WEBVTT - Trump Tariffs Shock Supply Chains 0:00:02.720 --> 0:00:10.560 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:10.560 --> 0:00:14.520 Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 0:00:14.560 --> 0:00:18.479 Eastern on Applecarplay and Android Auto with the Bloomberg Business App. 0:00:18.600 --> 0:00:21.840 Listen on demand wherever you get your podcasts, or watch 0:00:21.920 --> 0:00:23.040 us live on YouTube. 0:00:23.480 --> 0:00:24.880 Let's go a little technology here. 0:00:25.480 --> 0:00:27.080 You're thinking about some of the big tech names and 0:00:27.520 --> 0:00:29.160 how are they going to deal in the world where 0:00:29.320 --> 0:00:31.760 tariffs are going to be higher on a global scalue. 0:00:31.800 --> 0:00:32.960 Think about some of these big tech. 0:00:32.840 --> 0:00:36.920 Firms and they sell their hardware and software and services everywhere, 0:00:37.440 --> 0:00:40.199 so they are truly global rok Rana joints as Bloomberg 0:00:40.240 --> 0:00:45.360 Intelligence Technology and US. What's the tech call in a 0:00:45.680 --> 0:00:47.920 higher tariff world on roun. 0:00:48.040 --> 0:00:50.760 Oh, it's so bad right now. I mean, look at Apple. 0:00:51.240 --> 0:00:54.600 I mean it's really surprising that Datchain. You know, they 0:00:54.760 --> 0:00:56.840 rocked up so much on China. Now that's going to 0:00:56.840 --> 0:00:59.960 have a massive impact on Apple. Most of the problem 0:01:00.080 --> 0:01:02.440 exam made there. You know, you can cut it and 0:01:02.480 --> 0:01:05.959 slice it in any way. They cannot offset the margin risk. 0:01:06.280 --> 0:01:09.960 The iPhone sales are going to be traumatically impacted in 0:01:10.000 --> 0:01:13.160 the second half most likely, you know, it's going to 0:01:13.160 --> 0:01:18.160 be will see how China reacts to this. China accounts 0:01:18.160 --> 0:01:21.200 for twenty percent of sales for Apple, so the local population, 0:01:21.640 --> 0:01:23.039 you know, let's see if they're going to go with 0:01:23.160 --> 0:01:25.120 local brands. I mean, it's just a big mess for 0:01:25.160 --> 0:01:27.560 Apple frankly at this point. But when we look at 0:01:27.600 --> 0:01:29.880 the other vendors, when you look at the software companies, 0:01:29.920 --> 0:01:32.839 which even though they don't have the direct exposure to China, 0:01:32.959 --> 0:01:35.160 I think when you look at an economic slowdown like this, 0:01:35.560 --> 0:01:39.000 you're going to see breaks on technology spending and by default, 0:01:39.120 --> 0:01:40.959 you know a lot of what these guys sell to 0:01:41.000 --> 0:01:45.200 the market. We looked at growth estimates as of December 0:01:45.200 --> 0:01:48.400 thirty first, the top fifty software companies, they had a 0:01:48.440 --> 0:01:51.360 median growth rate of thirteen point two percent two days ago. 0:01:51.400 --> 0:01:52.040 We looked at it. 0:01:52.280 --> 0:01:54.840 People have not brought their numbers down, it's only it's 0:01:54.880 --> 0:01:57.600 still twelve point four percent. So we think that number 0:01:57.640 --> 0:01:59.920 gets cut down by quite a bit over the next 0:02:00.120 --> 0:02:01.040 you know, one month when. 0:02:00.960 --> 0:02:02.360 It off and that's not in the stocks yet. 0:02:02.440 --> 0:02:05.000 That's I can't tell whether that's on the stocks or not, 0:02:05.040 --> 0:02:08.080 but it's definitely not in the cell side estimates. Consensus 0:02:08.080 --> 0:02:08.640 out there. 0:02:08.480 --> 0:02:10.680 Well, here's what I wanted to kind of pull back 0:02:10.680 --> 0:02:12.200 a little bit. We talked about this with Mike sort 0:02:12.240 --> 0:02:14.960 of what the headline and tariff risk is and then 0:02:15.000 --> 0:02:17.880 what the actual fundamentals of the tech industry. And that 0:02:17.880 --> 0:02:20.440 brings us to the news that Microsoft, that Bloomberg broke, 0:02:20.520 --> 0:02:22.480 is pulled back on a bunch of data projects, right, 0:02:22.520 --> 0:02:25.720 and there was a whole list right, UK, Indonesia, Australia, Illinois, 0:02:25.840 --> 0:02:30.200 North Dakota, Wisconsin, et cetera. Is So, how do you 0:02:30.320 --> 0:02:30.720 read that? 0:02:30.800 --> 0:02:31.880 Like, is that a sign that. 0:02:31.880 --> 0:02:33.639 We're pairing back everything and it's. 0:02:33.480 --> 0:02:35.920 All over or what? No, how do I read that? 0:02:36.000 --> 0:02:37.920 I will wait for sut there to make his comments 0:02:37.960 --> 0:02:41.080 on the conference call, because there is a very's likelihood 0:02:41.160 --> 0:02:43.600 that he may say, listen, I'm happy to lease that 0:02:43.639 --> 0:02:46.120 same amount, just not build it. So from that point, 0:02:46.160 --> 0:02:48.720 it's okay with me, because they're still seeing the inference 0:02:48.800 --> 0:02:51.200 coming in and they still going to spend the money. 0:02:51.360 --> 0:02:54.280 These are just deciding not to build it themselves, which 0:02:54.320 --> 0:02:56.160 is fair. I mean, it's you know, either rent or buy. 0:02:56.240 --> 0:02:58.040 I mean it's you know, it's it's up to them. 0:02:58.280 --> 0:03:00.000 So I think those are going to be the most 0:03:00.040 --> 0:03:03.200 critical comments but it's tough for me to see how 0:03:03.240 --> 0:03:08.200 any executive can give any decent guidance into going into 0:03:08.440 --> 0:03:11.600 you know, this particular environment. Uh, you know the later 0:03:11.680 --> 0:03:12.480 this month. 0:03:12.440 --> 0:03:14.960 So important rent versus by Okay, this is why I 0:03:15.000 --> 0:03:16.920 had that tutorial with Anorat. This is why you got 0:03:16.960 --> 0:03:18.200 to do a call. You got to call them up 0:03:18.240 --> 0:03:20.160 after the show for half an hour, yep, and then 0:03:20.200 --> 0:03:21.519 you will understand all things. 0:03:21.960 --> 0:03:24.720 Tom keen watching the show here trying to learn tell. 0:03:24.600 --> 0:03:26.400 Us that he doesn't have the tail. 0:03:25.960 --> 0:03:27.320 Front exactly exactly. 0:03:27.639 --> 0:03:30.320 Okay, So then if it is just a tariff impact, 0:03:30.320 --> 0:03:32.720 then if that's really like what is rocking these docks, 0:03:33.520 --> 0:03:37.160 which companies are most exposed? Like which software companies are 0:03:37.160 --> 0:03:38.160 going to be hurt the hardest? 0:03:38.360 --> 0:03:38.560 See? 0:03:38.560 --> 0:03:40.800 I think Apples the one, you know, we talked about it. 0:03:40.880 --> 0:03:42.560 But then you have to look at it where. 0:03:42.360 --> 0:03:45.360 The valuations are still higher than pre pandemic levels. You know, 0:03:45.400 --> 0:03:47.960 look at somebody like a Shopify. It's down huge today 0:03:48.120 --> 0:03:51.119 because that evaluations a bit high. So it's now they 0:03:51.120 --> 0:03:53.000 have a lot of DOGE exposure as well. So there 0:03:53.040 --> 0:03:55.360 is a there are names out there that are that 0:03:55.480 --> 0:03:59.040 are far more you know, on on that value range. 0:03:59.120 --> 0:04:01.480 Where far more expensive than historical loans. 0:04:02.120 --> 0:04:06.000 Again, so but we're not making a valuation call here, No, No, 0:04:06.320 --> 0:04:07.640 we areble because there's. 0:04:07.520 --> 0:04:08.520 Still risks to estimates. 0:04:08.520 --> 0:04:10.880 It is probably a massive risks to estimates, and we 0:04:10.920 --> 0:04:12.480 don't know where the growth is going to be in 0:04:12.520 --> 0:04:15.080 the second half right now, and we have seen in 0:04:15.120 --> 0:04:18.159 the past recessions things drive up very quickly. 0:04:18.839 --> 0:04:21.560 How's actual demand for iPhones? This might seem like an 0:04:21.600 --> 0:04:24.320 insanely rudimentary question right now based on all we're dealing with, 0:04:24.440 --> 0:04:26.000 but what's the underlying move there? 0:04:26.080 --> 0:04:28.920 If you were to ignore everything on the taraff side, 0:04:29.160 --> 0:04:31.280 The demand was just in line with what it has 0:04:31.360 --> 0:04:32.680 been in the last two to three years. So we 0:04:32.760 --> 0:04:35.760 are not seeing a major spike in demand. Although in 0:04:35.800 --> 0:04:39.640 some Western countries where they have launched app launched Apple Intelligence, 0:04:39.640 --> 0:04:42.320 they have seen some improvement, but China has still been 0:04:42.320 --> 0:04:44.599 weak and that has been the big story with Apple 0:04:44.880 --> 0:04:47.520 and what we were hoping by the end of this 0:04:47.640 --> 0:04:52.120 year fiscal year this, you know, September October, when they 0:04:52.160 --> 0:04:55.320 launched the next phone, Apple Intelligence, will be in all 0:04:55.320 --> 0:04:58.240 the major regions. The new phone form factor come out, 0:04:58.240 --> 0:05:01.360 that slim iPhone seventeen that Goeman talks about and all 0:05:01.400 --> 0:05:04.640 of that creates a new excitement. But I mean everything 0:05:04.720 --> 0:05:06.159 is fair game at this point. 0:05:06.360 --> 0:05:08.800 All right, an Ron appreciate that on our run does 0:05:08.880 --> 0:05:13.159 all the technology stuff for Bloomberg Intelligence in our studio. 0:05:13.320 --> 0:05:14.040 How big is that? 0:05:14.160 --> 0:05:17.039 I mean, that's because you got your big AI conference, essuy, 0:05:17.080 --> 0:05:19.279 which was extraordinary successful. I stopped by a few times. 0:05:19.320 --> 0:05:21.440 The room was packed. It's really going to be actually 0:05:21.640 --> 0:05:24.080 for yeah, yeah, exactly. 0:05:24.200 --> 0:05:24.760 I learned things. 0:05:24.800 --> 0:05:26.440 Yeah, you learned things. So it's good stuff. 0:05:26.480 --> 0:05:32.039 So anyway, you're listening to the Bloomberg Intelligence Podcast. Catch 0:05:32.120 --> 0:05:35.200 us live weekdays at ten am Eastern on Apple, Cocklay 0:05:35.240 --> 0:05:38.200 and Android Auto with the Bloomberg Business app. Listen on 0:05:38.279 --> 0:05:41.520 demand wherever you get your podcasts, or watch us live 0:05:41.600 --> 0:05:42.240 on YouTube. 0:05:42.720 --> 0:05:45.200 Alex deal here alongside Paul Sweeney and John Tucker. This 0:05:45.400 --> 0:05:47.520 is Bloomberg Intelligence Radio. We bring you all the top 0:05:47.520 --> 0:05:50.160 news and business, economics and finance through our lens of 0:05:50.200 --> 0:05:52.560 our Bloomberg Intelligence folks. They cover two thousand companies and 0:05:52.560 --> 0:05:54.880 one hundred and thirty industries all around the world. Let's 0:05:54.880 --> 0:05:56.760 pick up them. What John Tucker was just talking about 0:05:56.800 --> 0:06:01.000 in terms of Stilantis temporarily halting some production Canada and 0:06:01.120 --> 0:06:04.719 Mexico forward already offering steep discounts to keep customers coming 0:06:04.760 --> 0:06:07.719 into the showrooms. Volkswagon warning dealers it's going to tack 0:06:07.760 --> 0:06:10.200 on import fees to the vehicles it ships to the 0:06:10.279 --> 0:06:13.120 US because today those twenty five percent tariffs and imported 0:06:13.160 --> 0:06:16.960 cards are already on the docket joining US now. Steve Man, 0:06:16.960 --> 0:06:20.400 Bloomberg Intelligence, Global Autos and Research analysts, can you walk 0:06:20.480 --> 0:06:23.640 us through these kind of ripple effects, right, like steep 0:06:23.680 --> 0:06:27.520 discounts getting them into the showroom, like Volkswagen doing import fees, 0:06:27.560 --> 0:06:30.320 Like what does that roll out to look like? 0:06:30.600 --> 0:06:33.680 Yeah, I was just having some costs this morning with 0:06:33.760 --> 0:06:36.520 some clients and that was the big question. You know, 0:06:36.640 --> 0:06:40.480 how much of that tariff costs can they pass down 0:06:40.520 --> 0:06:43.840 on to the consumers. It's a big debate. It really 0:06:43.839 --> 0:06:47.760 depends on the automakers. But in general, uh, you know, 0:06:47.800 --> 0:06:50.039 I think the automakers will have to eat that cost 0:06:50.320 --> 0:06:54.560 because you know, we're actually facing a downturn in the 0:06:54.600 --> 0:06:59.159 auto industry. Inventories are high. If you look at delinquency 0:06:59.279 --> 0:07:02.920 rates on auto loans, they're at a very high rate 0:07:03.560 --> 0:07:06.560 over in the last few years. So I don't think 0:07:06.560 --> 0:07:09.920 consumers are are willing to open up the purse strings 0:07:10.400 --> 0:07:11.080 any further. 0:07:12.560 --> 0:07:15.360 So, Steve, why are Ford and General Motors down? This 0:07:15.400 --> 0:07:18.080 is my dumb question of the day. Wouldn't the domestic 0:07:18.120 --> 0:07:24.080 automakers be positive today while the internationals would be down 0:07:24.160 --> 0:07:26.960 because of the terriffs. Aren't these tarfts designed to protect 0:07:26.960 --> 0:07:28.680 the domestic auto manufacturers. 0:07:28.760 --> 0:07:33.480 Yeah, Trump's announcement of reciprocal tarofts. You know it gave 0:07:34.120 --> 0:07:38.360 well quote unquote reprieve or exemption on autos not really 0:07:38.440 --> 0:07:41.120 right because they are announced to twenty five percent tariff 0:07:41.160 --> 0:07:44.600 last week, nothing more additional. I guess, so, I guess 0:07:44.680 --> 0:07:46.960 you're right. I mean, no news is good news at 0:07:46.960 --> 0:07:50.960 the moment. But I think you know, I think you 0:07:51.000 --> 0:07:53.600 know the stocks have trying it down quite a bit 0:07:53.800 --> 0:07:56.960 since last week already. But it's not done yet, right, 0:07:57.360 --> 0:08:02.640 because there's May third another deadline on auto tariffs. That's 0:08:02.640 --> 0:08:06.040 when they're going to announce. How are the parts that 0:08:06.080 --> 0:08:08.040 do not meet the U s m c A or 0:08:08.120 --> 0:08:11.040 not just US MSA that do not meet the US 0:08:11.160 --> 0:08:15.120 content rule quote quote unquote US content rule will apply 0:08:15.520 --> 0:08:16.720 to to auto parts. 0:08:16.800 --> 0:08:19.160 But to that point, it's just currently the tar tariffs 0:08:19.160 --> 0:08:21.760 are in place for already made cars coming into the US. 0:08:21.800 --> 0:08:23.600 We get the auto parts one, as you point out, 0:08:24.000 --> 0:08:26.400 coming in May. Third, Are you surprised at Ford sort 0:08:26.400 --> 0:08:28.840 of lowering and offering discounts to get people in their 0:08:28.840 --> 0:08:31.000 showrooms right now? Like that would feel like the opposite 0:08:31.040 --> 0:08:33.280 of what you would expect with tariffs in plays. 0:08:33.600 --> 0:08:33.840 Yeah. 0:08:34.120 --> 0:08:36.280 Uh, you know, this is what I said earlier. I 0:08:36.280 --> 0:08:40.679 think the automakers will have to eat this. Uh that's 0:08:41.720 --> 0:08:45.200 now they're going to have to lower the costs. Uh, well, 0:08:45.200 --> 0:08:47.640 definitely not raise the cost But like I said earlier too, 0:08:47.800 --> 0:08:50.720 they're you know, it's coming in a bad time where 0:08:50.760 --> 0:08:54.680 inventories are at you know, pre COVID levels really, so 0:08:55.760 --> 0:08:58.600 you know, they're you know, and the consumers are not 0:08:58.600 --> 0:09:01.840 buying as many cars as they they would, So they're 0:09:01.880 --> 0:09:04.080 going to have to not only eat it, but I 0:09:04.120 --> 0:09:06.200 have to, like in this case, for we'll have to 0:09:06.240 --> 0:09:07.040 even cut prices. 0:09:07.280 --> 0:09:10.000 What does this mean for the transition to electric vehicles? 0:09:10.000 --> 0:09:11.000 Because it felt like for. 0:09:11.040 --> 0:09:16.520 The US OE ms they were almost doing it begrudgingly 0:09:16.559 --> 0:09:18.760 because they kind of had to. The market was going there. 0:09:18.840 --> 0:09:22.000 They didn't really want to. The economics weren't there. Now 0:09:22.040 --> 0:09:25.640 I've got pressure on my core business. Does that slow 0:09:25.720 --> 0:09:27.040 down do you think? Or is that going to impact 0:09:27.080 --> 0:09:28.520 the move towards EV's. 0:09:28.880 --> 0:09:33.120 There's always been a debate. Right now evs are battery 0:09:33.160 --> 0:09:36.880 evs are about eight nine percent you know, penetration in 0:09:36.960 --> 0:09:40.240 the US market. There's debate in terms of if that's 0:09:40.280 --> 0:09:44.280 going to grow. But I think that's where in this segment, 0:09:44.360 --> 0:09:47.400 that's where we actually will see clearer winner and losers. 0:09:47.960 --> 0:09:51.760 I actually think the the pure place, the Rivians, the Lucid, 0:09:51.840 --> 0:09:56.400 and the Tesla will be clear winners because if you 0:09:56.440 --> 0:10:00.280 look at the legacy automakers, they're actually building a lot 0:10:00.320 --> 0:10:03.679 of these evs in Mexico to bring down costs. They 0:10:03.720 --> 0:10:08.360 offer a more attractive, attractive prices for consumer. But now 0:10:08.400 --> 0:10:11.680 with these tarraffs, you know, you know, g now they're 0:10:11.720 --> 0:10:14.400 going to have to raise prices on EV's, not really 0:10:14.440 --> 0:10:18.400 cut prices to bring in consumer. And you know, unfortunately 0:10:18.400 --> 0:10:21.640 GM was actually on our way uh to to profitability 0:10:21.640 --> 0:10:23.880 on EV's and that's gonna you know, these terrors are 0:10:23.880 --> 0:10:25.600 going to derail that that effort. 0:10:25.840 --> 0:10:27.880 Do you really think that we're going to see uh 0:10:28.080 --> 0:10:31.040 for more like GM build more auto plants in the US. 0:10:31.080 --> 0:10:32.080 Is that actually gonna happen. 0:10:33.679 --> 0:10:37.200 I think with the global tariffs, with the auto terrafts 0:10:37.240 --> 0:10:41.840 plus the reciprocal taroffs, it's actually up ending this supply 0:10:41.960 --> 0:10:44.800 chain that's that's been put in place since nineteen sixty five, 0:10:45.120 --> 0:10:49.480 you know, first kind of auto agree between US and Canada, 0:10:49.720 --> 0:10:51.040 which was called the autopack. 0:10:53.000 --> 0:10:55.200 This whole. These these rors are up ending that. 0:10:55.400 --> 0:10:59.559 And I do think that the US, these US automakers 0:11:00.160 --> 0:11:03.760 will bring vehicle assembly back, and it's going to have 0:11:03.760 --> 0:11:07.079 a ripple effect because they're going to force a lot 0:11:07.080 --> 0:11:09.520 of the suppliers to also come back to the US 0:11:09.559 --> 0:11:13.760 as well. So it's it's, uh, we don't exactly know 0:11:13.800 --> 0:11:16.720 how much it will cost. We've made some estimates can 0:11:16.760 --> 0:11:19.640 cost up towards of over four billion dollars just to 0:11:19.640 --> 0:11:22.200 bring just to you know, construct a new plant, a 0:11:22.200 --> 0:11:24.679 green field plant in the one greenfield plant. 0:11:24.480 --> 0:11:24.840 In the US. 0:11:25.120 --> 0:11:28.960 They talked about, have any of the companies that you 0:11:29.000 --> 0:11:32.320 covered they talked about were willing to make that investment. 0:11:32.480 --> 0:11:35.760 Have not, But I bet there's gonna be a lot 0:11:35.760 --> 0:11:38.319 of questions during the earnings costs talk about it. 0:11:38.400 --> 0:11:41.000 Though at this point they got to talk about it, 0:11:41.160 --> 0:11:43.160 which company think is best points to actually do that 0:11:43.240 --> 0:11:44.960 if they were to pour some billions into that. 0:11:45.679 --> 0:11:50.320 I still think the US automakers will actually, relatively speaking, 0:11:50.559 --> 0:11:54.480 will be better off than say the Europeans, uh, and 0:11:54.600 --> 0:11:59.000 some of the Asians like South Korea, South Korean, because 0:11:59.040 --> 0:12:03.240 the US auto and the US automakers do have additional 0:12:03.240 --> 0:12:08.000 capacity in the US that they actually can bring that capacity, 0:12:08.120 --> 0:12:12.359 shift that production back into the US where the Europeans 0:12:12.400 --> 0:12:15.200 and some day Asians will have to build greenfield sites 0:12:15.559 --> 0:12:18.880 which could cost about four billion dollars for a plant. 0:12:19.080 --> 0:12:22.240 Wow, And I'll build it in Tennessee or South Carolina 0:12:22.320 --> 0:12:24.079 or Alabama one of the non Union states. 0:12:24.120 --> 0:12:25.720 And there you go. They've already done that. All right, 0:12:25.760 --> 0:12:27.000 Steve Man, thanks so much for joining U. 0:12:27.000 --> 0:12:30.000 Steve Man, he's a global autos and industrials research channels 0:12:30.040 --> 0:12:34.040 for Bloomberg Intelligence, actually in New York City here today 0:12:34.040 --> 0:12:37.559 and I'm believte Sure Studio. I know so many people 0:12:37.559 --> 0:12:38.040 can say. 0:12:37.920 --> 0:12:43.280 That you're listening to the Bloomberg Intelligence podcast. Catch us 0:12:43.360 --> 0:12:46.400 live weekdays at ten am Eastern on Apple Coarcklay and 0:12:46.400 --> 0:12:49.680 Android Auto with the Bloomberg Business app. Listen on demand 0:12:49.720 --> 0:12:53.440 wherever you get your podcasts, or watch us live on YouTube. 0:12:53.800 --> 0:12:56.840 Alex Deeler alongside Popsmuni. This is Bloomberg Intelligence Radio. We 0:12:56.840 --> 0:12:59.120 are brought to you right now for interactive Brooker Studio 0:12:59.200 --> 0:13:01.600 right here in midtown Manhattan, and also check us out 0:13:01.760 --> 0:13:04.320 on YouTube as well. Let's go to another area and 0:13:04.400 --> 0:13:07.520 sector that will obviously be quite impacted by tariffs, and 0:13:07.559 --> 0:13:10.120 that is shipping. Lee clas Cow as Boomberg Intelligence and 0:13:10.160 --> 0:13:13.640 your Transportland and Shipping analyst. So Lee, if I gain 0:13:13.720 --> 0:13:15.560 this out, I see a couple of things. One, trade 0:13:15.559 --> 0:13:18.520 flows re route, so the shippers are still doing stuff, 0:13:18.559 --> 0:13:21.680 they're just doing stuff in different directions. Or we see 0:13:21.720 --> 0:13:24.559 trade really start to shut down. What's your base case? 0:13:26.640 --> 0:13:29.360 What we've been saying for a while that tariffs are 0:13:29.360 --> 0:13:31.760 not good for the freight markets, and the reason for 0:13:31.800 --> 0:13:34.960 that is obviously they're inflationary and the consumer is a 0:13:34.960 --> 0:13:36.960 big part of the US economy, so it's going to 0:13:37.000 --> 0:13:39.560 have an impact on things that we import. So it's 0:13:39.559 --> 0:13:42.240 going to impact companies like Maersk and how Hug, Lloyd 0:13:42.360 --> 0:13:46.280 and Costco those are marine shipping lines because they'll be 0:13:46.720 --> 0:13:50.800 hauling less containers from Asia to the United States. It'll 0:13:50.840 --> 0:13:55.160 impact railroads. It's as Union Pacific and CSX because still 0:13:55.160 --> 0:13:59.959 be hauling less freight. It'll impact truckload carriers and LTR 0:14:00.200 --> 0:14:02.600 carriers and also is going to obviously impact the parcel 0:14:02.640 --> 0:14:05.200 carriers like FedEx and ups. And we're kind of seeing 0:14:05.240 --> 0:14:08.480 that in the market right now. The Dow Joant Transports down, 0:14:09.720 --> 0:14:12.439 you know, over seven percent. Well the general markets down 0:14:12.480 --> 0:14:15.079 around four percent right now. So you know, these are 0:14:15.200 --> 0:14:21.120 highly cyclical names and they're really uh, you know, the 0:14:21.160 --> 0:14:23.960 demand really goes with where the economy is going. And 0:14:24.000 --> 0:14:25.880 what this is telling us is that it's going to 0:14:25.920 --> 0:14:29.760 be hit to the economy. What was announced yesterday after 0:14:29.840 --> 0:14:31.240 the close out of the White House. 0:14:32.280 --> 0:14:36.480 So Lee, I spoke with our one of our favorite 0:14:36.560 --> 0:14:38.680 transportation anols earlier this morning, Tony Hatchet. 0:14:38.720 --> 0:14:40.280 Now we get to speak to Lee Glasgow. So this 0:14:40.360 --> 0:14:42.680 is a good day. Say, how does that hurt? Now 0:14:42.760 --> 0:14:44.360 to my faves two of my faves. 0:14:44.640 --> 0:14:47.400 I worked for Tony way way way back in the day, 0:14:47.560 --> 0:14:47.960 and I. 0:14:47.960 --> 0:14:50.720 Work with Lee at BI. So it's all good. Lee. 0:14:50.800 --> 0:14:54.320 I mean, if you're CSX or Union Pacific, you're kind 0:14:54.320 --> 0:14:56.440 of just waiting to see what your customers, like Ford 0:14:56.520 --> 0:14:59.640 Motor Company or the the farmers are going to tell 0:14:59.640 --> 0:15:01.640 you about what they need in terms of demand. Are 0:15:01.680 --> 0:15:04.720 you hearing anything now about bookings or any of that 0:15:04.760 --> 0:15:05.320 kind of stuff. 0:15:06.120 --> 0:15:09.040 I mean, what we're seeing so you know, obviously, what 0:15:09.080 --> 0:15:11.880 we're seeing in the liner market is a couple of 0:15:11.880 --> 0:15:15.480 the liners have announced blank sailings. And what that means 0:15:15.560 --> 0:15:19.480 is that they're either going to you know, skip a 0:15:19.560 --> 0:15:23.640 port or they're just going to discontinue a whole loop 0:15:23.800 --> 0:15:26.520 of a ship going from Asia to the US and 0:15:26.600 --> 0:15:28.960 back to Asia. So we're starting to see that now. 0:15:28.960 --> 0:15:33.960 When we actually saw container rates Transpacific container rates actually 0:15:34.000 --> 0:15:36.400 spike a little bit this week and that's really been 0:15:36.480 --> 0:15:39.440 driven on that and and some general rate increases. So 0:15:39.720 --> 0:15:41.800 we are starting to see that. And then you know, 0:15:41.880 --> 0:15:44.040 have to remember there was a lot of pull forward 0:15:44.080 --> 0:15:47.800 to demand ahead of these towers, right and so what 0:15:47.920 --> 0:15:49.920 that's going to do is that means inventories are full 0:15:50.040 --> 0:15:52.440 right now, and so that's going to create very difficult 0:15:52.800 --> 0:15:55.800 comps in the second half of the year. And you know, 0:15:55.840 --> 0:15:58.800 when we were seeing intermodal volumes up mid to high 0:15:58.880 --> 0:16:02.200 single digits, uh, you know, you could see that going 0:16:02.240 --> 0:16:05.600 to declines in the second half. So and that's you know, 0:16:05.680 --> 0:16:09.680 intermodal impacts railroads. So all the railroads. So you know, 0:16:09.720 --> 0:16:13.280 we mentioned you Pacific, and it also impacts Norfolk Southern 0:16:13.360 --> 0:16:17.200 and Berkshire Hathaway's Burlington Northern. Also impacts big players in 0:16:17.240 --> 0:16:20.160 the emobile business like Hub Group or JB. Hunter or Schneider. 0:16:20.520 --> 0:16:24.440 So you know, the impact to the tariffs are really 0:16:24.480 --> 0:16:27.640 going to be felt for transportation companies. And that's all 0:16:28.040 --> 0:16:32.240 assuming that these tarists stick. Right if tomorrow the President 0:16:32.280 --> 0:16:34.720 wakes up and says, I forget about it. You know, uh, 0:16:35.160 --> 0:16:39.120 the then game on, right, it's like that Wayne's World scene, 0:16:39.200 --> 0:16:42.440 you know, a game off, game on. So so you know, 0:16:42.800 --> 0:16:45.960 we we we could be you know, back to normal 0:16:46.040 --> 0:16:48.760 because you know, what we were really banking on this 0:16:48.840 --> 0:16:51.520 year was a freight recovery for the truckload sector and 0:16:51.720 --> 0:16:55.240 kind of the truckload sector also, uh does impact other 0:16:55.400 --> 0:16:59.560 aspects of the freight economy, and that recovery really seems 0:16:59.640 --> 0:17:02.200 down to be pushed out a lot further than what 0:17:02.280 --> 0:17:05.439 we thought three months ago. You know, when President Trump 0:17:05.840 --> 0:17:07.679 you know, got into the White House, and you know, 0:17:07.720 --> 0:17:09.600 we thought that this was going to release all these 0:17:09.600 --> 0:17:12.840 animal spirits and you know, low taxes, low regulation, that's 0:17:12.880 --> 0:17:15.480 going to be great for the economy. But then now 0:17:15.520 --> 0:17:18.560 we have the risk of tariffs, and you know the 0:17:18.640 --> 0:17:20.560 end game is going to be interesting. So you know 0:17:21.160 --> 0:17:23.760 a company like Nike, they manufacture a lot of sneakers 0:17:24.240 --> 0:17:27.959 in Vietnam, but you know, an average sneaker worker. I 0:17:28.000 --> 0:17:30.320 just looked us up on the internet, so hopefully this 0:17:30.440 --> 0:17:33.399 is right. You know, they make something like two hundred 0:17:33.400 --> 0:17:36.080 and fifty dollars a month. I mean that that manufacturing 0:17:36.119 --> 0:17:37.679 is not going to come to the United States. So 0:17:38.720 --> 0:17:40.400 what are the goals of these tariffs? 0:17:40.480 --> 0:17:40.640 Right? 0:17:40.680 --> 0:17:44.280 Because you know, to bring that to the United States. 0:17:44.440 --> 0:17:47.920 You know obviously it's twenty dollars an hour, forty hours 0:17:47.920 --> 0:17:50.000 a week. That that's a lot more than two hundred 0:17:50.000 --> 0:17:50.920 and fifty dollars a month. 0:17:52.000 --> 0:17:54.119 But yes, to be sure, and I think that everyone 0:17:54.119 --> 0:17:57.000 doesn't necessarily know how what would the end goal is. 0:17:57.480 --> 0:17:59.560 Here's my really silly question. And I'm just looking in 0:17:59.600 --> 0:18:02.320 the ship like MARSK or any of the actual shippers. 0:18:02.520 --> 0:18:06.360 If we're rerouting goods in a less efficient route, for example, 0:18:07.080 --> 0:18:10.240 does that actually mean that they make more money or no? 0:18:11.520 --> 0:18:14.000 Yes so so near so the near term vent any 0:18:14.000 --> 0:18:18.680 disruption is good for the shipping markets and transports and 0:18:18.840 --> 0:18:23.320 free forwarders, but that that that good part is very 0:18:23.359 --> 0:18:27.400 short lived. Uh, And so you know we're not we're 0:18:27.440 --> 0:18:29.600 not going to see all of a sudden sneakers manufacture 0:18:29.880 --> 0:18:34.840 in Eastern Europe. It's just that's where they're manufactured. So 0:18:34.880 --> 0:18:36.520 they're just going to be coming in and they're just 0:18:36.520 --> 0:18:38.440 going to be more expensive and we're just going to 0:18:38.480 --> 0:18:40.639 buy less of them. So it's not like we're not 0:18:40.680 --> 0:18:42.960 talking about like the Red C crisis where the SEUs 0:18:43.040 --> 0:18:45.760 Canal is pretty much shut down to the container liner market, 0:18:46.720 --> 0:18:49.800 or you know, droughts in the Panama Canal or a 0:18:49.880 --> 0:18:55.600 war in Ukraine. Those really impacted trade flows. It's going 0:18:55.640 --> 0:19:00.000 to take a long time to change where things are manufactured. 0:19:00.080 --> 0:19:04.240 Sure now on the dry bulk side and the tanker side, 0:19:04.520 --> 0:19:07.320 I mean that could get a little more disrupted, but 0:19:07.720 --> 0:19:10.360 a lot of those commodities are kind of exempt already, 0:19:10.440 --> 0:19:13.639 so they may not really be impacted as much as 0:19:13.720 --> 0:19:15.879 really contain a lot of market. 0:19:15.680 --> 0:19:18.120 Gully with barely class GA Bloomberg Intelligence, Thanks a lot. 0:19:19.840 --> 0:19:23.520 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:19:23.600 --> 0:19:26.720 weekdays at ten am Eastern on Apple, Cocklay and Android 0:19:26.720 --> 0:19:29.960 Auto with the Bloomberg Business app. Listen on demand wherever 0:19:30.080 --> 0:19:33.160 you get your podcasts, or watch us live on YouTube. 0:19:33.640 --> 0:19:35.439 Because let's get to some of the stocks definitely on 0:19:35.520 --> 0:19:36.600 the move. That's Nike. 0:19:37.440 --> 0:19:38.960 We were off huge here. 0:19:39.040 --> 0:19:40.960 I mean, this is the lowest level we've seen since 0:19:41.000 --> 0:19:44.760 November of twenty seventeen, the worst selloff since June of 0:19:44.880 --> 0:19:47.840