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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the

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Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am

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Speaker 1: Eastern on Applecarplay and Android Auto with the Bloomberg Business App.

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Speaker 1: Listen on demand wherever you get your podcasts, or watch

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Speaker 1: us live on YouTube.

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Speaker 2: Let's go a little technology here.

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Speaker 3: You're thinking about some of the big tech names and

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Speaker 3: how are they going to deal in the world where

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Speaker 3: tariffs are going to be higher on a global scalue.

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Speaker 2: Think about some of these big tech.

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Speaker 3: Firms and they sell their hardware and software and services everywhere,

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Speaker 3: so they are truly global rok Rana joints as Bloomberg

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Speaker 3: Intelligence Technology and US. What's the tech call in a

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Speaker 3: higher tariff world on roun.

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Speaker 4: Oh, it's so bad right now. I mean, look at Apple.

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Speaker 4: I mean it's really surprising that Datchain. You know, they

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Speaker 4: rocked up so much on China. Now that's going to

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Speaker 4: have a massive impact on Apple. Most of the problem

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Speaker 4: exam made there. You know, you can cut it and

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Speaker 4: slice it in any way. They cannot offset the margin risk.

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Speaker 4: The iPhone sales are going to be traumatically impacted in

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Speaker 4: the second half most likely, you know, it's going to

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Speaker 4: be will see how China reacts to this. China accounts

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Speaker 4: for twenty percent of sales for Apple, so the local population,

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Speaker 4: you know, let's see if they're going to go with

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Speaker 4: local brands. I mean, it's just a big mess for

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Speaker 4: Apple frankly at this point. But when we look at

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Speaker 4: the other vendors, when you look at the software companies,

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Speaker 4: which even though they don't have the direct exposure to China,

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Speaker 4: I think when you look at an economic slowdown like this,

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Speaker 4: you're going to see breaks on technology spending and by default,

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Speaker 4: you know a lot of what these guys sell to

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Speaker 4: the market. We looked at growth estimates as of December

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Speaker 4: thirty first, the top fifty software companies, they had a

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Speaker 4: median growth rate of thirteen point two percent two days ago.

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Speaker 2: We looked at it.

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Speaker 4: People have not brought their numbers down, it's only it's

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Speaker 4: still twelve point four percent. So we think that number

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Speaker 4: gets cut down by quite a bit over the next

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Speaker 4: you know, one month when.

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Speaker 5: It off and that's not in the stocks yet.

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Speaker 4: That's I can't tell whether that's on the stocks or not,

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Speaker 4: but it's definitely not in the cell side estimates. Consensus

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Speaker 4: out there.

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Speaker 5: Well, here's what I wanted to kind of pull back

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Speaker 5: a little bit. We talked about this with Mike sort

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Speaker 5: of what the headline and tariff risk is and then

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Speaker 5: what the actual fundamentals of the tech industry. And that

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Speaker 5: brings us to the news that Microsoft, that Bloomberg broke,

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Speaker 5: is pulled back on a bunch of data projects, right,

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Speaker 5: and there was a whole list right, UK, Indonesia, Australia, Illinois,

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Speaker 5: North Dakota, Wisconsin, et cetera. Is So, how do you

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Speaker 5: read that?

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Speaker 6: Like, is that a sign that.

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Speaker 5: We're pairing back everything and it's.

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Speaker 4: All over or what? No, how do I read that?

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Speaker 4: I will wait for sut there to make his comments

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Speaker 4: on the conference call, because there is a very's likelihood

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Speaker 4: that he may say, listen, I'm happy to lease that

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Speaker 4: same amount, just not build it. So from that point,

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Speaker 4: it's okay with me, because they're still seeing the inference

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Speaker 4: coming in and they still going to spend the money.

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Speaker 4: These are just deciding not to build it themselves, which

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Speaker 4: is fair. I mean, it's you know, either rent or buy.

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Speaker 4: I mean it's you know, it's it's up to them.

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Speaker 4: So I think those are going to be the most

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Speaker 4: critical comments but it's tough for me to see how

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Speaker 4: any executive can give any decent guidance into going into

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Speaker 4: you know, this particular environment. Uh, you know the later

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Speaker 4: this month.

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Speaker 5: So important rent versus by Okay, this is why I

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Speaker 5: had that tutorial with Anorat. This is why you got

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Speaker 5: to do a call. You got to call them up

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Speaker 5: after the show for half an hour, yep, and then

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Speaker 5: you will understand all things.

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Speaker 2: Tom keen watching the show here trying to learn tell.

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Speaker 5: Us that he doesn't have the tail.

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Speaker 2: Front exactly exactly.

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Speaker 5: Okay, So then if it is just a tariff impact,

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Speaker 5: then if that's really like what is rocking these docks,

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Speaker 5: which companies are most exposed? Like which software companies are

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Speaker 5: going to be hurt the hardest?

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Speaker 6: See?

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Speaker 4: I think Apples the one, you know, we talked about it.

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Speaker 2: But then you have to look at it where.

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Speaker 4: The valuations are still higher than pre pandemic levels. You know,

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Speaker 4: look at somebody like a Shopify. It's down huge today

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Speaker 4: because that evaluations a bit high. So it's now they

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Speaker 4: have a lot of DOGE exposure as well. So there

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Speaker 4: is a there are names out there that are that

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Speaker 4: are far more you know, on on that value range.

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Speaker 4: Where far more expensive than historical loans.

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Speaker 3: Again, so but we're not making a valuation call here, No, No,

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Speaker 3: we areble because there's.

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Speaker 2: Still risks to estimates.

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Speaker 4: It is probably a massive risks to estimates, and we

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Speaker 4: don't know where the growth is going to be in

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Speaker 4: the second half right now, and we have seen in

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Speaker 4: the past recessions things drive up very quickly.

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Speaker 5: How's actual demand for iPhones? This might seem like an

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Speaker 5: insanely rudimentary question right now based on all we're dealing with,

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Speaker 5: but what's the underlying move there?

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Speaker 4: If you were to ignore everything on the taraff side,

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Speaker 4: The demand was just in line with what it has

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Speaker 4: been in the last two to three years. So we

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Speaker 4: are not seeing a major spike in demand. Although in

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Speaker 4: some Western countries where they have launched app launched Apple Intelligence,

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Speaker 4: they have seen some improvement, but China has still been

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Speaker 4: weak and that has been the big story with Apple

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Speaker 4: and what we were hoping by the end of this

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Speaker 4: year fiscal year this, you know, September October, when they

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Speaker 4: launched the next phone, Apple Intelligence, will be in all

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Speaker 4: the major regions. The new phone form factor come out,

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Speaker 4: that slim iPhone seventeen that Goeman talks about and all

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Speaker 4: of that creates a new excitement. But I mean everything

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Speaker 4: is fair game at this point.

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Speaker 3: All right, an Ron appreciate that on our run does

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Speaker 3: all the technology stuff for Bloomberg Intelligence in our studio.

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Speaker 2: How big is that?

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Speaker 3: I mean, that's because you got your big AI conference, essuy,

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Speaker 3: which was extraordinary successful. I stopped by a few times.

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Speaker 2: The room was packed. It's really going to be actually

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Speaker 2: for yeah, yeah, exactly.

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Speaker 6: I learned things.

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Speaker 2: Yeah, you learned things. So it's good stuff.

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Speaker 1: So anyway, you're listening to the Bloomberg Intelligence Podcast. Catch

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Speaker 1: us live weekdays at ten am Eastern on Apple, Cocklay

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Speaker 1: and Android Auto with the Bloomberg Business app. Listen on

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Speaker 1: demand wherever you get your podcasts, or watch us live

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Speaker 1: on YouTube.

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Speaker 5: Alex deal here alongside Paul Sweeney and John Tucker. This

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Speaker 5: is Bloomberg Intelligence Radio. We bring you all the top

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Speaker 5: news and business, economics and finance through our lens of

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Speaker 5: our Bloomberg Intelligence folks. They cover two thousand companies and

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Speaker 5: one hundred and thirty industries all around the world. Let's

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Speaker 5: pick up them. What John Tucker was just talking about

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Speaker 5: in terms of Stilantis temporarily halting some production Canada and

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Speaker 5: Mexico forward already offering steep discounts to keep customers coming

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Speaker 5: into the showrooms. Volkswagon warning dealers it's going to tack

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Speaker 5: on import fees to the vehicles it ships to the

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Speaker 5: US because today those twenty five percent tariffs and imported

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Speaker 5: cards are already on the docket joining US now. Steve Man,

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Speaker 5: Bloomberg Intelligence, Global Autos and Research analysts, can you walk

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Speaker 5: us through these kind of ripple effects, right, like steep

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Speaker 5: discounts getting them into the showroom, like Volkswagen doing import fees,

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Speaker 5: Like what does that roll out to look like?

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Speaker 7: Yeah, I was just having some costs this morning with

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Speaker 7: some clients and that was the big question. You know,

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Speaker 7: how much of that tariff costs can they pass down

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Speaker 7: on to the consumers. It's a big debate. It really

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Speaker 7: depends on the automakers. But in general, uh, you know,

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Speaker 7: I think the automakers will have to eat that cost

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Speaker 7: because you know, we're actually facing a downturn in the

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Speaker 7: auto industry. Inventories are high. If you look at delinquency

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Speaker 7: rates on auto loans, they're at a very high rate

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Speaker 7: over in the last few years. So I don't think

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Speaker 7: consumers are are willing to open up the purse strings

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Speaker 7: any further.

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Speaker 3: So, Steve, why are Ford and General Motors down? This

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Speaker 3: is my dumb question of the day. Wouldn't the domestic

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Speaker 3: automakers be positive today while the internationals would be down

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Speaker 3: because of the terriffs. Aren't these tarfts designed to protect

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Speaker 3: the domestic auto manufacturers.

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Speaker 7: Yeah, Trump's announcement of reciprocal tarofts. You know it gave

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Speaker 7: well quote unquote reprieve or exemption on autos not really

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Speaker 7: right because they are announced to twenty five percent tariff

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Speaker 7: last week, nothing more additional. I guess, so, I guess

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Speaker 7: you're right. I mean, no news is good news at

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Speaker 7: the moment. But I think you know, I think you

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Speaker 7: know the stocks have trying it down quite a bit

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Speaker 7: since last week already. But it's not done yet, right,

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Speaker 7: because there's May third another deadline on auto tariffs. That's

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Speaker 7: when they're going to announce. How are the parts that

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Speaker 7: do not meet the U s m c A or

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Speaker 7: not just US MSA that do not meet the US

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Speaker 7: content rule quote quote unquote US content rule will apply

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Speaker 7: to to auto parts.

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Speaker 5: But to that point, it's just currently the tar tariffs

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Speaker 5: are in place for already made cars coming into the US.

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Speaker 5: We get the auto parts one, as you point out,

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Speaker 5: coming in May. Third, Are you surprised at Ford sort

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Speaker 5: of lowering and offering discounts to get people in their

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Speaker 5: showrooms right now? Like that would feel like the opposite

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Speaker 5: of what you would expect with tariffs in plays.

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Speaker 8: Yeah.

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Speaker 7: Uh, you know, this is what I said earlier. I

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Speaker 7: think the automakers will have to eat this. Uh that's

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Speaker 7: now they're going to have to lower the costs. Uh, well,

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Speaker 7: definitely not raise the cost But like I said earlier too,

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Speaker 7: they're you know, it's coming in a bad time where

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Speaker 7: inventories are at you know, pre COVID levels really, so

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Speaker 7: you know, they're you know, and the consumers are not

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Speaker 7: buying as many cars as they they would, So they're

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Speaker 7: going to have to not only eat it, but I

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Speaker 7: have to, like in this case, for we'll have to

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Speaker 7: even cut prices.

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Speaker 3: What does this mean for the transition to electric vehicles?

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Speaker 2: Because it felt like for.

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Speaker 3: The US OE ms they were almost doing it begrudgingly

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Speaker 3: because they kind of had to. The market was going there.

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Speaker 3: They didn't really want to. The economics weren't there. Now

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Speaker 3: I've got pressure on my core business. Does that slow

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Speaker 3: down do you think? Or is that going to impact

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Speaker 3: the move towards EV's.

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Speaker 7: There's always been a debate. Right now evs are battery

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Speaker 7: evs are about eight nine percent you know, penetration in

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Speaker 7: the US market. There's debate in terms of if that's

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Speaker 7: going to grow. But I think that's where in this segment,

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Speaker 7: that's where we actually will see clearer winner and losers.

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Speaker 7: I actually think the the pure place, the Rivians, the Lucid,

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Speaker 7: and the Tesla will be clear winners because if you

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Speaker 7: look at the legacy automakers, they're actually building a lot

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Speaker 7: of these evs in Mexico to bring down costs. They

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Speaker 7: offer a more attractive, attractive prices for consumer. But now

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Speaker 7: with these tarraffs, you know, you know, g now they're

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Speaker 7: going to have to raise prices on EV's, not really

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Speaker 7: cut prices to bring in consumer. And you know, unfortunately

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Speaker 7: GM was actually on our way uh to to profitability

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Speaker 7: on EV's and that's gonna you know, these terrors are

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Speaker 7: going to derail that that effort.

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Speaker 5: Do you really think that we're going to see uh

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Speaker 5: for more like GM build more auto plants in the US.

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Speaker 5: Is that actually gonna happen.

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Speaker 7: I think with the global tariffs, with the auto terrafts

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Speaker 7: plus the reciprocal taroffs, it's actually up ending this supply

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Speaker 7: chain that's that's been put in place since nineteen sixty five,

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Speaker 7: you know, first kind of auto agree between US and Canada,

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Speaker 7: which was called the autopack.

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Speaker 2: This whole. These these rors are up ending that.

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Speaker 7: And I do think that the US, these US automakers

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Speaker 7: will bring vehicle assembly back, and it's going to have

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Speaker 7: a ripple effect because they're going to force a lot

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Speaker 7: of the suppliers to also come back to the US

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Speaker 7: as well. So it's it's, uh, we don't exactly know

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Speaker 7: how much it will cost. We've made some estimates can

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Speaker 7: cost up towards of over four billion dollars just to

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Speaker 7: bring just to you know, construct a new plant, a

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Speaker 7: green field plant in the one greenfield plant.

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Speaker 2: In the US.

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Speaker 3: They talked about, have any of the companies that you

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Speaker 3: covered they talked about were willing to make that investment.

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Speaker 7: Have not, But I bet there's gonna be a lot

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Speaker 7: of questions during the earnings costs talk about it.

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Speaker 5: Though at this point they got to talk about it,

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Speaker 5: which company think is best points to actually do that

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Speaker 5: if they were to pour some billions into that.

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Speaker 7: I still think the US automakers will actually, relatively speaking,

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Speaker 7: will be better off than say the Europeans, uh, and

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Speaker 7: some of the Asians like South Korea, South Korean, because

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Speaker 7: the US auto and the US automakers do have additional

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Speaker 7: capacity in the US that they actually can bring that capacity,

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Speaker 7: shift that production back into the US where the Europeans

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Speaker 7: and some day Asians will have to build greenfield sites

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Speaker 7: which could cost about four billion dollars for a plant.

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Speaker 3: Wow, And I'll build it in Tennessee or South Carolina

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Speaker 3: or Alabama one of the non Union states.

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Speaker 2: And there you go. They've already done that. All right,

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Speaker 2: Steve Man, thanks so much for joining U.

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Speaker 3: Steve Man, he's a global autos and industrials research channels

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Speaker 3: for Bloomberg Intelligence, actually in New York City here today

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Speaker 3: and I'm believte Sure Studio. I know so many people

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Speaker 3: can say.

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Speaker 1: That you're listening to the Bloomberg Intelligence podcast. Catch us

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Speaker 1: live weekdays at ten am Eastern on Apple Coarcklay and

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Speaker 1: Android Auto with the Bloomberg Business app. Listen on demand

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Speaker 1: wherever you get your podcasts, or watch us live on YouTube.

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Speaker 5: Alex Deeler alongside Popsmuni. This is Bloomberg Intelligence Radio. We

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Speaker 5: are brought to you right now for interactive Brooker Studio

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Speaker 5: right here in midtown Manhattan, and also check us out

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Speaker 5: on YouTube as well. Let's go to another area and

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Speaker 5: sector that will obviously be quite impacted by tariffs, and

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Speaker 5: that is shipping. Lee clas Cow as Boomberg Intelligence and

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Speaker 5: your Transportland and Shipping analyst. So Lee, if I gain

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Speaker 5: this out, I see a couple of things. One, trade

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Speaker 5: flows re route, so the shippers are still doing stuff,

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Speaker 5: they're just doing stuff in different directions. Or we see

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Speaker 5: trade really start to shut down. What's your base case?

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Speaker 8: What we've been saying for a while that tariffs are

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Speaker 8: not good for the freight markets, and the reason for

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Speaker 8: that is obviously they're inflationary and the consumer is a

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Speaker 8: big part of the US economy, so it's going to

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Speaker 8: have an impact on things that we import. So it's

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Speaker 8: going to impact companies like Maersk and how Hug, Lloyd

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Speaker 8: and Costco those are marine shipping lines because they'll be

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Speaker 8: hauling less containers from Asia to the United States. It'll

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Speaker 8: impact railroads. It's as Union Pacific and CSX because still

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Speaker 8: be hauling less freight. It'll impact truckload carriers and LTR

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Speaker 8: carriers and also is going to obviously impact the parcel

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Speaker 8: carriers like FedEx and ups. And we're kind of seeing

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Speaker 8: that in the market right now. The Dow Joant Transports down,

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Speaker 8: you know, over seven percent. Well the general markets down

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Speaker 8: around four percent right now. So you know, these are

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Speaker 8: highly cyclical names and they're really uh, you know, the

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Speaker 8: demand really goes with where the economy is going. And

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Speaker 8: what this is telling us is that it's going to

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Speaker 8: be hit to the economy. What was announced yesterday after

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Speaker 8: the close out of the White House.

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Speaker 3: So Lee, I spoke with our one of our favorite

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Speaker 3: transportation anols earlier this morning, Tony Hatchet.

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Speaker 2: Now we get to speak to Lee Glasgow. So this

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Speaker 2: is a good day. Say, how does that hurt? Now

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Speaker 2: to my faves two of my faves.

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Speaker 3: I worked for Tony way way way back in the day,

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Speaker 3: and I.

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Speaker 2: Work with Lee at BI. So it's all good. Lee.

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Speaker 3: I mean, if you're CSX or Union Pacific, you're kind

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Speaker 3: of just waiting to see what your customers, like Ford

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Speaker 3: Motor Company or the the farmers are going to tell

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Speaker 3: you about what they need in terms of demand. Are

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Speaker 3: you hearing anything now about bookings or any of that

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Speaker 3: kind of stuff.

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Speaker 8: I mean, what we're seeing so you know, obviously, what

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Speaker 8: we're seeing in the liner market is a couple of

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Speaker 8: the liners have announced blank sailings. And what that means

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Speaker 8: is that they're either going to you know, skip a

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Speaker 8: port or they're just going to discontinue a whole loop

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Speaker 8: of a ship going from Asia to the US and

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Speaker 8: back to Asia. So we're starting to see that now.

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Speaker 8: When we actually saw container rates Transpacific container rates actually

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Speaker 8: spike a little bit this week and that's really been

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Speaker 8: driven on that and and some general rate increases. So

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Speaker 8: we are starting to see that. And then you know,

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Speaker 8: have to remember there was a lot of pull forward

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Speaker 8: to demand ahead of these towers, right and so what

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Speaker 8: that's going to do is that means inventories are full

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Speaker 8: right now, and so that's going to create very difficult

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Speaker 8: comps in the second half of the year. And you know,

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Speaker 8: when we were seeing intermodal volumes up mid to high

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Speaker 8: single digits, uh, you know, you could see that going

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Speaker 8: to declines in the second half. So and that's you know,

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Speaker 8: intermodal impacts railroads. So all the railroads. So you know,

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Speaker 8: we mentioned you Pacific, and it also impacts Norfolk Southern

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Speaker 8: and Berkshire Hathaway's Burlington Northern. Also impacts big players in

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Speaker 8: the emobile business like Hub Group or JB. Hunter or Schneider.

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Speaker 8: So you know, the impact to the tariffs are really

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Speaker 8: going to be felt for transportation companies. And that's all

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Speaker 8: assuming that these tarists stick. Right if tomorrow the President

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Speaker 8: wakes up and says, I forget about it. You know, uh,

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Speaker 8: the then game on, right, it's like that Wayne's World scene,

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Speaker 8: you know, a game off, game on. So so you know,

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Speaker 8: we we we could be you know, back to normal

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Speaker 8: because you know, what we were really banking on this

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Speaker 8: year was a freight recovery for the truckload sector and

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Speaker 8: kind of the truckload sector also, uh does impact other

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Speaker 8: aspects of the freight economy, and that recovery really seems

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Speaker 8: down to be pushed out a lot further than what

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Speaker 8: we thought three months ago. You know, when President Trump

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Speaker 8: you know, got into the White House, and you know,

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Speaker 8: we thought that this was going to release all these

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Speaker 8: animal spirits and you know, low taxes, low regulation, that's

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Speaker 8: going to be great for the economy. But then now

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Speaker 8: we have the risk of tariffs, and you know the

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Speaker 8: end game is going to be interesting. So you know

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Speaker 8: a company like Nike, they manufacture a lot of sneakers

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Speaker 8: in Vietnam, but you know, an average sneaker worker. I

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Speaker 8: just looked us up on the internet, so hopefully this

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Speaker 8: is right. You know, they make something like two hundred

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Speaker 8: and fifty dollars a month. I mean that that manufacturing

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Speaker 8: is not going to come to the United States. So

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Speaker 8: what are the goals of these tariffs?

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Speaker 7: Right?

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Speaker 8: Because you know, to bring that to the United States.

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Speaker 8: You know obviously it's twenty dollars an hour, forty hours

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Speaker 8: a week. That that's a lot more than two hundred

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Speaker 8: and fifty dollars a month.

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Speaker 5: But yes, to be sure, and I think that everyone

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Speaker 5: doesn't necessarily know how what would the end goal is.

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Speaker 5: Here's my really silly question. And I'm just looking in

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Speaker 5: the ship like MARSK or any of the actual shippers.

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Speaker 5: If we're rerouting goods in a less efficient route, for example,

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Speaker 5: does that actually mean that they make more money or no?

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Speaker 8: Yes so so near so the near term vent any

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Speaker 8: disruption is good for the shipping markets and transports and

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Speaker 8: free forwarders, but that that that good part is very

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Speaker 8: short lived. Uh, And so you know we're not we're

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Speaker 8: not going to see all of a sudden sneakers manufacture

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Speaker 8: in Eastern Europe. It's just that's where they're manufactured. So

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Speaker 8: they're just going to be coming in and they're just

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Speaker 8: going to be more expensive and we're just going to

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Speaker 8: buy less of them. So it's not like we're not

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Speaker 8: talking about like the Red C crisis where the SEUs

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Speaker 8: Canal is pretty much shut down to the container liner market,

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Speaker 8: or you know, droughts in the Panama Canal or a

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Speaker 8: war in Ukraine. Those really impacted trade flows. It's going

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Speaker 8: to take a long time to change where things are manufactured.

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Speaker 8: Sure now on the dry bulk side and the tanker side,

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Speaker 8: I mean that could get a little more disrupted, but

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Speaker 8: a lot of those commodities are kind of exempt already,

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Speaker 8: so they may not really be impacted as much as

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Speaker 8: really contain a lot of market.

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Speaker 5: Gully with barely class GA Bloomberg Intelligence, Thanks a lot.

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Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android

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Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever

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Speaker 1: you get your podcasts, or watch us live on YouTube.

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Speaker 5: Because let's get to some of the stocks definitely on

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Speaker 5: the move. That's Nike.

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Speaker 2: We were off huge here.

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Speaker 5: I mean, this is the lowest level we've seen since

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Speaker 5: November of twenty seventeen, the worst selloff since June of

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Speaker 5: last year. Punham Goyle is senior US e Commerce and

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Speaker 5: retail analyst at Bloomberg Intelligence. Punham this is a completely

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Speaker 5: unfair question. But where is the bottom or the revaluation

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Speaker 5: for the stock here?

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Speaker 6: I guess it depends on how are they going to

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Speaker 6: on these prices? Right, So, you know, a fifty four

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Speaker 6: percent tariff on China, forty six percent on Vietnam, where

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Speaker 6: Nike makes fifty percent of its footwear. These are big,

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Speaker 6: big numbers. There's no way they can absorb even half

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Speaker 6: of this. These companies have laser thin profit margins, you know,

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Speaker 6: high single digits, operating margins, low double digits maybe at

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Speaker 6: best for some of them. It's just something they can't absorb.

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Speaker 6: So prices will rise to the consumer and the consumer

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Speaker 6: will pull back. And that's where we struggle because inventory

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Speaker 6: will pile up again. If you talk specifically about Nike.

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Speaker 6: Nike's in a position today where they need to get

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Speaker 6: rid of excess inventory, and that's been the push that

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Speaker 6: they've been pushing for the last two quarters.

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Speaker 5: We're just kind of getting it together.

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Speaker 6: Yeah, exactly. So now this happens, So does the problem

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Speaker 6: become worse? I think so. I think as prices rise,

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Speaker 6: consumers fall back. Now there's more inventory that needs to

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Speaker 6: be disposed. And it's just the surple effect that they

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Speaker 6: can't escape. So things are going to get much uglier

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Speaker 6: before they get better, or we think even if they

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Speaker 6: can get better.

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Speaker 3: So from the last I guess terariff scenario of several

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Speaker 3: years ago plunam, did we learn any lessons? There were

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Speaker 3: the retailers able to.

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Speaker 2: Pass long price increases?

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Speaker 3: Where they did they end up taking it in the margin?

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Speaker 2: What did they do?

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Speaker 6: So in the last round there were ways to offset it.

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Speaker 6: So what happened in the last round was it was

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Speaker 6: only China that had the tariffs, So retailers shifted production

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Speaker 6: out of China into Vietnam, into Cambodia, into Bangladesh, and

437
00:21:42,400 --> 00:21:45,600
Speaker 6: they were able to diversify that cost exposure, but they

438
00:21:45,640 --> 00:21:49,359
Speaker 6: didn't bring production to the US. Today, there's no place

439
00:21:49,440 --> 00:21:52,000
Speaker 6: to really diversify it and bringing it back to the

440
00:21:52,119 --> 00:21:55,240
Speaker 6: US is I think impossible. I mean, we don't have

441
00:21:55,280 --> 00:21:58,200
Speaker 6: the infrastructure, We don't have the skilled labor to do

442
00:21:58,240 --> 00:22:01,040
Speaker 6: this anytime soon yet alone years.

443
00:22:01,760 --> 00:22:03,439
Speaker 5: Right, So that's the whole point. It's like they already

444
00:22:03,440 --> 00:22:06,520
Speaker 5: did this and then they have to like do it again,

445
00:22:06,560 --> 00:22:09,680
Speaker 5: Like where would they go? What other companies? I knew

446
00:22:09,720 --> 00:22:12,360
Speaker 5: Nike is getting hit really hard. You gave the incredible

447
00:22:12,359 --> 00:22:16,600
Speaker 5: statistics in terms of how much they make overseas and essay, Vietnam,

448
00:22:17,040 --> 00:22:19,720
Speaker 5: what other country? What other companies are going to be

449
00:22:19,800 --> 00:22:20,679
Speaker 5: hit as hard?

450
00:22:21,200 --> 00:22:25,840
Speaker 6: So every company that manufacturers in Asia will be hit.

451
00:22:26,160 --> 00:22:30,200
Speaker 6: There's really no escape here. All Birds a very small company.

452
00:22:30,240 --> 00:22:33,040
Speaker 6: One hundred percent of their footwear is made in Vietnam.

453
00:22:33,600 --> 00:22:38,439
Speaker 6: Oh Adidas thirty nine percent. Lulu Lemon, which before yesterday

454
00:22:38,960 --> 00:22:42,280
Speaker 6: did escape the TERRAF front because they did not manufacture

455
00:22:42,320 --> 00:22:46,440
Speaker 6: in China. Now they have forty percent of their manufacturing

456
00:22:46,720 --> 00:22:50,440
Speaker 6: in China in Vietnam. I'm sorry, so they're exposed to now.

457
00:22:50,480 --> 00:22:54,680
Speaker 6: So it's really everyone apparel. We are a net importer

458
00:22:54,800 --> 00:22:57,520
Speaker 6: of apparel and footwear. We don't make it here. We

459
00:22:57,560 --> 00:23:00,159
Speaker 6: don't make enough here to say we can bring it

460
00:23:00,240 --> 00:23:04,080
Speaker 6: back here. It's in Asia, and the Asian countries across

461
00:23:04,119 --> 00:23:07,359
Speaker 6: the board have very high tariffs on them, which is

462
00:23:07,359 --> 00:23:10,320
Speaker 6: going to impact pricing and costs and margin.

463
00:23:11,720 --> 00:23:16,119
Speaker 2: Are there any brands I don't know how to? I mean,

464
00:23:16,240 --> 00:23:19,720
Speaker 2: are there companies that are going to be winners here?

465
00:23:19,760 --> 00:23:23,000
Speaker 3: Maybe they're that they're they're all American manufacturing and so

466
00:23:23,040 --> 00:23:24,280
Speaker 3: on and goods, and they.

467
00:23:24,200 --> 00:23:28,240
Speaker 6: Are, but they don't manufacture anything. So think about the

468
00:23:28,320 --> 00:23:30,560
Speaker 6: resale companies right when you go and these are much

469
00:23:30,600 --> 00:23:32,439
Speaker 6: smaller companies, but when you go to a throat up,

470
00:23:32,440 --> 00:23:34,080
Speaker 6: when you go to a poshmark, when you go to

471
00:23:34,119 --> 00:23:38,080
Speaker 6: an eBay, they're selling stuff that already existed in the marketplace.

472
00:23:38,359 --> 00:23:41,840
Speaker 6: So as consumers seek these deep value do they start

473
00:23:41,920 --> 00:23:45,600
Speaker 6: thrifting More possible. It just depends on how high prices

474
00:23:45,640 --> 00:23:48,040
Speaker 6: will go and how consumers will pull back. But these

475
00:23:48,600 --> 00:23:52,760
Speaker 6: values driven companies that offer deep, deep discounts, whether it's

476
00:23:52,800 --> 00:23:56,120
Speaker 6: the off price even to some extent as inventory piles,

477
00:23:56,520 --> 00:24:00,520
Speaker 6: or whether it's like a Walmart which offers just better pricing,

478
00:24:00,560 --> 00:24:04,000
Speaker 6: we'll see consumers trade down, we'll see consumers full back,

479
00:24:04,280 --> 00:24:07,960
Speaker 6: and we'll see consumers seek discount. It's a traditional retail cycle,

480
00:24:08,040 --> 00:24:11,040
Speaker 6: but this time it's just big. The impact is really

481
00:24:11,040 --> 00:24:11,960
Speaker 6: big on retailers.

482
00:24:12,000 --> 00:24:14,119
Speaker 5: And that's why the TJX is of the world right

483
00:24:14,200 --> 00:24:16,200
Speaker 5: with the resale. So if you have the extra inventory,

484
00:24:16,200 --> 00:24:18,880
Speaker 5: where does it go TJX? And then that rams up

485
00:24:19,080 --> 00:24:22,159
Speaker 5: their own inventory and availability for customers.

486
00:24:21,720 --> 00:24:24,440
Speaker 3: Under Rummer down sixteen percent today via I mean, these

487
00:24:24,440 --> 00:24:27,440
Speaker 3: are American companies just getting hammered.

488
00:24:27,720 --> 00:24:30,240
Speaker 5: One of them. Get my scan in Theodore secondhand on

489
00:24:30,320 --> 00:24:33,320
Speaker 5: Poshmark cheaper than what they are now. It's a whole thing.

490
00:24:33,440 --> 00:24:35,520
Speaker 2: Oh, it's a whole thing. Put it on. What I'm

491
00:24:35,520 --> 00:24:36,159
Speaker 2: talking about, all right?

492
00:24:36,200 --> 00:24:37,680
Speaker 5: Put them, thanks a lot, put them. Goyle a senior

493
00:24:37,760 --> 00:24:40,640
Speaker 5: US e commerce and retailing list at Bloomberg Intelligence. Joining us.

494
00:24:41,040 --> 00:24:45,719
Speaker 1: This is the Bloomberg Intelligence podcast, available on Apple, Spotify,

495
00:24:45,920 --> 00:24:49,400
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496
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497
00:24:53,280 --> 00:24:56,800
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498
00:24:57,240 --> 00:24:59,960
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499
00:25:00,560 --> 00:25:02,800
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500
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Speaker 8: Yeahm