,359 --> 00:26:58,119
Speaker 5: I think I talked to a couple of trade lawyers

598
00:26:58,119 --> 00:27:00,879
Speaker 5: about that prediction, and they told me that, yes, he

599
00:27:00,960 --> 00:27:03,040
Speaker 5: might do that, but there's no way that would hold.

600
00:27:02,920 --> 00:27:03,440
Speaker 4: Up in a court.

601
00:27:03,600 --> 00:27:05,600
Speaker 3: So oh interesting, Okay, it's.

602
00:27:05,480 --> 00:27:08,159
Speaker 5: One thing what Trump does versus what a court finds

603
00:27:08,160 --> 00:27:09,720
Speaker 5: to be legal will find it.

604
00:27:25,720 --> 00:27:29,399
Speaker 3: Going back to the way these tariffs were originally described

605
00:27:29,440 --> 00:27:32,600
Speaker 3: by the administration, the whole idea was bringing jobs and

606
00:27:32,720 --> 00:27:36,120
Speaker 3: industry back to America, and like some of the justifications,

607
00:27:36,160 --> 00:27:38,320
Speaker 3: seems to have morphed since then. At the State of

608
00:27:38,440 --> 00:27:40,919
Speaker 3: Union address, Trump was talking I think about how he

609
00:27:41,040 --> 00:27:44,280
Speaker 3: used tariffs as like a tool of political power to

610
00:27:44,440 --> 00:27:47,280
Speaker 3: influence countries and get them to do other stuff that

611
00:27:47,320 --> 00:27:50,600
Speaker 3: he wanted. But again, when you look at your customers,

612
00:27:50,640 --> 00:27:53,360
Speaker 3: do you get the sense that these tariffs have been

613
00:27:53,560 --> 00:27:57,960
Speaker 3: successful in their original goal in shifting economic activity back

614
00:27:57,960 --> 00:27:59,000
Speaker 3: to America.

615
00:27:59,080 --> 00:28:00,640
Speaker 4: It's a little hard to parse out.

616
00:28:00,720 --> 00:28:02,760
Speaker 5: I mean, like a lot of our customers are importing

617
00:28:02,800 --> 00:28:04,160
Speaker 5: good so they're not the ones.

618
00:28:03,960 --> 00:28:05,439
Speaker 4: That the exporters. You know.

619
00:28:05,480 --> 00:28:08,679
Speaker 5: I've met as many companies at export that said that

620
00:28:08,760 --> 00:28:13,280
Speaker 5: these tariffs actually hurt them because they import components, right,

621
00:28:13,359 --> 00:28:14,960
Speaker 5: and it makes it uncompetitive.

622
00:28:15,080 --> 00:28:16,920
Speaker 4: You import a component, you got to pay a duty

623
00:28:16,960 --> 00:28:17,239
Speaker 4: on it.

624
00:28:17,800 --> 00:28:19,639
Speaker 5: And if they were to put that factory in Mexico,

625
00:28:19,680 --> 00:28:22,600
Speaker 5: they wouldn't pay the same duty. They could import the goods.

626
00:28:22,600 --> 00:28:24,520
Speaker 5: And then if they're if they're selling in the US, fine,

627
00:28:24,560 --> 00:28:26,040
Speaker 5: it's like one way or the other, it's the same.

628
00:28:26,080 --> 00:28:29,280
Speaker 5: But if you're selling it into Europe or shipping it abroad,

629
00:28:29,520 --> 00:28:34,160
Speaker 5: then it really makes that manufacturing less competitive. It's probably

630
00:28:34,200 --> 00:28:35,840
Speaker 5: a little hard to parse out though, because we're going

631
00:28:35,880 --> 00:28:38,840
Speaker 5: through this incredible AI cap x build out that you know,

632
00:28:38,880 --> 00:28:41,280
Speaker 5: there's a lot of industrialization happening, a lot of a

633
00:28:41,320 --> 00:28:45,040
Speaker 5: lot of stuff like in general and theoretical grounds like

634
00:28:45,080 --> 00:28:51,760
Speaker 5: tariffs are good for manufacturing and purely economic theoretical world,

635
00:28:51,960 --> 00:28:54,360
Speaker 5: but these things are like I think, much too complex

636
00:28:54,440 --> 00:28:56,960
Speaker 5: to be centrally managed by the state.

637
00:28:57,240 --> 00:28:59,320
Speaker 4: Is like the great lesson of the last century. I

638
00:28:59,360 --> 00:28:59,920
Speaker 4: do think the.

639
00:29:00,120 --> 00:29:04,360
Speaker 2: Point about tariffing imported components, for you know, because we

640
00:29:04,400 --> 00:29:06,840
Speaker 2: don't in theory, we don't want to just build stuff here.

641
00:29:06,880 --> 00:29:09,600
Speaker 2: We want to build complex, high value and then sell

642
00:29:09,600 --> 00:29:12,080
Speaker 2: it to other people and sell it supposedly. But yeah,

643
00:29:12,120 --> 00:29:14,680
Speaker 2: if your input costs go up because here's this one

644
00:29:14,720 --> 00:29:17,760
Speaker 2: piece of metal or whatever it is, then that does

645
00:29:18,120 --> 00:29:20,840
Speaker 2: make the cost of doing business higher in the United States,

646
00:29:21,000 --> 00:29:23,800
Speaker 2: But on the AI, I'm curious just sitting aside all

647
00:29:23,800 --> 00:29:27,320
Speaker 2: the tariffs since you brought up the AI boom, that's

648
00:29:27,360 --> 00:29:32,520
Speaker 2: creating its new different trade flows. Incredible imports from Korea

649
00:29:32,600 --> 00:29:35,640
Speaker 2: right for memory chips, so those prices are going insane.

650
00:29:35,720 --> 00:29:38,880
Speaker 2: And I think I saw a stat just the pure

651
00:29:39,040 --> 00:29:43,200
Speaker 2: level of importing that we're doing from Taiwan is just staggering,

652
00:29:43,560 --> 00:29:45,840
Speaker 2: all because of chips, et cetera. But what else are

653
00:29:45,840 --> 00:29:49,680
Speaker 2: you saying interesting in terms of trade flows because of

654
00:29:49,760 --> 00:29:52,960
Speaker 2: all this AI activity that's going on, or do you

655
00:29:53,000 --> 00:29:53,920
Speaker 2: see any fingerprints of that?

656
00:29:54,000 --> 00:29:55,480
Speaker 5: Yeah, you see a lot in the air freight market,

657
00:29:55,600 --> 00:30:00,160
Speaker 5: especially because one of the Trump administration crackdowns was the

658
00:30:00,280 --> 00:30:03,360
Speaker 5: end of dominimous shipping, which was if you ship something

659
00:30:03,440 --> 00:30:05,200
Speaker 5: less than eight hundred dollars, you didn't have to pay

660
00:30:05,200 --> 00:30:06,360
Speaker 5: customs duties on it.

661
00:30:06,400 --> 00:30:08,240
Speaker 4: And that was just this huge boom.

662
00:30:08,480 --> 00:30:10,600
Speaker 5: It had been fifty percent of the world's air free

663
00:30:10,840 --> 00:30:12,720
Speaker 5: and so when that ended back in I think it

664
00:30:12,760 --> 00:30:15,640
Speaker 5: was in May for China, they stopped. They ended that program.

665
00:30:16,200 --> 00:30:19,080
Speaker 5: All the experts, including me, went on the record and said, hey,

666
00:30:19,160 --> 00:30:21,800
Speaker 5: the price of air freight is going to collapse because

667
00:30:21,840 --> 00:30:24,040
Speaker 5: it's fifty percent of the world's air freight is dominimous

668
00:30:24,120 --> 00:30:27,720
Speaker 5: shipments from Asia, from China mostly, and that's all going away,

669
00:30:27,960 --> 00:30:29,560
Speaker 5: and so the price going to collapse. Well, it turns

670
00:30:29,560 --> 00:30:34,000
Speaker 5: out price of air freight is stable, stayed high because

671
00:30:34,680 --> 00:30:38,440
Speaker 5: there's so much, so many components for data center buildouts

672
00:30:38,440 --> 00:30:40,760
Speaker 5: getting flown around the world. It's more than made up

673
00:30:40,760 --> 00:30:42,880
Speaker 5: for the drop from the deminimus shipping.

674
00:30:43,160 --> 00:30:47,400
Speaker 3: That deminimous exception, the eight hundred exception that always reminds

675
00:30:47,440 --> 00:30:49,920
Speaker 3: me of, you know, the charts that you see of

676
00:30:50,000 --> 00:30:53,840
Speaker 3: men's self reported heights, where like no one is five

677
00:30:53,880 --> 00:30:56,680
Speaker 3: eight or five nine. Everyone is either like shorter or

678
00:30:56,840 --> 00:30:59,480
Speaker 3: five to ten and above. Like all the shipments were

679
00:30:59,520 --> 00:31:02,360
Speaker 3: either you know, like less than eight hundred or a

680
00:31:02,400 --> 00:31:06,080
Speaker 3: lot more than eight hundred, and like nothing just around there.

681
00:31:06,560 --> 00:31:08,760
Speaker 2: What happened though, because I thought they were gonna kill

682
00:31:08,800 --> 00:31:11,120
Speaker 2: like Shean and Timu and some of these things with

683
00:31:11,160 --> 00:31:14,440
Speaker 2: the dominimus stuff, did any what happened with those businesses

684
00:31:14,680 --> 00:31:15,360
Speaker 2: are actually do.

685
00:31:15,560 --> 00:31:17,360
Speaker 4: They're doing pretty well.

686
00:31:17,400 --> 00:31:21,360
Speaker 5: It turns out it wasn't just tariff arbitrage. So that's

687
00:31:21,400 --> 00:31:23,080
Speaker 5: also part of the story on the air fright market

688
00:31:23,120 --> 00:31:25,680
Speaker 5: that we got wrong. It's like they're doing okay. And

689
00:31:25,720 --> 00:31:28,040
Speaker 5: that one thing they've set up fulfillment centers in the US.

690
00:31:28,080 --> 00:31:31,920
Speaker 5: They've set up some pretty big automated networks that probably

691
00:31:32,000 --> 00:31:34,360
Speaker 5: like twenty percent of the size of Amazon's network now

692
00:31:34,480 --> 00:31:36,920
Speaker 5: is these fulfillment centers for Chinese e comm run by

693
00:31:37,000 --> 00:31:40,520
Speaker 5: Chinese e commerce companies. It is really a massive, kind

694
00:31:40,520 --> 00:31:43,240
Speaker 5: of an underreported thing there. And they're also they're still

695
00:31:43,240 --> 00:31:45,560
Speaker 5: flying it from China, they're paying the duties. One of

696
00:31:45,600 --> 00:31:47,800
Speaker 5: the most interesting facts I learned this year actually is

697
00:31:47,800 --> 00:31:51,320
Speaker 5: that Sheen does but they have forty billion of sales,

698
00:31:51,360 --> 00:31:54,360
Speaker 5: forty billion of revenue last year, and no purchase order

699
00:31:54,400 --> 00:31:57,320
Speaker 5: that was made from Sheen to its factories was more

700
00:31:57,360 --> 00:32:00,320
Speaker 5: than two hundred items. So you're talking about ze hans

701
00:32:00,360 --> 00:32:03,240
Speaker 5: of millions of little tiny granular purchases. And that means

702
00:32:03,240 --> 00:32:05,600
Speaker 5: they never have to discount because they don't keep much stock.

703
00:32:06,280 --> 00:32:07,920
Speaker 5: You know, they only have two hundred of each thing,

704
00:32:08,400 --> 00:32:10,200
Speaker 5: Whereas if you go to like a lot of websites

705
00:32:10,360 --> 00:32:12,840
Speaker 5: or like retail stores are always running a sale because

706
00:32:12,840 --> 00:32:14,520
Speaker 5: they got too they bought too much stuff and they're

707
00:32:14,560 --> 00:32:17,640
Speaker 5: dumping it. So the business model actually has some attractive

708
00:32:18,360 --> 00:32:21,720
Speaker 5: beatures for it, and we had started to build that service.

709
00:32:21,760 --> 00:32:23,560
Speaker 5: We were offering it for a lot of We do

710
00:32:23,600 --> 00:32:25,920
Speaker 5: still offer a similar service. We can ship from overseas

711
00:32:25,960 --> 00:32:29,920
Speaker 5: and then we'll just inject it directly to the postal service.

712
00:32:29,640 --> 00:32:31,080
Speaker 4: Or other last mile carriers.

713
00:32:31,360 --> 00:32:33,120
Speaker 5: We stopped investing there because I was like, this is

714
00:32:33,160 --> 00:32:34,600
Speaker 5: going to die with the end of Deminimus.

715
00:32:34,720 --> 00:32:37,760
Speaker 4: But probably a mistake. In hindsight, we're seeing like, actually

716
00:32:37,760 --> 00:32:39,000
Speaker 4: that model is still working.

717
00:32:39,080 --> 00:32:43,000
Speaker 3: So actually that reminds me when you look back at gosh,

718
00:32:43,080 --> 00:32:45,320
Speaker 3: I can't believe it's only been like a year basically,

719
00:32:45,360 --> 00:32:47,440
Speaker 3: But when you look back at the past year and

720
00:32:47,520 --> 00:32:51,800
Speaker 3: your customers, what was the biggest differentiating factor between those

721
00:32:51,880 --> 00:32:55,080
Speaker 3: who handled the tariffs well and those who didn't. Was

722
00:32:55,080 --> 00:32:58,800
Speaker 3: it just like size and their ability to squeeze out

723
00:32:58,800 --> 00:33:02,000
Speaker 3: concessions from supply, or was it I don't know, data

724
00:33:02,040 --> 00:33:05,360
Speaker 3: records and really good lawyers. I guess what did you

725
00:33:05,360 --> 00:33:08,880
Speaker 3: see that made a particular company handle this better than others?

726
00:33:10,040 --> 00:33:10,240
Speaker 4: Yeah?

727
00:33:10,240 --> 00:33:12,280
Speaker 5: I mean you have to look probably within an industry,

728
00:33:12,320 --> 00:33:16,920
Speaker 5: because there certain industries are just have sectoral advantages or disadvantages,

729
00:33:16,960 --> 00:33:20,360
Speaker 5: like it's hard to move electronics out of China, and

730
00:33:20,400 --> 00:33:23,320
Speaker 5: then some of those industries were exempted from the tariffs. Actually,

731
00:33:23,320 --> 00:33:24,560
Speaker 5: you know who did the best was the guys who

732
00:33:24,600 --> 00:33:26,520
Speaker 5: went to manage to get a meeting at the White

733
00:33:26,560 --> 00:33:28,120
Speaker 5: House and shake hands and convince them, you know, like

734
00:33:28,160 --> 00:33:28,760
Speaker 5: Apple Dom.

735
00:33:28,600 --> 00:33:30,000
Speaker 4: Tax don't tarif the iPhone.

736
00:33:30,520 --> 00:33:32,360
Speaker 5: But that was a very privileged small number of people

737
00:33:32,440 --> 00:33:35,400
Speaker 5: that had that kind of access, but smaller, all other

738
00:33:35,440 --> 00:33:38,400
Speaker 5: things being equal, I think that like more entrepreneurial companies

739
00:33:38,440 --> 00:33:41,440
Speaker 5: that could just move quickly and make good decisions and

740
00:33:41,520 --> 00:33:42,880
Speaker 5: just like, all right, cool, we're going to set up

741
00:33:42,880 --> 00:33:46,800
Speaker 5: manufacturing in Mexico or Latin America.

742
00:33:46,480 --> 00:33:49,120
Speaker 4: Or some of these places and actually move relatively quickly.

743
00:33:49,640 --> 00:33:50,680
Speaker 4: But it's not just speed.

744
00:33:50,720 --> 00:33:52,800
Speaker 5: You got to make good decisions, you know, like people

745
00:33:52,840 --> 00:33:54,640
Speaker 5: who moved to India in a hurry and then found

746
00:33:54,680 --> 00:33:56,800
Speaker 5: out India got hit with a fifty percent tariff, like

747
00:33:57,800 --> 00:33:59,000
Speaker 5: not doing that great.

748
00:33:59,080 --> 00:34:00,479
Speaker 4: So maybe some of it luck too.

749
00:34:00,480 --> 00:34:03,480
Speaker 5: I mean, it's very hard to forecast how this thing

750
00:34:03,680 --> 00:34:05,760
Speaker 5: would did play out, and what's going.

751
00:34:05,760 --> 00:34:08,120
Speaker 4: To happen next is kind of anybody's gas.

752
00:34:08,160 --> 00:34:10,160
Speaker 5: So sometimes the best thing to do is nothing and

753
00:34:10,280 --> 00:34:11,360
Speaker 5: just let things go stable.

754
00:34:11,400 --> 00:34:13,120
Speaker 4: I met a couple of companies that said that was

755
00:34:13,160 --> 00:34:17,160
Speaker 4: their plan. And I was like, that's kind of bold,

756
00:34:17,160 --> 00:34:18,600
Speaker 4: and I like it on some level.

757
00:34:19,080 --> 00:34:22,120
Speaker 2: So, Okay, you're fairly optimistic that this is not going

758
00:34:22,200 --> 00:34:24,279
Speaker 2: to take as long as perhaps some people think. But

759
00:34:24,360 --> 00:34:26,839
Speaker 2: what is what are companies doing right now to walk

760
00:34:26,920 --> 00:34:30,920
Speaker 2: us through the actual nuts and bolts of getting the

761
00:34:30,960 --> 00:34:33,799
Speaker 2: refunds and what's happening right now? Yeah, the timeline works,

762
00:34:33,840 --> 00:34:36,000
Speaker 2: and what they have to do to actually get them

763
00:34:36,040 --> 00:34:37,160
Speaker 2: and so forth, walk us through that.

764
00:34:37,800 --> 00:34:39,799
Speaker 5: It's a bit of a technical thing, but you guys

765
00:34:39,800 --> 00:34:42,160
Speaker 5: have a nerdy audience, so yeah, yeah, I think the

766
00:34:42,200 --> 00:34:44,759
Speaker 5: way that it'll work, there's, first of all, there's some

767
00:34:44,840 --> 00:34:46,319
Speaker 5: uncertainty of how the timing is going to work. If

768
00:34:46,320 --> 00:34:48,359
Speaker 5: there are refunds at all, is still not guaranteed, although

769
00:34:48,360 --> 00:34:49,600
Speaker 5: I feel pretty high certainty.

770
00:34:49,640 --> 00:34:51,480
Speaker 4: The way that it's likely to work is you're going

771
00:34:51,560 --> 00:34:52,239
Speaker 4: to need to pull that.

772
00:34:52,200 --> 00:34:54,319
Speaker 5: ACE report that was I was talking about earlier, pull

773
00:34:54,360 --> 00:34:57,920
Speaker 5: it from customs, calculate how much you're owed. You then

774
00:34:57,960 --> 00:35:00,319
Speaker 5: are going to need to file it's unclear if you'll

775
00:35:00,320 --> 00:35:02,279
Speaker 5: need to file protests. Typically, the way that works to

776
00:35:02,280 --> 00:35:04,880
Speaker 5: get a refund is you go you file a protest,

777
00:35:04,960 --> 00:35:07,280
Speaker 5: You make your case to the government that hey, we've

778
00:35:07,320 --> 00:35:11,400
Speaker 5: got this misclassified, we are protesting, and you'll get a refund.

779
00:35:11,600 --> 00:35:15,200
Speaker 5: That's typically how it works, and that's how we're set

780
00:35:15,280 --> 00:35:17,680
Speaker 5: up to go do that is go file these protests

781
00:35:17,760 --> 00:35:21,120
Speaker 5: on your behalf, to go challenge the IPA protests and

782
00:35:21,120 --> 00:35:22,640
Speaker 5: say hey, you never should have paid me this, and

783
00:35:22,719 --> 00:35:23,759
Speaker 5: I'll get a refund.

784
00:35:24,040 --> 00:35:25,759
Speaker 4: So we're putting that program in.

785
00:35:25,719 --> 00:35:29,720
Speaker 5: Place right now for companies to go just make that easy, take.

786
00:35:29,600 --> 00:35:30,360
Speaker 4: Away the paperwork.

787
00:35:30,560 --> 00:35:32,839
Speaker 5: The piece that's a little bit more sophisticated is where

788
00:35:32,840 --> 00:35:35,120
Speaker 5: people are selling these things in the secondary market I

789
00:35:35,120 --> 00:35:38,520
Speaker 5: mentioned earlier. So there's at least three big banks that

790
00:35:38,560 --> 00:35:39,840
Speaker 5: are out there. I don't know if they're big, but

791
00:35:39,840 --> 00:35:42,279
Speaker 5: there are three groups that are out there, at least three.

792
00:35:42,360 --> 00:35:45,960
Speaker 4: There's probably more that are buying these things.

793
00:35:46,000 --> 00:35:47,720
Speaker 5: And like I said, the market price went to fifty

794
00:35:47,719 --> 00:35:49,680
Speaker 5: two percent, so there's a lot of negotiating right now

795
00:35:49,719 --> 00:35:51,880
Speaker 5: of going all right, what's this time value of money,

796
00:35:52,000 --> 00:35:54,840
Speaker 5: what's the X what's your relative certainty of when and

797
00:35:55,239 --> 00:35:57,320
Speaker 5: how this is going to play out. That's a market

798
00:35:57,320 --> 00:35:59,799
Speaker 5: that I'm tracking very closely. Thus far, those guys have

799
00:36:00,040 --> 00:36:03,520
Speaker 5: only transacted where company's refund is at least ten million

800
00:36:03,560 --> 00:36:05,839
Speaker 5: dollars One of the things I'd like to be able

801
00:36:05,840 --> 00:36:07,319
Speaker 5: to do is say, hey, we can pool a bunch

802
00:36:07,360 --> 00:36:08,080
Speaker 5: of these guys together.

803
00:36:08,280 --> 00:36:09,839
Speaker 2: I haven't found do any of the bank Have any

804
00:36:09,880 --> 00:36:12,480
Speaker 2: of the banks come to you and said, like, rather

805
00:36:12,520 --> 00:36:16,600
Speaker 2: than trying to gather all of these you know, tens

806
00:36:16,600 --> 00:36:19,759
Speaker 2: of thousands, however, hundreds of thousands of companies, do they

807
00:36:19,800 --> 00:36:22,040
Speaker 2: just come to any of the freight brokers and say, like,

808
00:36:22,160 --> 00:36:24,560
Speaker 2: assemle your crew and we like do a bat a

809
00:36:24,600 --> 00:36:25,320
Speaker 2: batch sale.

810
00:36:25,880 --> 00:36:28,880
Speaker 4: Yeah, until last Friday, we have we talked to all

811
00:36:28,880 --> 00:36:29,200
Speaker 4: of them.

812
00:36:29,360 --> 00:36:31,399
Speaker 5: Until last Friday, there was just a little too much

813
00:36:31,480 --> 00:36:34,200
Speaker 5: uncertainty for us to put in the effort and like

814
00:36:34,320 --> 00:36:35,200
Speaker 5: to build the thing.

815
00:36:35,239 --> 00:36:36,440
Speaker 4: We built a calculator.

816
00:36:36,480 --> 00:36:38,320
Speaker 5: That's why we were able to go live with the calculator,

817
00:36:38,760 --> 00:36:40,759
Speaker 5: you know, the same day as their refunds went live,

818
00:36:40,800 --> 00:36:43,960
Speaker 5: because we've been building that. But as far as the processing,

819
00:36:44,520 --> 00:36:48,520
Speaker 5: we didn't really invest in building that capability until Friday.

820
00:36:48,560 --> 00:36:50,680
Speaker 5: We kicked off those, you know, like in earnest So

821
00:36:50,760 --> 00:36:52,919
Speaker 5: as I'm hoping to be able to build in a hurry,

822
00:36:53,200 --> 00:36:53,759
Speaker 5: as i.

823
00:36:53,760 --> 00:36:55,480
Speaker 4: Really like to be able to pool these things.

824
00:36:55,520 --> 00:36:57,839
Speaker 5: And I've talked to so many companies that said, hey,

825
00:36:57,880 --> 00:36:59,879
Speaker 5: if you could get me seventy percent out sixty percent,

826
00:37:00,040 --> 00:37:02,959
Speaker 5: even I would do it tomorrow, So that would be.

827
00:37:02,920 --> 00:37:05,279
Speaker 4: I think we could. I think that we could create

828
00:37:05,280 --> 00:37:07,480
Speaker 4: a lot of value there for everybody. I mean, I

829
00:37:07,520 --> 00:37:09,640
Speaker 4: think my estimate is much higher than sixty percent.

830
00:37:09,719 --> 00:37:12,319
Speaker 5: So does if I value the thing differently than you are,

831
00:37:12,320 --> 00:37:13,839
Speaker 5: there should be a win win.

832
00:37:14,400 --> 00:37:15,920
Speaker 3: Well, this is what I was going to ask, so

833
00:37:16,080 --> 00:37:18,920
Speaker 3: just to be clear, like those claims on terror refunds

834
00:37:18,960 --> 00:37:22,960
Speaker 3: are trading at fifty or sixty percent at the moment,

835
00:37:23,200 --> 00:37:27,600
Speaker 3: but we are expecting the full refund amount to actually

836
00:37:27,880 --> 00:37:30,960
Speaker 3: come back. Right, there's not plus legal fees I think.

837
00:37:31,800 --> 00:37:33,520
Speaker 4: Uh, well I'm not legal fees a but plus interest,

838
00:37:33,520 --> 00:37:34,640
Speaker 4: you're supposed to get six percent.

839
00:37:35,200 --> 00:37:37,359
Speaker 5: I think six percent is the current rate on that

840
00:37:37,640 --> 00:37:40,360
Speaker 5: six percent annualized. So yeah, wouldn't now we say we

841
00:37:40,400 --> 00:37:42,680
Speaker 5: are expecting That's me and my team and some lawyers

842
00:37:42,719 --> 00:37:46,080
Speaker 5: I've talked to. But the brands probably aren't expecting it

843
00:37:46,160 --> 00:37:47,880
Speaker 5: that high, or else they wouldn't sell it for sixty

844
00:37:47,880 --> 00:37:48,560
Speaker 5: percent or they.

845
00:37:48,960 --> 00:37:53,000
Speaker 3: Right justification for not getting the full refund if they're illegal,

846
00:37:53,160 --> 00:37:57,080
Speaker 3: like the totality is illegal, right, Well, this is.

847
00:37:57,120 --> 00:37:58,880
Speaker 5: The full refund would come. But in that case, they

848
00:37:58,880 --> 00:38:00,200
Speaker 5: would go to the person who bought it for you,

849
00:38:00,320 --> 00:38:02,400
Speaker 5: not you. So it's just a time value of money

850
00:38:02,440 --> 00:38:05,759
Speaker 5: and as uncertainty question that someone's willing to take a

851
00:38:05,760 --> 00:38:06,319
Speaker 5: lower rate.

852
00:38:06,640 --> 00:38:08,000
Speaker 4: But yeah, I think I.

853
00:38:07,760 --> 00:38:09,279
Speaker 5: Personally, I think if you sell it for sixty percent,

854
00:38:09,280 --> 00:38:10,520
Speaker 5: you're probably leaving money on the table.

855
00:38:10,600 --> 00:38:12,440
Speaker 4: Just wait a year. I mean forty for a year

856
00:38:12,480 --> 00:38:13,680
Speaker 4: is a pretty good return.

857
00:38:14,120 --> 00:38:17,240
Speaker 2: Should set up a little side hedge fund, a little

858
00:38:17,239 --> 00:38:18,320
Speaker 2: side pocket.

859
00:38:18,040 --> 00:38:20,839
Speaker 3: Joe, I'll sell you my all right.

860
00:38:21,800 --> 00:38:23,480
Speaker 2: Maybe we'll do a little a little trade here and

861
00:38:23,480 --> 00:38:26,560
Speaker 2: write about it. Ryan Peterson, thank you so much. Great

862
00:38:26,600 --> 00:38:28,319
Speaker 2: to catch up with you. I'm sure there will be

863
00:38:28,360 --> 00:38:31,680
Speaker 2: more opportunities and the coming months and years ahead of

864
00:38:31,840 --> 00:38:33,880
Speaker 2: all this, but thanks for coming back on oddlines.

865
00:38:34,280 --> 00:38:35,640
Speaker 4: That was great to be here again. Thank you.

866
00:38:35,920 --> 00:38:36,719
Speaker 3: Thanks Ryan.

867
00:38:49,160 --> 00:38:52,440
Speaker 2: Tracy. We should do an episode on the new delivery

868
00:38:52,480 --> 00:38:55,520
Speaker 2: network that's being built by the Chinese companies inside the

869
00:38:55,600 --> 00:38:57,520
Speaker 2: United States. I didn't know that existed at all. I

870
00:38:57,520 --> 00:39:02,160
Speaker 2: think twenty percent is already as big as Amazon's logistical network.

871
00:39:02,160 --> 00:39:02,840
Speaker 2: That's pretty wild.

872
00:39:02,960 --> 00:39:05,000
Speaker 3: Well, this is why you know. I was asking a

873
00:39:05,000 --> 00:39:08,040
Speaker 3: few questions about, like how you actually classify items and

874
00:39:08,200 --> 00:39:10,960
Speaker 3: things whenever you see this kind of sweeping rule change.

875
00:39:11,040 --> 00:39:15,120
Speaker 3: I feel like you get a very immediate reaction from

876
00:39:15,160 --> 00:39:17,319
Speaker 3: the people who are paying it, and some of them

877
00:39:17,400 --> 00:39:21,520
Speaker 3: get extremely creative, if not illegal, right, And it's fascinating

878
00:39:21,560 --> 00:39:22,960
Speaker 3: to look at some of those solutions.

879
00:39:23,080 --> 00:39:25,560
Speaker 2: Yeah, No, I like the it's I mean, it makes

880
00:39:25,600 --> 00:39:27,600
Speaker 2: obvious sense. It's all, I sell this thing for one

881
00:39:27,640 --> 00:39:30,000
Speaker 2: hundred dollars. I'm going to set up a company in

882
00:39:30,040 --> 00:39:32,520
Speaker 2: the US that I sell it to for a dollar, right,

883
00:39:32,600 --> 00:39:35,040
Speaker 2: and then that company sells it for one hundred dollars

884
00:39:35,040 --> 00:39:36,239
Speaker 2: to you know, or tries to.

885
00:39:36,719 --> 00:39:37,440
Speaker 3: That's business.

886
00:39:37,600 --> 00:39:40,600
Speaker 2: It's also illegal, it's business. But the fact that you

887
00:39:40,640 --> 00:39:42,640
Speaker 2: see it's like that it shows up in the data,

888
00:39:42,719 --> 00:39:45,160
Speaker 2: right that. Yeah, like all that a foreign company can

889
00:39:45,239 --> 00:39:47,960
Speaker 2: theoretically apply for the refund and et cetera, or could

890
00:39:48,000 --> 00:39:51,480
Speaker 2: establish what was the importer of record. That it can

891
00:39:51,600 --> 00:39:54,440
Speaker 2: a foreign company can establish itself as the importer of record,

892
00:39:54,920 --> 00:39:56,640
Speaker 2: and that it shows up in the data like that,

893
00:39:56,719 --> 00:40:00,080
Speaker 2: It shows how much creativity was underway since lib.

894
00:40:00,680 --> 00:40:03,319
Speaker 3: I mean, just from a broader macro perspective. And I

895
00:40:03,360 --> 00:40:05,359
Speaker 3: know that wasn't the focus of this episode, but maybe

896
00:40:05,400 --> 00:40:07,120
Speaker 3: we'll do one at some point. It is going to

897
00:40:07,160 --> 00:40:11,640
Speaker 3: be really fascinating to see what refund recipients actually do

898
00:40:12,000 --> 00:40:14,960
Speaker 3: with that money. Right. Yeah, I feel like if you're

899
00:40:14,960 --> 00:40:18,040
Speaker 3: a corporate analyst at the moment, or if you're an investor,

900
00:40:18,040 --> 00:40:19,319
Speaker 3: like it's going to tell you a lot about the

901
00:40:19,320 --> 00:40:22,440
Speaker 3: direction of that particular company what they do with that money.

902
00:40:22,520 --> 00:40:24,640
Speaker 2: I think a big question is just going to be

903
00:40:25,120 --> 00:40:29,719
Speaker 2: how many announced sales or something, because like there's going

904
00:40:29,760 --> 00:40:33,279
Speaker 2: to be some pressure to refund money to consumers, right,

905
00:40:33,760 --> 00:40:37,239
Speaker 2: And it'll be interesting to see if any do some

906
00:40:37,280 --> 00:40:39,799
Speaker 2: sort of nominal rebate of some sort of I mean,

907
00:40:39,840 --> 00:40:44,120
Speaker 2: obviously they're not legally obliged to, but you know, I

908
00:40:44,120 --> 00:40:46,200
Speaker 2: think a lot of people it's going to really annoy

909
00:40:46,280 --> 00:40:50,440
Speaker 2: people if, especially if there are categories where it's obvious

910
00:40:50,480 --> 00:40:54,120
Speaker 2: that consumer prices went up because of the tariffs, or

911
00:40:54,200 --> 00:40:57,880
Speaker 2: if companies in some cases may have, oh, we're putting

912
00:40:57,880 --> 00:41:00,440
Speaker 2: a TEARFF surcharge on you, right, and they might have

913
00:41:00,520 --> 00:41:02,239
Speaker 2: spelled it out of some sort of bill.

914
00:41:02,320 --> 00:41:03,840
Speaker 3: Well, they probably did because they don't want to be

915
00:41:03,880 --> 00:41:04,879
Speaker 3: seen to be raising price.

916
00:41:05,000 --> 00:41:06,560
Speaker 2: So if you were the type of company it's like, look,

917
00:41:06,560 --> 00:41:08,520
Speaker 2: we weren't raising we didn't want to raise prices. We

918
00:41:08,680 --> 00:41:10,920
Speaker 2: just have to so we're telling you that part of

919
00:41:10,960 --> 00:41:13,920
Speaker 2: this fifty dollars that you paid X amount is a

920
00:41:13,960 --> 00:41:16,480
Speaker 2: tear offf surcharge that we're applying. They better give you

921
00:41:16,520 --> 00:41:18,759
Speaker 2: a refund otherwise that's going to be really annoying, I guess,

922
00:41:19,160 --> 00:41:22,239
Speaker 2: just annoying. Doubt other it's like a defective windfall for them.

923
00:41:22,400 --> 00:41:24,640
Speaker 3: Well, you know, who handled it pretty well go on

924
00:41:24,760 --> 00:41:27,880
Speaker 3: all things considered. At this moment in time, it seems

925
00:41:27,880 --> 00:41:30,319
Speaker 3: like they handled it pretty well at Costco, because I

926
00:41:30,320 --> 00:41:33,320
Speaker 3: think they didn't. They explicitly said they weren't going to

927
00:41:33,400 --> 00:41:36,000
Speaker 3: pass on the TEARFF charges to customers. They were just

928
00:41:36,040 --> 00:41:39,440
Speaker 3: going to like eat the loss, but also file suit

929
00:41:39,480 --> 00:41:43,040
Speaker 3: against the Trump administration, yeah, saying the tariffs are illegal.

930
00:41:43,560 --> 00:41:45,920
Speaker 3: And so now you know, they get the refunds, they

931
00:41:45,920 --> 00:41:48,360
Speaker 3: don't have to like actually pay them back to customers,

932
00:41:48,400 --> 00:41:51,000
Speaker 3: but they don't take the brand hit from not doing

933
00:41:51,040 --> 00:41:52,359
Speaker 3: that because they never charged them.

934
00:41:52,400 --> 00:41:55,239
Speaker 2: Anyway, They say they never charged them, But you know,

935
00:41:55,320 --> 00:41:58,080
Speaker 2: in theory, they could have held a price steady and

936
00:41:58,160 --> 00:42:01,680
Speaker 2: maybe in it in the alternate universe, the prices would

937
00:42:01,719 --> 00:42:02,919
Speaker 2: have come down, right, So.

938
00:42:03,280 --> 00:42:06,480
Speaker 3: Sure, we'll see, at least from I'm saying from a

939
00:42:06,480 --> 00:42:08,919
Speaker 3: pr for me it was a good play.

940
00:42:09,000 --> 00:42:09,880
Speaker 2: Yeah, yeah, totally.

941
00:42:09,960 --> 00:42:11,680
Speaker 3: I'm only saying that because I'm a big fan of

942
00:42:11,760 --> 00:42:14,720
Speaker 3: the giant Spanish hams that you can get it at.

943
00:42:14,560 --> 00:42:16,680
Speaker 2: Costco, which were presumably tterriffed.

944
00:42:16,560 --> 00:42:20,239
Speaker 3: I guess. But this is the first year I ever

945
00:42:20,280 --> 00:42:22,680
Speaker 3: bought a Costco Ham, so I can't tell good it

946
00:42:22,760 --> 00:42:24,880
Speaker 3: was so good. I can't tell you what it was

947
00:42:25,120 --> 00:42:28,320
Speaker 3: the year before, if it actually went up.

948
00:42:28,160 --> 00:42:30,560
Speaker 2: But can I tell you if a little life hack

949
00:42:30,640 --> 00:42:32,439
Speaker 2: for the people that are still listening to the very

950
00:42:32,520 --> 00:42:35,200
Speaker 2: end of the conversation. If you ever, like show up

951
00:42:35,239 --> 00:42:38,520
Speaker 2: at a party and you bring a Spanish Ham, people

952
00:42:38,760 --> 00:42:40,319
Speaker 2: just love you and like, you know, they're a couple

953
00:42:40,360 --> 00:42:42,880
Speaker 2: of hundred dollars or whatever, but there's a lot of

954
00:42:42,880 --> 00:42:44,880
Speaker 2: food into Spanish ham. And if you're the guy who

955
00:42:44,960 --> 00:42:47,520
Speaker 2: shows up at a party with a big Spanish Ham

956
00:42:47,560 --> 00:42:49,640
Speaker 2: on the hole on the spit or whatever it is,

957
00:42:50,160 --> 00:42:52,000
Speaker 2: like that year would be the life of the party.

958
00:42:52,040 --> 00:42:54,000
Speaker 2: It is a very strong move. A friend of mine

959
00:42:54,000 --> 00:42:55,839
Speaker 2: did that and everyone loved him.

960
00:42:56,120 --> 00:42:58,680
Speaker 3: I think that's an excellent idea. I bought my husband

961
00:42:58,760 --> 00:43:00,760
Speaker 3: one for Christmas, and I will I think it lasted

962
00:43:00,840 --> 00:43:02,719
Speaker 3: us like a good three and we ate a lot

963
00:43:02,719 --> 00:43:03,080
Speaker 3: of hams.

964
00:43:03,080 --> 00:43:03,799
Speaker 2: You just leave it out there.

965
00:43:03,960 --> 00:43:05,000
Speaker 3: Yeah, you just know it's great.

966
00:43:05,040 --> 00:43:07,200
Speaker 2: Yeah, they preserve very well some.

967
00:43:07,239 --> 00:43:09,120
Speaker 3: Cheese and ham for dinner for like three years.

968
00:43:09,120 --> 00:43:11,880
Speaker 2: Just keep carving out it. Yeah, it actually is.

969
00:43:11,960 --> 00:43:12,279
Speaker 4: All right.

970
00:43:12,480 --> 00:43:13,439
Speaker 3: Shall we leave it there?

971
00:43:13,520 --> 00:43:14,160
Speaker 2: Let's leave it there.

972
00:43:14,239 --> 00:43:17,000
Speaker 3: Okay. This has been another episode of the oud Loots podcast.

973
00:43:17,080 --> 00:43:20,600
Speaker 3: I'm Tracy Alloway. You can follow me at Tracy Alloway.

974
00:43:20,360 --> 00:43:22,960
Speaker 2: And I'm Joe Wisenthal. You can follow me at the Stalwart.

975
00:43:23,040 --> 00:43:26,160
Speaker 2: Follow our guest Ryan Peterson, He's at types Fast, Follow

976
00:43:26,239 --> 00:43:29,840
Speaker 2: our producers Carmen Rodriguez at Carmen Arman, dash Ol Bennett

977
00:43:29,840 --> 00:43:32,759
Speaker 2: at Dashbot and Kilbrooks at Kalebrooks. And for more Odd

978
00:43:32,840 --> 00:43:35,319
Speaker 2: Laws content go to Bloomberg dot com slash odd Logs

979
00:43:35,320 --> 00:43:37,840
Speaker 2: were a daily newsletter and all of our episodes, and

980
00:43:37,920 --> 00:43:39,839
Speaker 2: you can shout about all of these things twenty four

981
00:43:39,840 --> 00:43:43,400
Speaker 2: to seven in our discord Discord dot gg slash odlines.

982
00:43:44,000 --> 00:43:46,120
Speaker 3: And if you enjoy Odd Lots, if you like it

983
00:43:46,160 --> 00:43:48,759
Speaker 3: when we talk about Spanish hams and the tariffs, then

984
00:43:48,800 --> 00:43:51,920
Speaker 3: please leave us a positive review on your favorite podcast platform.

985
00:43:52,200 --> 00:43:54,719
Speaker 3: And remember, if you are a Bloomberg subscriber, you can

986
00:43:54,760 --> 00:43:57,879
Speaker 3: listen to all of our episodes absolutely add free. All

987
00:43:57,920 --> 00:44:00,160
Speaker 3: you need to do is find the Bloomberg channel on

988
00:44:00,239 --> 00:44:03,680
Speaker 3: Apple Podcasts and follow the instructions there. Thanks for listening.