WEBVTT - What Tariffs Are Doing to North American Freight 0:00:02.720 --> 0:00:13.920 Bloomberg Audio Studios, Podcasts, radio News. 0:00:18.520 --> 0:00:22.040 Hello and welcome to another episode of the Odd Lots podcast. 0:00:22.160 --> 0:00:25.480 I'm Jill Wisenthal and I'm Tracy Alloway. Tracy, we can't 0:00:25.480 --> 0:00:29.159 get enough of trying to understand the immediate impact that 0:00:29.200 --> 0:00:31.840 the new tariff announcement they are having basically to like 0:00:32.000 --> 0:00:35.199 every business in the world, but certainly any business that 0:00:35.280 --> 0:00:38.640 touches goods and certainly any business that touches goods that 0:00:38.720 --> 0:00:41.120 at some point across a border, which at some point 0:00:41.159 --> 0:00:41.680 is all of them. 0:00:41.920 --> 0:00:43.680 I like the implication that we're just going to do 0:00:43.720 --> 0:00:46.600 episodes on every single business in the world. That's what 0:00:46.640 --> 0:00:49.800 we're saying, right, are we Yeah, I think we are. 0:00:49.600 --> 0:00:52.040 We're deep in the process of doing that already. So 0:00:52.159 --> 0:00:54.080 here's an episode with another business. 0:00:54.320 --> 0:00:57.320 Well, so yesterday in our episode, our first of the 0:00:57.560 --> 0:01:00.520 multiple emergency tariff episodes, were like, we just got to 0:01:00.560 --> 0:01:02.240 go down the list and talk to all the supply 0:01:02.400 --> 0:01:05.440 chain specialists that we talked to a few years ago 0:01:05.440 --> 0:01:07.839 over the last several years, and so we're just gonna 0:01:07.880 --> 0:01:10.760 do that. And we have another guest today who I 0:01:10.760 --> 0:01:13.000 think we talked to about a year ago, maybe a 0:01:13.000 --> 0:01:16.280 little less. We're going to be speaking with Matt Silver. 0:01:16.440 --> 0:01:19.960 He is the co founder and CEO of Cargato, which 0:01:20.000 --> 0:01:25.160 is a freight brokerage that really specializes in US Mexico lanes. 0:01:25.280 --> 0:01:28.639 North America. Knows a lot about North America trucking, cross 0:01:28.680 --> 0:01:32.119 border trucking, et cetera. And given the world of tariffs, 0:01:32.680 --> 0:01:35.200 you know, suddenly things like knowing about the world of 0:01:35.240 --> 0:01:36.360 cross border trucking. 0:01:36.720 --> 0:01:38.920 You know. The last time we spoke to him, I 0:01:38.920 --> 0:01:42.120 think the episode was titled like how shippers are responding 0:01:42.160 --> 0:01:44.080 to a US Mexico trade boom? 0:01:44.200 --> 0:01:46.600 Oh yeah, so I guess we'll I guess we're going 0:01:46.680 --> 0:01:48.080 to check in on whether. 0:01:47.840 --> 0:01:50.120 That you check in on the Mexico trade boom? 0:01:50.160 --> 0:01:53.600 Matt, Is there a US Mexico trade boom happening right 0:01:53.640 --> 0:01:55.760 now on April seventh and twenty twenty twenty five. 0:01:56.240 --> 0:01:59.040 Well, first of all, trade for Q one is up 0:01:59.120 --> 0:02:02.200 your overear Mexico, so it is definitely still going in 0:02:02.200 --> 0:02:05.360 the right direction. One thing to clarify, We're not a brokerage, 0:02:05.400 --> 0:02:08.880 we're a software business. But yeah, so we work with 0:02:08.919 --> 0:02:12.160 freight brokers and trucking companies that are moving across border freight. 0:02:12.240 --> 0:02:15.679 So we hear it from everybody involved in the process, 0:02:15.880 --> 0:02:20.680 and there's definitely anxiety and concern over how these tariffs 0:02:20.680 --> 0:02:23.640 are going to impact trade with Mexico and Canada. The 0:02:23.720 --> 0:02:26.560 thing is, like the news that we heard this week 0:02:27.080 --> 0:02:30.440 revolved around basically every country besides Mexico and Canada and 0:02:31.000 --> 0:02:33.800 the USMCA got some sort of a reprieve, if you will, 0:02:34.400 --> 0:02:36.760 but they were still hit by tariffs over the last 0:02:36.880 --> 0:02:40.920 couple of months. And so the companies, like the automakers 0:02:40.919 --> 0:02:44.880 that are producing cars throughout North America, they're not getting 0:02:44.960 --> 0:02:46.840 hit the same way the companies that are bringing their 0:02:46.880 --> 0:02:49.680 cars in from overseas, from Europe or Asia. And so 0:02:50.720 --> 0:02:53.160 you know, the trucking companies that are moving this freight, 0:02:53.639 --> 0:02:56.080 they're going to continue to move the freight that they 0:02:56.120 --> 0:03:00.440 can still move that's consistently shipping. But they understand that 0:03:00.480 --> 0:03:02.800 things might get a little bit rocky as all these 0:03:02.840 --> 0:03:06.639 discussions get worked through, and so they're gonna stand strong 0:03:06.680 --> 0:03:09.040 and I guess ultimately and wait and see what happens 0:03:09.280 --> 0:03:10.639 with the market, right. 0:03:10.960 --> 0:03:13.840 I mean, I think even if Mexico was exempted from 0:03:13.919 --> 0:03:16.760 the reciprocal tariffs that were announced last week, and I 0:03:16.760 --> 0:03:19.840 should just mention we're recording this on April seventh. Lots 0:03:19.840 --> 0:03:22.560 of things could still change, but even if they were exempt, 0:03:22.680 --> 0:03:27.000 I mean, the direction of travel seems fairly clear at 0:03:27.000 --> 0:03:31.200 this point. Give us a reminder of why US Mexico 0:03:31.320 --> 0:03:35.440 trade had been on a sort of upwards trend line 0:03:35.480 --> 0:03:37.720 because a lot of people were saying, well, this is actual, 0:03:37.840 --> 0:03:41.160 genuine trade between the US and Mexico, and then other 0:03:41.240 --> 0:03:44.600 people would say, well, this is China re routing some 0:03:44.640 --> 0:03:48.240 stuff through Mexico in order to get further away from 0:03:48.320 --> 0:03:52.760 the Trump administration's first round of tariffs back in circa 0:03:52.840 --> 0:03:53.640 twenty eighteen. 0:03:54.080 --> 0:03:57.360 Yeah, so going back to twenty eighteen, that's on Trump 0:03:57.400 --> 0:04:02.360 updated NAFTA to the USMCA, and that encouraged more manufacturing 0:04:02.400 --> 0:04:04.520 to happen in North America on less overseas. And so 0:04:04.920 --> 0:04:08.120 you've got the pandemic that scared everybody and thinking that 0:04:08.520 --> 0:04:10.760 it's not such a great idea to rely on China 0:04:10.800 --> 0:04:14.680 for manufacturing. Couple that with the general relations that the 0:04:14.800 --> 0:04:17.159 US and China have had for the last decade or so, 0:04:17.279 --> 0:04:21.040 which has been contentious and it's not super friendly. Then 0:04:21.120 --> 0:04:24.039 you've got the latest round and everything even up to 0:04:24.080 --> 0:04:27.000 the last few hours when Trump said that if China 0:04:27.160 --> 0:04:30.000 goes through with the increased tariffs that they announced. I 0:04:30.000 --> 0:04:32.680 think he said ninety percent would be placed on all 0:04:32.760 --> 0:04:36.680 goods coming from China, and so things are only escalating. 0:04:36.720 --> 0:04:40.200 And between the fact that Mexico is primarily on the 0:04:40.200 --> 0:04:42.960 same or similar time zones as the United States, it's 0:04:42.960 --> 0:04:45.880 only a few hours to get there, whereas it's I 0:04:45.880 --> 0:04:48.760 think fourteen or fifteen hours to get to China. And 0:04:48.800 --> 0:04:52.400 then the culture and language barriers are a lot simpler 0:04:52.800 --> 0:04:55.200 and easier to get through with Mexico than it is 0:04:55.200 --> 0:04:57.640 with overseas. And so there are a lot of reasons 0:04:57.640 --> 0:05:00.599 why companies already do manufacture in Mexico and why they're 0:05:00.600 --> 0:05:03.680 going to continue to do that. Yes, there's Chinese investment 0:05:03.720 --> 0:05:06.000 in Mexico, but it's not as heavy as people make 0:05:06.040 --> 0:05:08.039 it out. To me. It's just you start to hear 0:05:08.080 --> 0:05:10.880 it more because everyone's going, well, here's how China's reacting 0:05:10.920 --> 0:05:14.360 to this trade war. They're investing in countries nearby like Mexico. 0:05:14.480 --> 0:05:17.800 But I still think we'll see more American companies investing 0:05:17.839 --> 0:05:20.320 in Mexico than we will Chinese. 0:05:20.200 --> 0:05:23.200 Time zones in language two of the great non tariff 0:05:23.240 --> 0:05:26.400 trade barriers that affect our world. All right, why don't 0:05:26.400 --> 0:05:30.240 we applause here give us the status of the terriffs, 0:05:30.240 --> 0:05:32.000 because it seemed like Trumpe was like, really, you know 0:05:32.000 --> 0:05:34.440 for a while, like talking about blowing up the USMCA. 0:05:34.560 --> 0:05:37.400 Right now on April seventh, what is the status of 0:05:37.440 --> 0:05:40.719 what's newly being tariffed, what isn't in the cross border 0:05:40.880 --> 0:05:42.080 US Mexico trade. 0:05:42.520 --> 0:05:46.200 So you hear about the big separator being what qualifies 0:05:46.240 --> 0:05:50.320 under the USMCA. I think most agricultural products still qualify 0:05:50.400 --> 0:05:52.040 under that, and so we're not seeing an impact on 0:05:52.480 --> 0:05:55.000 most of those goods, although the US for a long 0:05:55.000 --> 0:05:58.039 time said tariffs on sugar, Mexico has had it on 0:05:58.080 --> 0:06:01.440 some dairy products. Like the irony right now is like 0:06:01.480 --> 0:06:04.919 the RFK movement talks about trying to reduce the reliance 0:06:04.920 --> 0:06:07.919 on highfritose corn syrup, and like the biggest counter to 0:06:07.960 --> 0:06:10.640 that would be sugar, which we could buy from Mexico. 0:06:10.720 --> 0:06:14.240 And so on one side, like you've got goods that 0:06:14.360 --> 0:06:17.800 fall under the USMCA that have those requirements. So like 0:06:18.200 --> 0:06:21.839 take a car, for example, if seventy five percent of 0:06:21.880 --> 0:06:24.640 the value of the car came from Mexico, the US 0:06:24.760 --> 0:06:28.440 or Canada, it falls under the USMCA, and it's qualified. 0:06:28.920 --> 0:06:31.520 The difference now, though, is that the parts that are 0:06:31.600 --> 0:06:35.960 not falling under the USMCA will get taxed right now 0:06:36.000 --> 0:06:39.799 at that twenty five percent rate. And so if let's 0:06:39.800 --> 0:06:43.400 say on a forty thousand dollars car, ten percent of 0:06:43.400 --> 0:06:46.039 that car, so about four thousand dollars worth of value 0:06:46.839 --> 0:06:50.920 is coming from overseas that could still have tariffs applied 0:06:50.960 --> 0:06:53.200 to it. And if it's twenty five percent tariff, then 0:06:53.520 --> 0:06:55.839 it'd be twenty five percent on that four thousand dollars, 0:06:55.920 --> 0:06:58.560 So about one thousand dollars would get added to the 0:06:58.960 --> 0:07:02.279 forty thousand dollars car, and so they're only taxing that piece. 0:07:02.680 --> 0:07:06.040 Who actually does those calculations though, because that seems seems 0:07:06.040 --> 0:07:08.400 like a lot of paperwork to break cars down by 0:07:08.480 --> 0:07:10.560 like components and where those components are made. 0:07:11.080 --> 0:07:15.560 It's the customs broker. Oh wow, and there's yeah, I 0:07:15.600 --> 0:07:18.600 mean there's there's a startup called guy Dynamics that's also 0:07:18.640 --> 0:07:21.760 doing that using AI, and so companies are able to 0:07:21.840 --> 0:07:24.480 use them for that stuff now too. But like it's 0:07:24.680 --> 0:07:29.200 very specific, like if you're using something made of steel 0:07:29.280 --> 0:07:32.920 versus aluminum versus and other raw material even if it's 0:07:32.920 --> 0:07:35.640 a screw, it's still it depends on what it's made 0:07:35.680 --> 0:07:37.360 out of, and it depends on the size of it 0:07:37.440 --> 0:07:40.280 and all that other stuff. So like they're very specific. 0:07:41.040 --> 0:07:44.360 It's called harmonized tariff codes that are assigned to each 0:07:44.560 --> 0:07:47.840 good and then there's a potential tax related to that 0:07:48.360 --> 0:07:51.040 along with requirements very specific. 0:08:06.680 --> 0:08:09.240 Okay, so let's say I'm some company and you know, 0:08:09.320 --> 0:08:12.840 I don't know what the future is of US Mexico trade. 0:08:13.080 --> 0:08:16.720 Some things are getting tariffed now that weren't so much 0:08:17.200 --> 0:08:19.520 like what am I passing along and what am I eating? 0:08:19.920 --> 0:08:23.400 So it depends on what if so the who is 0:08:23.440 --> 0:08:27.640 a land Rover Jaguar the name of their brand is 0:08:27.680 --> 0:08:30.200 now like they announced that all their cars coming in 0:08:30.240 --> 0:08:33.079 from overseas are pausing for a moment until they figure 0:08:33.120 --> 0:08:37.880 out exactly how to manage this. And historically even cars 0:08:37.960 --> 0:08:41.199 like that that were coming from Europe were still or Asia. 0:08:41.240 --> 0:08:44.480 We're still getting grandfathered in under kind of almost like 0:08:44.520 --> 0:08:47.360 a side letter to the USMCA. And so some of 0:08:47.360 --> 0:08:48.960 those companies were able to get by and now all 0:08:48.960 --> 0:08:50.840 of a suddeny're getting hit with these terriffs, and so 0:08:51.360 --> 0:08:53.880 they don't want to go turn around to their customers 0:08:53.880 --> 0:08:56.280 and raise prices. They know it's not a good look, 0:08:56.480 --> 0:08:59.440 and so rather than raising prices, they're saying, hey, hang 0:08:59.480 --> 0:09:01.080 on a second, we're not going to put more cards 0:09:01.120 --> 0:09:03.240 on the lot. We're going to stop shipping for a 0:09:03.280 --> 0:09:06.080 moment until we figure this out, and they're you know, 0:09:06.200 --> 0:09:09.360 over the next call it five to ten days. As 0:09:09.400 --> 0:09:12.680 like the US and the EU navigate and negotiate, and 0:09:12.720 --> 0:09:16.400 I think I just saw recently that that conversation is starting, 0:09:16.440 --> 0:09:19.040 and you'll see similar with a lot of other countries 0:09:19.120 --> 0:09:23.200 or trade organizations that ideally that'll get back to some 0:09:23.440 --> 0:09:26.439 level of a more balanced trade agreement where there's ideally 0:09:26.480 --> 0:09:29.559 no tariffs in either direction. And so those companies that 0:09:29.559 --> 0:09:31.480 are getting affected by it, they just have to wait. 0:09:31.760 --> 0:09:33.400 And I think a lot of them are just waiting, 0:09:33.600 --> 0:09:36.640 and they're okay with less inventory for the time being 0:09:37.080 --> 0:09:39.760 and keeping the prices the same because those cars already landed, 0:09:40.360 --> 0:09:42.880 rather than trying to charge more to the consumer or 0:09:42.960 --> 0:09:43.760 eat that cost. 0:09:44.360 --> 0:09:47.800 So if we were to assume that maybe things don't 0:09:47.880 --> 0:09:50.600 change from what's been declared, like let's just assume that 0:09:50.679 --> 0:09:53.200 we don't see a bunch of deals like Trump is 0:09:53.200 --> 0:09:56.600 advocating for and these tariffs were stuck with them for 0:09:56.640 --> 0:10:00.320 a while. How would you expect some of your clients 0:10:00.440 --> 0:10:04.600 to actually react and maybe reorient their businesses for this 0:10:04.679 --> 0:10:06.120 new reality. What would they do? 0:10:06.760 --> 0:10:10.040 Our customers are logistics companies, and I think what you're 0:10:10.080 --> 0:10:12.319 thinking about is more on the manufacturer side, which is 0:10:12.360 --> 0:10:15.280 their customers. And so I'll put myself in the shoes 0:10:15.280 --> 0:10:19.480 of a logistics company that's working with manufacturer. My first 0:10:19.559 --> 0:10:22.480 thought is like, let's build some consistency around the freight 0:10:22.480 --> 0:10:24.800 that you're moving, because if you have to move that freight, 0:10:25.360 --> 0:10:27.319 one of the levers that you have is how much 0:10:27.320 --> 0:10:30.280 you're spending on moving it. So if you're getting an 0:10:30.360 --> 0:10:32.679 increase in the taxes and duties that you're paying on 0:10:32.720 --> 0:10:35.680 your goods, then I would be looking at ways to 0:10:35.720 --> 0:10:38.440 reduce my costs, which would be relying more on a 0:10:38.480 --> 0:10:41.319 logistics company or a third party logistics provider that can 0:10:41.360 --> 0:10:44.760 help kind of spread that price risk and the operational risk, 0:10:45.360 --> 0:10:47.800 and they can take that on with more volume. So 0:10:47.840 --> 0:10:50.720 you think about how more density builds over time with 0:10:50.800 --> 0:10:53.880 more freight moving in an individual lane, well, all of 0:10:53.920 --> 0:10:56.760 that that's going to drive ideally a better price control 0:10:56.840 --> 0:11:00.880 and so for a shipper thinking about their freight moving 0:11:00.880 --> 0:11:03.600 across the border, I might rely more on a logistics 0:11:03.600 --> 0:11:06.839 company to try to navigate that and reduce my cost 0:11:06.960 --> 0:11:10.640 of actually procuring different trucking companies and potentially be able 0:11:10.640 --> 0:11:13.079 to scale that business up by outsourcing more of that. 0:11:13.679 --> 0:11:15.680 And so if I'm a shipper, that's how I'm thinking 0:11:15.679 --> 0:11:18.560 about it. If I'm a trucking company, from what I 0:11:18.640 --> 0:11:21.360 understand is right now, trucking companies are not running out 0:11:21.400 --> 0:11:23.880 and buying more trucks. They want to see what's going 0:11:23.920 --> 0:11:28.280 to happen right now. They're waiting, they're not panicking, they're 0:11:28.320 --> 0:11:31.520 not picking up and switching how their business operates. So 0:11:31.640 --> 0:11:33.640 like I was in Canada recently and I met with 0:11:33.720 --> 0:11:36.760 a handful of trucking companies that move freight from Mexico 0:11:36.800 --> 0:11:39.560 to Canada and vice versa, and they told me, you know, 0:11:39.679 --> 0:11:43.040 look like there's definitely anxiety here. Like there's this much 0:11:43.480 --> 0:11:46.400 outrage that I heard from every trucking company and burger 0:11:46.440 --> 0:11:48.319 that I met with in Canada a few weeks ago, 0:11:48.600 --> 0:11:51.360 that I've seen on social media about everything going on 0:11:51.440 --> 0:11:54.080 right now in politics. And so most of those trucking 0:11:54.120 --> 0:11:56.800 companies are saying like, hey, we're going to stay calm, 0:11:57.040 --> 0:11:59.960 We're going to focus on supporting what we can support. 0:12:00.120 --> 0:12:02.839 We know some customers might not be shipping right now 0:12:02.840 --> 0:12:06.720 if they're freight is getting taxed heavily, and so we 0:12:06.800 --> 0:12:10.000 have to find freight elsewhere. But for the time being, 0:12:10.320 --> 0:12:12.080 we're going to stand strong. We're going to wait and see, 0:12:12.080 --> 0:12:13.680 because we don't think this is how it's going to 0:12:13.800 --> 0:12:16.760 stay long term. And so they're of a more long 0:12:16.840 --> 0:12:19.679 term mindset of waiting and seeing what happens, rather than 0:12:19.720 --> 0:12:22.800 panicking and trying to switch what they're doing or shutting 0:12:22.840 --> 0:12:25.680 something down or slowing down their fleet. They might just 0:12:25.720 --> 0:12:27.640 not grow as much right now, but they're not going 0:12:27.679 --> 0:12:28.600 to stop their trucks. 0:12:28.880 --> 0:12:31.400 But it sounds like no matter who you're talking about. 0:12:31.480 --> 0:12:35.000 And it's funny because look in the financial markets, one 0:12:35.000 --> 0:12:37.280 gets the sense that there is a widespread belief that 0:12:37.880 --> 0:12:40.120 the CURL rules can't stay in place, like this can't 0:12:40.120 --> 0:12:42.640 be the ultimate status quo, and no one really wants 0:12:42.679 --> 0:12:46.600 to accept that the new tariff schedules are really the 0:12:46.640 --> 0:12:48.480 whole thing. And I think there's a widespread belief that 0:12:48.520 --> 0:12:51.040 if somehow you at a crystal ball and these were 0:12:51.080 --> 0:12:54.040 the permanent tariffs for years to come, the markets would 0:12:54.040 --> 0:12:57.280 go a lot lower. It sounds like actually from you 0:12:57.960 --> 0:13:00.600 that that's kind of the same in industry, whether we're 0:13:00.600 --> 0:13:04.400 talking about manufacturers or whether we're talking about truckers. Yeah, okay, 0:13:04.400 --> 0:13:08.480 so pausing, We're not gonna move new inventory in right now. 0:13:08.559 --> 0:13:10.800 We're not going to change our business model. But at 0:13:10.800 --> 0:13:13.560 the moment still the sort of widespread belief that this 0:13:13.600 --> 0:13:15.360 can't be the final set of rules. 0:13:16.000 --> 0:13:18.720 Correct, And like, keep in mind that, you know, the 0:13:18.800 --> 0:13:21.560 big market that everybody talks about is the US market 0:13:21.600 --> 0:13:24.840 when it comes to freight. And obviously ocean freight's going 0:13:24.880 --> 0:13:27.880 to slow down. We're already hearing about that on both 0:13:27.920 --> 0:13:32.040 social and from customers directly that they're seeing volume coming 0:13:32.120 --> 0:13:35.840 in through the port slowdown. And then two that freight 0:13:35.920 --> 0:13:38.040 comes into the port, it goes to a warehouse at 0:13:38.040 --> 0:13:42.200 some point, it gets repackaged or labeled and then packaged 0:13:42.240 --> 0:13:45.720 and palatized. It goes on a truck after that. And 0:13:45.800 --> 0:13:49.120 so what people in you know, the US market would 0:13:49.120 --> 0:13:52.880 say is considered domestic freight moving from like Los Angeles 0:13:52.880 --> 0:13:55.400 to Dallas. That freight very well is going on a 0:13:55.440 --> 0:13:58.199 truck and it is considered a domestic shipment at that point, 0:13:58.200 --> 0:14:00.800 but it's really part of an international move and so 0:14:01.040 --> 0:14:04.720 if international freight slows down coming in over the ocean, 0:14:05.160 --> 0:14:07.640 that is ultimately going to impact over the road throughout 0:14:07.640 --> 0:14:10.080 the US. And so I don't think we're going to 0:14:10.080 --> 0:14:12.360 see a spike in rates by any means. I think 0:14:12.400 --> 0:14:14.959 we might see some weird fluctuation over the next couple 0:14:15.000 --> 0:14:18.240 months as these things settle, but I think overall the 0:14:18.280 --> 0:14:20.320 market's going to be a little bit slower for freight 0:14:20.360 --> 0:14:23.160 in general, not just for cross border or international. 0:14:23.920 --> 0:14:26.000 I mean, on this note, one of the things we 0:14:26.200 --> 0:14:29.960 learned from the twenty twenty pandemic and the supply chain 0:14:30.000 --> 0:14:33.600 disruptions after that, one of the things we really internalized 0:14:33.720 --> 0:14:37.440 is just how cyclical the trucking business actually is and 0:14:37.480 --> 0:14:40.440 how you do tend to get these boom bust cycles. 0:14:40.480 --> 0:14:43.160 And it feels like the more sort of one off 0:14:43.240 --> 0:14:46.680 shocks we have to the system, the worse that cyclicality 0:14:46.840 --> 0:14:51.240 kind of gets. How bad should we assume things are 0:14:51.280 --> 0:14:55.760 going to get if this tariff uncertainty sticks around for 0:14:55.800 --> 0:14:56.200 a while. 0:14:56.720 --> 0:14:58.920 I think it really depends on what happens with China 0:15:00.040 --> 0:15:02.720 all the other countries like it all has an effect, right, 0:15:02.800 --> 0:15:05.400 Like if you think about what happened during the pandemic 0:15:05.440 --> 0:15:08.000 when all of a sudden there's a shortage with semiconductor 0:15:08.080 --> 0:15:11.360 chips and what that did to everything. Like all of 0:15:11.400 --> 0:15:14.000 a sudden, cars were not rolling off of lines because 0:15:14.000 --> 0:15:16.120 of how many chips are going to a car, And 0:15:16.200 --> 0:15:20.320 so the whole ecosystem is really tied in more than 0:15:20.360 --> 0:15:23.600 you'd think. But China is really the big one that 0:15:23.680 --> 0:15:26.040 it's all going to depend on, right Like if we 0:15:26.120 --> 0:15:29.400 come out of this with significant tariffs from both sides 0:15:29.560 --> 0:15:33.480 on China, yeah, and from China to the US, then like, yeah, 0:15:33.560 --> 0:15:36.560 it's going to slow things down if things go to 0:15:36.600 --> 0:15:39.680 a new normal. But to me, normal still means that 0:15:40.240 --> 0:15:42.840 supply chains don't have to be completely redone in a 0:15:42.880 --> 0:15:46.280 really quick fashion. Then I think the market should pick 0:15:46.320 --> 0:15:49.880 back up and there should be excitement from the new 0:15:49.960 --> 0:15:53.320 agreements in place where people might start buying again. People 0:15:53.320 --> 0:15:56.320 are not obviously happy about their bank accounts right now. 0:15:56.800 --> 0:15:59.280 Yeah, obviously not. No. I mean like this is sort 0:15:59.280 --> 0:16:02.640 of the big one because if some of these levels 0:16:02.680 --> 0:16:04.880 that are being discussed, and again we're talking about this 0:16:04.960 --> 0:16:07.920 April seventh, two thirty five pm Eastern time. If some 0:16:07.960 --> 0:16:10.960 of these levels for China tariffs remain in place, I mean, 0:16:11.000 --> 0:16:15.040 people are talking about the end of US China trading, 0:16:15.080 --> 0:16:18.280 which is the sort of the defining economic relationship of 0:16:18.320 --> 0:16:21.240 the entire world. Matt Silver, thank you so much for 0:16:21.280 --> 0:16:22.960 coming back on oddlocks. 0:16:23.400 --> 0:16:24.760 Absolutely thanks for having me. 0:16:37.480 --> 0:16:40.520 It really feels tracy, even with all of the market volatility. 0:16:40.520 --> 0:16:42.280 I love catching up with Matt. By the way, it 0:16:42.320 --> 0:16:45.560 really feels though, with all the market volatility that we've seen, 0:16:46.280 --> 0:16:48.920 with all the selling, like no one just believes that 0:16:48.960 --> 0:16:51.160 this could be the the new normal right now. 0:16:51.200 --> 0:16:51.880 Everyone's like waiting. 0:16:52.400 --> 0:16:54.400 It's like, Oh, we're gonna see what happens with negotiations. 0:16:54.440 --> 0:16:56.680 I'm like, what negotiations? But you know, there's got to 0:16:56.720 --> 0:16:59.480 be something, right, Everyone assumes there must be some deal 0:16:59.520 --> 0:16:59.960 to be cut. 0:17:00.200 --> 0:17:03.440 Yeah. Well, I mean ostensibly that's the whole point of 0:17:03.480 --> 0:17:07.560 this process, right, It's to use leverage to strike deals. 0:17:07.840 --> 0:17:10.159 But in the meantime we're all sort of grappling with 0:17:10.200 --> 0:17:12.760 all this uncertainty of what's going to happen. But I 0:17:12.760 --> 0:17:15.480 thought that was really interesting, good to catch up with Matt. 0:17:15.560 --> 0:17:19.240 I did think his emphasis on the importance of China 0:17:19.440 --> 0:17:22.200 is a really big deal, and you've said it very 0:17:22.200 --> 0:17:24.560 well at the end as well, like the world's two 0:17:24.760 --> 0:17:29.120 largest economies, there's a real chance that they're basically decoupling 0:17:29.640 --> 0:17:33.480 from each other, which seems like it could reverberate around 0:17:33.560 --> 0:17:36.520 supply chains and industries around the world. So again, no 0:17:36.600 --> 0:17:39.679 matter what happens, you know, if the US strikes a 0:17:39.760 --> 0:17:44.240 deal with I don't know, like some small Pacific island 0:17:44.480 --> 0:17:47.720 or something like, maybe it doesn't really matter because the 0:17:47.840 --> 0:17:52.160 US China relationship is much much bigger and weighs much 0:17:52.200 --> 0:17:54.440 much much more heavily on the global economy. 0:17:54.840 --> 0:17:56.960 Yeah, it seems like the big one. And so it's like, 0:17:57.080 --> 0:18:00.200 even if you're talking about US versus Mexico trail aid, 0:18:00.840 --> 0:18:03.919 the future of US and Mexico trade is contingent to 0:18:03.960 --> 0:18:07.000 some there still China of US China trade because A 0:18:07.600 --> 0:18:09.520 there's a question of well, can Chinese good to get 0:18:09.520 --> 0:18:11.679 through Mexico and then to the US, which happens to 0:18:11.720 --> 0:18:14.199 some extent. And then B if you're really shut off 0:18:14.240 --> 0:18:18.119 from China, how much actual actual capital I investment do 0:18:18.160 --> 0:18:20.840 you then make it in North America? And how much 0:18:20.880 --> 0:18:23.920 you make in Mexico versus the United States. Many big questions, 0:18:24.119 --> 0:18:27.640 But like investors, it sounds like the world of shippers 0:18:27.640 --> 0:18:29.960 and carriers are also in a certain kind of light 0:18:30.040 --> 0:18:30.639 and see mode. 0:18:30.760 --> 0:18:32.880 Yeah, And I mean the other big thing happening here 0:18:33.040 --> 0:18:36.479 is the difference between now versus twenty eighteen is you 0:18:36.520 --> 0:18:39.959 don't have those outlet countries necessarily, right, So you can't 0:18:40.000 --> 0:18:44.280 just re route stuff into Vietnam or into Mexico away 0:18:44.280 --> 0:18:47.639 from China like that is no longer an option. So 0:18:47.680 --> 0:18:50.800 that seems to make it much much more complicated as well. 0:18:51.320 --> 0:18:52.200 Shall we leave it there? 0:18:52.400 --> 0:18:53.120 Let's leave it there. 0:18:53.280 --> 0:18:56.040 This has been another episode of the Authoughts podcast. I'm 0:18:56.080 --> 0:18:59.200 Tracy Alloway. You can follow me at Tracy Alloway. 0:18:58.880 --> 0:19:01.080 And I'm Jill Wasn't the You can follow me at 0:19:01.080 --> 0:19:04.720 the Stalwart. Follow Matt Silver, He's at Matt Silver. Follow 0:19:04.760 --> 0:19:08.080 our producers Carmen Rodriguez at Kerman armand dash Ol Bennett 0:19:08.080 --> 0:19:11.639 at Dashbod and Kelbrooks at Kelbrooks. From our Odd Lots content. 0:19:11.720 --> 0:19:14.240 Go to Bloomberg dot com slash odd Lots, where we 0:19:14.280 --> 0:19:16.919 have all of our episodes in a daily newsletter and 0:19:16.960 --> 0:19:18.880 you can chat about all of these topics. Twenty four 0:19:18.880 --> 0:19:22.840 to seven in our discord discord, dot gg, slash. 0:19:22.480 --> 0:19:25.159 Od lots and if you enjoy odd Lots, if you 0:19:25.359 --> 0:19:27.480 like it when we go back and talk to some 0:19:27.600 --> 0:19:31.080 of our supply chain and logistics contacts, then please leave 0:19:31.160 --> 0:19:34.760 us a positive review on your favorite podcast platform. And remember, 0:19:34.800 --> 0:19:37.399 if you are a Bloomberg subscriber, you can listen to 0:19:37.560 --> 0:19:40.600 all of our episodes absolutely ad free. All you need 0:19:40.640 --> 0:19:43.200 to do is find the Bloomberg channel on Apple Podcasts 0:19:43.240 --> 0:20:07.240 and follow the instructions there. Thanks for listening.