WEBVTT - Bitcoin Soars Past $100,000 on Trump’s Pro-Crypto Pick for SEC Head 0:00:00.600 --> 0:00:07.240 Bloomberg Audio Studios, Podcasts, radio news. 0:00:08.520 --> 0:00:12.880 This is Bloomberg business Week Inside, from the reporters and 0:00:13.039 --> 0:00:16.640 editors who bring you America's most trusted business magazine, plus 0:00:16.720 --> 0:00:20.840 global business, finance and tech news. The Bloomberg Business Week 0:00:20.880 --> 0:00:25.800 Podcast with Carol Messer and Tim Stenebek from Bloomberg Radio. 0:00:27.160 --> 0:00:28.080 The Price of Bitcoin. 0:00:28.240 --> 0:00:31.280 We're always watching that President elect Donald Trump's pick up 0:00:31.280 --> 0:00:33.000 a crypto proponent to be the next head of the 0:00:33.040 --> 0:00:35.440 SEC lifted bitcoin to one hundred thousand dollars for the 0:00:35.479 --> 0:00:39.360 first time as traders warmed to the prospect of relaxed regulations. 0:00:39.720 --> 0:00:41.960 We got with us Stacy Marie Ishmel, Managing editor for 0:00:42.080 --> 0:00:45.120 Crypto at Bloomberg News. Stacey Marie joins us here in 0:00:45.120 --> 0:00:48.320 the Bloomberg Interactive Brokers studio. Zeke Fox is a Bloomberg 0:00:48.360 --> 0:00:51.080 News financial investigation reporter. He's also the author of Number 0:00:51.120 --> 0:00:55.080 Go Up Inside at Crypto's Wild Rise and Staggering Fall. 0:00:55.520 --> 0:00:59.200 Zeke joins us from New York as well. Stacey Marie. 0:00:59.200 --> 0:01:01.600 There this moment when it comes to news events that 0:01:01.600 --> 0:01:03.720 are kind of indelible in people's minds. You know, you 0:01:03.880 --> 0:01:06.120 talk to people when they heard about the assassination of 0:01:06.160 --> 0:01:11.360 JFK or like, you know, more recently in our lifetimes, covid. 0:01:11.840 --> 0:01:13.440 You know, where were you when you heard Tom Hanks 0:01:13.440 --> 0:01:16.120 had COVID and the NBA was shutting down the season Austin, 0:01:16.200 --> 0:01:17.000 Texas is. 0:01:17.080 --> 0:01:19.680 Exactly you know? Is bitcoin? You were? Were you there 0:01:19.680 --> 0:01:20.560 for south by Southwest? 0:01:20.560 --> 0:01:20.600 No? 0:01:20.720 --> 0:01:22.400 Is there for work? Okay? You're there for work? Okay? 0:01:24.000 --> 0:01:24.560 Are you? 0:01:25.200 --> 0:01:27.399 Is this one of those moments where like it's that 0:01:27.560 --> 0:01:30.000 significant when it comes to the history of cryptocurrency? 0:01:30.319 --> 0:01:31.959 Where were you when bitcoin hit one hundred k? 0:01:32.160 --> 0:01:34.920 I will say that was very much the vibe of 0:01:35.319 --> 0:01:40.080 folks in and around bitcoin and crypto yesterday, particularly on 0:01:40.160 --> 0:01:44.360 social media, whether it was LinkedIn or x or blue Sky, 0:01:44.959 --> 0:01:47.160 you know, the you know, folks who are CEOs, folks 0:01:47.160 --> 0:01:50.000 who are developers, folks who are just retail traders were like, 0:01:50.320 --> 0:01:52.840 it's here, We've made it. Our time is now. 0:01:53.880 --> 0:01:56.520 Zeke. I wanted to bring you into the conversation because 0:01:56.560 --> 0:01:58.360 something I've been asking a lot of people about is 0:01:58.400 --> 0:02:00.200 sort of the frothiness, because once you get two one 0:02:00.240 --> 0:02:01.840 hundred thousand, a lot of people want to start talking 0:02:01.880 --> 0:02:04.400 about technicals about resistance. But I mean, where do you 0:02:04.440 --> 0:02:06.360 find resistance from there. And what I'm wondering too, is 0:02:06.360 --> 0:02:08.080 when you have people like the Hawk to a Girl 0:02:08.480 --> 0:02:10.480 Haley Welch that are kind of jumping in and trying 0:02:10.520 --> 0:02:13.280 to launch these type of mean coins. Are we actually 0:02:13.320 --> 0:02:15.520 at the phase here where things are looking a little 0:02:15.560 --> 0:02:17.560 too froppy for the crypto space. 0:02:18.919 --> 0:02:23.280 Well, what the bitcoin proponents would say is that all 0:02:23.280 --> 0:02:26.160 the attention that bitcoin is getting around the price hitting 0:02:26.200 --> 0:02:29.600 this milestone, like the coverage US talking about it right now, 0:02:30.040 --> 0:02:32.080 is part of the momentum that's going to drive it 0:02:32.520 --> 0:02:36.839 even higher. And this crypto executive, Dan held I once 0:02:36.880 --> 0:02:40.720 heard him explain it in a pretty interesting way. He 0:02:40.840 --> 0:02:43.840 called it number go up technology, and he said it's 0:02:44.000 --> 0:02:47.440 very powerful piece of technology. It's the price. As the 0:02:47.440 --> 0:02:50.240 price goes higher, more people become aware of it and 0:02:50.280 --> 0:02:53.880 buy it in anticipation of the price continuing to climb. Now, 0:02:54.000 --> 0:02:58.520 I don't think that that is a sustainable state of affairs, 0:02:58.880 --> 0:03:02.720 but that's what it's been driving Bitcoin higher. Now it's 0:03:02.800 --> 0:03:08.040 up fivefold since it's lows after FTX collapsed back in 0:03:08.120 --> 0:03:11.240 November twenty twenty two. It's pretty wild to see how 0:03:12.120 --> 0:03:12.880 far it's come. 0:03:13.680 --> 0:03:15.480 It is wild, Stacey Marie, I want to bring you 0:03:15.520 --> 0:03:16.840 back in here. The reason I asked about where you 0:03:16.919 --> 0:03:20.480 were because my phone blew ups. I think everybody else 0:03:20.480 --> 0:03:23.200 has did with notifications about this. I was talking to 0:03:23.240 --> 0:03:27.120 somebody who works in real estate development, who has an MBA, 0:03:27.440 --> 0:03:32.160 who understands cash flows and is extremely skeptical about why 0:03:32.200 --> 0:03:35.520 bitcoin is worth one hundred thousand dollars. There are still 0:03:35.520 --> 0:03:36.880 many of those skeptics out there. 0:03:37.880 --> 0:03:40.040 There are, absolutely there are. I think there are more 0:03:40.040 --> 0:03:42.720 people who don't know and don't care than there are skeptics, 0:03:42.720 --> 0:03:44.280 and then there are the true believers. That's sort of 0:03:44.360 --> 0:03:47.080 the segmentation. What I would say is, in addition to 0:03:47.280 --> 0:03:50.280 the very common market dynamic that Zeke just described about 0:03:50.320 --> 0:03:53.760 people being attracted to large numbers and especially numbers, it 0:03:53.760 --> 0:03:55.960 seems to be on a positive trajectory. There is the 0:03:56.000 --> 0:03:59.080 reality that there is something of an institutional price floor 0:03:59.160 --> 0:04:01.480 in the market now for bitcoin, and that is the 0:04:01.520 --> 0:04:06.960 participation of the enormous asset manages, the black Rocks of 0:04:07.000 --> 0:04:11.520 the world who are getting more involved in things like ETFs, 0:04:12.080 --> 0:04:14.760 the people who want to put bitcoin into people's four 0:04:14.760 --> 0:04:18.279 oh one case and have that kind of institutionalization of 0:04:18.320 --> 0:04:21.359 how retail investors are getting access to this asset, and 0:04:21.400 --> 0:04:24.440 that is driving some amounts of the enthusiasm. But the 0:04:24.480 --> 0:04:28.080 other is the possibility that the US federal government might 0:04:28.120 --> 0:04:30.440 itself become a large holder of bitcoin. 0:04:30.480 --> 0:04:32.520 Well, well, let's dig into that a little bit. Why 0:04:33.240 --> 0:04:36.479 you're talking about a potential strategic bitcoin reserve or maybe 0:04:36.560 --> 0:04:40.320 other methods of the US buying this during the next administration. 0:04:41.279 --> 0:04:43.680 What's the justification for that, Like, how do you get 0:04:43.680 --> 0:04:44.760 that past tax payers? 0:04:46.120 --> 0:04:47.719 How you get a past task players is a question 0:04:47.720 --> 0:04:50.400 for political scientists. But the justification that's being offered by 0:04:50.440 --> 0:04:54.360 the administration is that bitcoin the US should be the 0:04:54.800 --> 0:04:59.320 world capital of financial innovation, and bitcoin and blockchain technology 0:04:59.360 --> 0:05:02.320 are key elements of that. Right, that's the claim, And 0:05:02.600 --> 0:05:05.440 Zeke was there in Nashville when President elect Trump was 0:05:05.480 --> 0:05:08.400 kind of making these claims to a large gathering of 0:05:08.440 --> 0:05:11.120 people who are absolutely primed to believe it. The problem 0:05:11.200 --> 0:05:13.400 for I think the average taxpayer, to your point, is 0:05:13.880 --> 0:05:17.359 joining the dots between This is a virtual currency, a 0:05:17.400 --> 0:05:20.159 digital currency. It's not something that you can hold. It's 0:05:20.200 --> 0:05:24.760 not like a vaccine or wheat or petroleum that in 0:05:24.800 --> 0:05:27.200 a time of crisis, you have exactly a clear sense 0:05:27.240 --> 0:05:29.480 of how this will be used but for folks who 0:05:29.520 --> 0:05:31.719 believe in bitcoin and folks who believe in blockchain, they're like, 0:05:32.200 --> 0:05:34.760 just getting that assurance from the US government is enough. 0:05:35.120 --> 0:05:37.080 Zeke, I want to bring you back into this conversation 0:05:37.160 --> 0:05:38.640 so you can talk more about when you have a 0:05:38.640 --> 0:05:40.440 new administration coming in here and then sort of the 0:05:40.480 --> 0:05:42.400 lack of regulation when it comes to the crypto space. 0:05:42.680 --> 0:05:44.520 How do you view and your sources view kind of 0:05:44.520 --> 0:05:47.760 the direction of a bitcoin and other cryptocurrencies with the 0:05:47.760 --> 0:05:49.520 Trump administration coming in again. 0:05:50.520 --> 0:05:54.520 Well, it's kind of funny that bitcoiners are so concerned 0:05:54.560 --> 0:05:59.039 with regulation. I mean, in most ways, bitcoin was already 0:05:59.120 --> 0:06:03.440 legal and wasn't fit facing huge threats from whatever administration 0:06:03.640 --> 0:06:06.400 was going to come. I think the bitcoiners are really 0:06:06.480 --> 0:06:09.880 excited to have the president talking about bitcoin and talking 0:06:09.880 --> 0:06:14.479 about the possibility of this strategic reserve, even if it 0:06:14.560 --> 0:06:18.520 is kind of far fetched. Trump Truth today on truth 0:06:18.600 --> 0:06:25.720 Social congratulations, Bitcoiners, You're welcome. And what he's saying is that, 0:06:25.960 --> 0:06:28.880 I mean, he flew to Nashville, he gave a speech 0:06:28.920 --> 0:06:33.320 at the Bitcoin Conference where he laid out how he 0:06:33.440 --> 0:06:35.839 was going to do things to help promote bitcoin. He 0:06:35.920 --> 0:06:38.560 said that you know, the usf Bitcoin's going to the moon. 0:06:38.960 --> 0:06:41.080 The US is going to lead the way. And now 0:06:41.120 --> 0:06:44.039 without even doing anything, just with his election, with what 0:06:44.160 --> 0:06:49.880 he's been saying, he's gotten kind of the bitcoin mania 0:06:49.920 --> 0:06:53.279 going to like new heights. And it should be said 0:06:53.279 --> 0:06:58.520 that bitcoin executives came together to give Trump twenty five 0:06:58.520 --> 0:07:01.800 million dollars in campaign to nations, which helped smooth the 0:07:01.839 --> 0:07:04.720 way for him to flip from calling bitcoin a scam, 0:07:04.720 --> 0:07:07.440 which is what he said during his first administration. 0:07:08.760 --> 0:07:10.480 So, Sat Marie, how do you view sort of the 0:07:10.560 --> 0:07:13.520 flip flopping there, Because when you think of even saying 0:07:13.520 --> 0:07:15.960 Elon Musk with ev makers and things like that, they 0:07:16.000 --> 0:07:18.720 definitely benefited in his company benefited more so under a 0:07:18.720 --> 0:07:21.000 Biden administration. But we were thinking about the crypto side 0:07:21.040 --> 0:07:23.120 of things and maybe the AI side of things. How 0:07:23.200 --> 0:07:25.360 is this sort of shift coming in your kind of view? 0:07:26.080 --> 0:07:27.960 I mean, I think one of the big things you know, Zeke, 0:07:28.040 --> 0:07:30.960 is entirely correct. Bitcoin itself wasn't targeted by the US 0:07:31.000 --> 0:07:34.119 Securities and Exchange Commission in any real way, but pretty 0:07:34.160 --> 0:07:36.000 much every other part of the market was. 0:07:36.160 --> 0:07:36.320 Right. 0:07:36.400 --> 0:07:39.880 If you were somebody who was doing transactions in Ether 0:07:40.000 --> 0:07:42.000 on the ethereum blockchain, if you were somebody who was 0:07:42.040 --> 0:07:44.560 doing crypto lending. If you were somebody who was lending 0:07:44.600 --> 0:07:47.400 to somebody who was doing crypto lending, the SEC probably 0:07:47.400 --> 0:07:49.120 found a way to sue you, or at least to 0:07:49.120 --> 0:07:51.280 tell you to stop to stop doing that thing. And 0:07:51.440 --> 0:07:55.440 the widespread expectation, especially among the folks who were celebrating 0:07:55.480 --> 0:07:57.640 on social media yesterday, is that it'll be a totally 0:07:57.680 --> 0:08:00.960 different ballgame under the new regulatory. 0:08:00.320 --> 0:08:02.520 Okay, so that's exactly where I want to go right now. 0:08:02.560 --> 0:08:04.000 And I brought this up in a live Q and 0:08:04.040 --> 0:08:05.800 A that we did on the Bloomberg terminal and for 0:08:05.880 --> 0:08:09.160 Bloomberg subscribers a little earlier today about bitcoin here at 0:08:09.200 --> 0:08:11.120 one hundred thousand, Zeke, I want to send this on 0:08:11.200 --> 0:08:13.360 over to you first and then have Stacy Marie way in. 0:08:13.680 --> 0:08:16.640 And it's just the whole idea behind regulations. We live 0:08:16.680 --> 0:08:20.280 in a world with regulations and with laws, and those 0:08:20.400 --> 0:08:23.040 laws and regulations a lot of people would argue are 0:08:23.080 --> 0:08:25.800 there for a reason. I'm wondering to what extent you 0:08:25.800 --> 0:08:29.840 think the guardrails will be off an industry like cryptocurrency 0:08:30.000 --> 0:08:33.640 during the Trump administration, and if at all we could 0:08:33.720 --> 0:08:36.079 see negative repercussions for that I mean, we're just two 0:08:36.120 --> 0:08:39.160 years out from the collapse of FTX, and a lot 0:08:39.200 --> 0:08:42.080 of folks who lost quite a lot of money. Some 0:08:42.160 --> 0:08:44.920 of it has been recovered at this point with different projects, 0:08:45.360 --> 0:08:47.040 but there were folks who were hurting for quite quite 0:08:47.040 --> 0:08:48.360 a bit of time in the wake of that. 0:08:49.800 --> 0:08:52.560 Yeah, I mean, I was just watching an old interview 0:08:52.600 --> 0:08:57.080 with Paul Atkins, who's tabbed to be the next SEC commissioner, 0:08:57.440 --> 0:09:01.960 and he was saying that he felt some of the 0:09:02.080 --> 0:09:05.599 huge frauds that occurred during the last crypto boom like FTX, 0:09:05.880 --> 0:09:11.600 where the result of the SEC not creating a set 0:09:11.640 --> 0:09:15.680 of cryptospecific regulations that would bring the industry inside them 0:09:15.920 --> 0:09:20.079 and instead, since it was difficult to comply, people were 0:09:20.120 --> 0:09:23.600 just sort of running wild. I'm not sure how true 0:09:23.720 --> 0:09:30.280 that is. And we mentioned Poctua coin today. Yeah, this 0:09:30.360 --> 0:09:33.160 is a you know, they've actually been a huge number 0:09:33.200 --> 0:09:37.240 of these meme coins where basically somebody with some degree 0:09:37.240 --> 0:09:41.240 of notoriety starts promoting some made up coin. People jump 0:09:41.280 --> 0:09:44.280 in hoping that the price will pomp in that they'll 0:09:44.280 --> 0:09:46.679 get out while the getting is good, and then inevitably 0:09:46.760 --> 0:09:49.480 it's like a zero sum game. Are actually worse Most 0:09:49.520 --> 0:09:51.120 of the people who do it are going to lose money. 0:09:52.280 --> 0:09:56.640 Now where that fits in like a pro crypto regulatory regime, 0:09:56.960 --> 0:09:59.480 I'm not sure, but it doesn't seem like the kind 0:09:59.520 --> 0:10:02.679 of economic activity we should be encouraging. 0:10:03.120 --> 0:10:04.560 Stacey Marie, I want to give you the last word 0:10:04.600 --> 0:10:08.040 here thirty seconds on this thinking about a regulatory environment 0:10:08.040 --> 0:10:09.680 where guardrails could be off. 0:10:10.400 --> 0:10:12.480 I think one of the most important things to that 0:10:12.520 --> 0:10:14.720 point you're making, Zee, and what you said in the 0:10:14.760 --> 0:10:17.600 conversation earlier, is what does this mean for a person 0:10:17.800 --> 0:10:20.920 who buys something that they think is real from somebody 0:10:20.920 --> 0:10:23.240 they think is reliable it turns out to be a scam, 0:10:23.320 --> 0:10:27.040 a fraud, misrepresented, missold. What is the recourse that they have? 0:10:27.440 --> 0:10:29.439 And a lot of the industry's focus has been on 0:10:29.840 --> 0:10:32.200 the regulation of a kind of the companies, the exchanges, 0:10:32.240 --> 0:10:35.640 the technology itself, and there's a large gap, particularly in 0:10:35.679 --> 0:10:39.040 the US, for consumer protections as it relates to that, 0:10:39.080 --> 0:10:41.600 and I am personally very interested in seeing whether we'll 0:10:41.600 --> 0:10:42.800 get any movement there. 0:10:42.880 --> 0:10:45.040 We'll definitely appreciate you both of us joining us. Stacey 0:10:45.080 --> 0:10:48.320 Marie Ishmail, managing editor for Crypto at Bloomberg News. Also 0:10:48.440 --> 0:10:51.520 Zeke Fox Bloomberg News Financial Investigations reporter, also the author 0:10:51.520 --> 0:10:56.000 of Number Go Up, Inside Crypto's wild Rise and Staggering Fall. 0:10:57.400 --> 0:11:00.920 You're listening to the Bloomberg Business Week podcast. Catch us 0:11:00.960 --> 0:11:04.199 live weekday afternoons from two to five pm Eastern Listen 0:11:04.240 --> 0:11:06.400 on Apple car Play and then brout Auto with a 0:11:06.400 --> 0:11:10.120 Bloomberg Business act or watch us live on YouTube. 0:11:10.520 --> 0:11:12.880 We've got all our eyes, all eyes on what's going 0:11:12.920 --> 0:11:15.199 on when it comes to tariffs and the potential threat 0:11:15.240 --> 0:11:18.280 of tariffs from the incoming administration or Bloomberg Intelligence team 0:11:18.280 --> 0:11:20.280 actually that with a new note this morning about the 0:11:20.400 --> 0:11:24.840 risks of tariffs specifically on US automakers. US automakers could 0:11:24.840 --> 0:11:27.840 see more than three hundred and thirty five hundred dollars 0:11:27.880 --> 0:11:30.840 in added labor cost per vehicle if President elect Donald 0:11:30.840 --> 0:11:34.600 Trump's proposed tariffs are imposed on imports from Canada and Mexico, 0:11:35.080 --> 0:11:38.160 and the figure may also arise if auto parts are reshored. 0:11:38.559 --> 0:11:42.120 This is according to a Bloomberg Intelligence analysis. Ford GM 0:11:42.160 --> 0:11:44.600 and Stilantis might bear the biggest brunt given their production 0:11:44.679 --> 0:11:48.439 in Mexico, but Tesla could be least affected. We got 0:11:48.440 --> 0:11:51.480 with us Linley Brown, partnering Global Trade at Ernst and Young. 0:11:51.600 --> 0:11:56.680 She joins us from San Francisco this afternoon. Linley, First 0:11:56.679 --> 0:11:58.960 of all, how are you out in California right now? 0:12:00.679 --> 0:12:00.920 Good? 0:12:01.400 --> 0:12:04.200 It's hard to complain, you know, December and California. 0:12:04.320 --> 0:12:07.280 Okay, Good, just wanted to check there. Hey, I do 0:12:07.360 --> 0:12:09.600 want to get an idea from you. First of all, 0:12:10.360 --> 0:12:13.400 how you think about the relationship between tax and tariffs, 0:12:13.440 --> 0:12:16.960 because this is the intersection of your specialty at Ey 0:12:17.440 --> 0:12:20.760 and specifically the conversations that you're having right now with 0:12:20.960 --> 0:12:24.440 leaders at companies all around the country as they prepare 0:12:24.440 --> 0:12:25.480 for the incoming administration. 0:12:26.880 --> 0:12:30.640 Yeah, that's a great question. It's been very busy and 0:12:30.679 --> 0:12:33.880 this is certainly the topic to jure. You know, with 0:12:34.040 --> 0:12:37.800 the current threat of widespread tariffs, companies are really examining 0:12:38.000 --> 0:12:41.520 multiple avenues of mitigation and one of those, one of 0:12:41.520 --> 0:12:45.040 those levers, one of those super powerful mitigating factors is 0:12:45.160 --> 0:12:51.880 customs valuation. Pertinent to customs valuation is tax, particularly where 0:12:51.920 --> 0:12:55.480 you have buyers and sellers in these global transactions who 0:12:55.559 --> 0:12:58.800 are related, namely, you know the automakers, the companies that 0:12:58.840 --> 0:13:01.840 you named and kind of the intro so this is them, right, 0:13:01.920 --> 0:13:05.040 This is that valuation of products that is all tax. 0:13:05.880 --> 0:13:08.920 And Tim was actually just mentioning a really interesting stat 0:13:08.960 --> 0:13:12.360 from Bloomberg Intelligence where they were compiling data about how 0:13:12.400 --> 0:13:15.960 Detroit automakers face a thirty five hundred dollars a car 0:13:16.040 --> 0:13:19.760 hike on Trump tariffs, potentially an added labor cost per vehicle. 0:13:19.800 --> 0:13:21.800 What I'm wondering when you have a situation on this, 0:13:22.480 --> 0:13:24.800 what are the potential here of this getting passed down 0:13:24.800 --> 0:13:27.200 to consumers and shoppers of these types of vehicles. 0:13:28.520 --> 0:13:32.800 That's a great question. You know, the importer of record 0:13:33.240 --> 0:13:36.680 will bear that duty cost one hundred percent of the time. 0:13:36.840 --> 0:13:39.640 Right then to your point, right, the question is will 0:13:39.720 --> 0:13:43.440 that product from a price elasticity perspective, will they be 0:13:43.480 --> 0:13:45.839 able to pass that on to consumers or not? Right, 0:13:45.880 --> 0:13:48.400 if you are the only seller of a very particular product, 0:13:48.559 --> 0:13:51.160 you can charge whatever you want to. If you're not, 0:13:51.400 --> 0:13:54.400 and there's you know a lot of competition, those companies 0:13:54.440 --> 0:13:57.320 are probably going to absorb those costs. And that's when 0:13:57.360 --> 0:14:00.000 comes in these mitigating activities. Right, how do you mitigate 0:14:00.160 --> 0:14:02.560 the extent of those tariffs so that it doesn't because 0:14:02.559 --> 0:14:04.679 those go right into cost of goods sold. But the 0:14:04.720 --> 0:14:08.079 ability to pass those costs onto consumers will totally depend 0:14:08.520 --> 0:14:11.040 on the availability of you know, in the competitiveness in 0:14:11.080 --> 0:14:11.800 this market. 0:14:12.000 --> 0:14:12.760 What do you mean by that? 0:14:12.800 --> 0:14:16.600 Do you mean geographic competitiveness and companies that might not 0:14:16.679 --> 0:14:17.880 necessarily be important? 0:14:17.920 --> 0:14:19.040 Like, how does that work? 0:14:19.120 --> 0:14:22.200 Because you would imagine that every company is sort of 0:14:22.240 --> 0:14:24.560 dealing with the same thing, at least if they're manufacturing 0:14:24.600 --> 0:14:26.280 products in those areas. 0:14:27.600 --> 0:14:30.000 Yeah, so it's we've certainly seen a shift, right, So 0:14:30.040 --> 0:14:33.880 from twenty eighteen, with like the first Trump administration until now, 0:14:34.400 --> 0:14:37.800 companies have certainly diversified their supply chain. They moved out 0:14:37.840 --> 0:14:40.000 of China, they moved you know, near shoring, right, they 0:14:40.080 --> 0:14:43.960 moved to Mexico. Certain other companies you know, moved other places. 0:14:44.000 --> 0:14:46.560 From a you know, from a supply and demand perspective. 0:14:46.640 --> 0:14:50.320 The impact of the tariffs is on those automakers that 0:14:50.480 --> 0:14:53.200 sort of went all in from a Mexico perspective, They're 0:14:53.240 --> 0:14:57.120 they're in that bullseye right now. It's totally geographical. It 0:14:57.160 --> 0:15:00.320 depends on you know, near shoring, far shoring, whatever you 0:15:00.440 --> 0:15:05.080 made to diversify your manufacturing base. That will certainly impact 0:15:05.120 --> 0:15:08.520 what options you have available to mitigate the tariffs and 0:15:08.600 --> 0:15:09.880 just how impacted you are. 0:15:10.520 --> 0:15:14.840 So walk us through how exactly tax and custom departments 0:15:14.840 --> 0:15:16.600 will end up having to work together on this. 0:15:18.680 --> 0:15:21.280 Yeah, it is really it's interesting because you know, with 0:15:21.360 --> 0:15:23.360 an EY, I sit in the tax group, right, I'm 0:15:23.400 --> 0:15:26.840 an indirect tax. That's kind of an EY construct within 0:15:27.520 --> 0:15:30.720 most companies, and certainly it will vary based on sector 0:15:30.760 --> 0:15:33.760 and based on product customers could sit in supply chain, 0:15:33.800 --> 0:15:36.040 it could sit in legal, it could sit in tax 0:15:36.080 --> 0:15:40.080 Automotive for example, historics tell us it sits in tax, technology, 0:15:40.200 --> 0:15:42.520 sits in tax where that doesn't happen. 0:15:42.760 --> 0:15:42.960 Right. 0:15:43.800 --> 0:15:46.000 What these companies are going to need to do and 0:15:46.080 --> 0:15:49.840 have already started doing, is connecting those thoughts to say, 0:15:49.920 --> 0:15:55.400 if I really want to decrease my duties on imported products, 0:15:55.960 --> 0:15:59.120 most duties are advalrum. They are a percentage of customs value. 0:15:59.160 --> 0:16:01.880 To the extent you decrease your customs value, you pay 0:16:01.920 --> 0:16:05.280 less duties. The only way you're really decreasing that value 0:16:05.320 --> 0:16:08.040 is to team with tax, particularly in these areas of 0:16:08.080 --> 0:16:11.360 related party pricing, So where you are purchasing from a 0:16:11.400 --> 0:16:15.560 related party, you have a lot more ability and kind 0:16:15.560 --> 0:16:17.440 of you know, you have the ability to kind of 0:16:17.480 --> 0:16:21.240 change where is the profit in that value chain That 0:16:21.400 --> 0:16:24.960 is a tax discussion with a customs valuation lens. Those 0:16:25.040 --> 0:16:29.720 rules are different OECD transfer pricing wto customs valuation rules, 0:16:29.920 --> 0:16:32.920 but they have the same goal right arms length pricing. 0:16:33.480 --> 0:16:37.080 So to those two groups will undoubtedly work together. They 0:16:37.160 --> 0:16:40.520 have been largely since twenty eighteen, and for any of 0:16:40.520 --> 0:16:42.880 those linkages that were broken, they will certainly pick that 0:16:42.960 --> 0:16:46.320 right back up. And that is the way that both 0:16:46.360 --> 0:16:48.960 customs and tax kind of team together to create the 0:16:49.000 --> 0:16:53.680 most strategic value to enterprises when they're in this immediate 0:16:53.800 --> 0:16:56.000 kind of blizzard of tariff discussions. 0:16:56.840 --> 0:17:00.080 Linley really appreciate you joining us. Linley Brown, partner in 0:17:00.120 --> 0:17:04.119 Global Trade at Ernst and Young, joining us this afternoon. 0:17:04.400 --> 0:17:06.959 I'm the latest when it comes to how executives, how 0:17:07.000 --> 0:17:11.280 boardrooms are thinking about the added labor costs or the 0:17:11.320 --> 0:17:16.040 added costs associated with Trump's tariffs. Again, we don't know 0:17:16.119 --> 0:17:18.720 what's going to happen on January twentieth. We only know 0:17:18.760 --> 0:17:20.760 what the President elect has said thus far. 0:17:20.880 --> 0:17:26.119 Jess, you're listening to the Bloomberg Business Week podcast. Listen 0:17:26.240 --> 0:17:29.440 live each weekday starting at two pm Eastern on applecar 0:17:29.560 --> 0:17:32.520 Play and Android Auto with the Bloomberg Business Ad. You 0:17:32.560 --> 0:17:35.800 can also listen live on Amazon Alexa from our flagship 0:17:35.840 --> 0:17:39.679 New York station, just say Alexa playing Bloomberg eleven thirty. 0:17:41.080 --> 0:17:42.879 Well, you can find our next guest products in the 0:17:42.920 --> 0:17:45.880 dairy section of your local supermarket. LifeWay known for its 0:17:46.000 --> 0:17:48.960 kaffir it's that yogurt like drink. Can also find it 0:17:48.960 --> 0:17:51.040 in my cousin's fridge. I found out over the weekend. 0:17:51.080 --> 0:17:53.359 I opened the fridge and there was some LifeWay in there. 0:17:53.800 --> 0:17:55.800 It's a public traded company about three hundred and sixty 0:17:55.840 --> 0:17:59.080 million dollar market cap. We got back with us Julie Smolanski. 0:17:59.240 --> 0:18:01.399 She's second generation of her family to run the company 0:18:01.440 --> 0:18:03.840 after her father started it and took it public on 0:18:03.880 --> 0:18:07.080 the Nasdaq. There's a pretty cool story behind that. Julie 0:18:07.119 --> 0:18:10.399 Simolanski is Chairman, president and CEO over at LifeWay, joining 0:18:10.480 --> 0:18:12.159 us from Los Angeles. 0:18:12.400 --> 0:18:14.000 Julie, great to have you back with us. 0:18:14.040 --> 0:18:15.960 Actilli in Miami, right, Oh Miami? 0:18:16.920 --> 0:18:20.640 Oh look at that? Okay? Well, trade one warm climate 0:18:20.720 --> 0:18:21.959 for another warm climate? 0:18:22.040 --> 0:18:23.160 Were more than here for sure. 0:18:23.560 --> 0:18:23.920 Love it. 0:18:24.119 --> 0:18:24.320 Hey. 0:18:25.160 --> 0:18:28.439 So, since we last spoke in October, LifeWay rejected that 0:18:28.520 --> 0:18:31.880 unsolicited takeover offer bides to Known North America twenty seven 0:18:31.960 --> 0:18:32.720 dollars per share. 0:18:33.160 --> 0:18:34.439 Because according to you guys, that. 0:18:34.520 --> 0:18:39.440 Quote substantially undervalues the company. Though you also said that 0:18:39.480 --> 0:18:41.280 the board is not opposed to the sale of the 0:18:41.320 --> 0:18:43.359 company at any price. 0:18:44.400 --> 0:18:49.760 What's the price, Well, that's for others to decide, But 0:18:49.960 --> 0:18:52.720 what I can tell you is that, you know, I'm 0:18:52.720 --> 0:18:55.080 not surprised that there is this interest and a lot 0:18:55.119 --> 0:18:56.320 of eyes on us. 0:18:56.440 --> 0:19:00.800 We have achieved twenty quarters of year ROHD over year growth. 0:19:00.840 --> 0:19:04.959 The last five quarters were historic record breaking quarters. Our 0:19:05.000 --> 0:19:07.639 growth profit has gone up almost one hundred percent in 0:19:07.680 --> 0:19:11.000 the last five years. Our shareholder return we've delivered a 0:19:11.040 --> 0:19:15.080 twelve hundred percent return in the last five years. So 0:19:15.320 --> 0:19:17.960 there is a lot going on at LifeWay, and we're 0:19:18.000 --> 0:19:20.960 really excited about all the opportunities that are available. 0:19:21.080 --> 0:19:23.200 So you know, we still have we have a long 0:19:23.280 --> 0:19:24.560 runway to go, and we have. 0:19:24.520 --> 0:19:26.840 A playbook on how to do it with an incredible 0:19:26.920 --> 0:19:30.960 management team and really on trend. 0:19:32.080 --> 0:19:34.480 Products that are really hitting the tipping point. 0:19:34.680 --> 0:19:37.280 Like we haven't even scratched the surface of all the 0:19:37.320 --> 0:19:43.199 opportunities around gut health, microbiome friendly live bacteria that is 0:19:43.240 --> 0:19:46.040 beneficial to the body that science is now finally just 0:19:46.160 --> 0:19:48.560 touching up to what my ancestors have been saying for 0:19:48.600 --> 0:19:52.800 two thousand years, which is the keeper and lifewaykeeper is 0:19:53.440 --> 0:19:55.959 beneficial to the body, and so so we're really excited 0:19:56.000 --> 0:19:56.560 about all of that. 0:19:57.119 --> 0:19:59.840 Julie, would it be do you want to actually sell 0:19:59.880 --> 0:20:04.359 the company? Because you grew up with this company, you 0:20:04.440 --> 0:20:08.480 took over at the age of twenty seven. It's a 0:20:08.520 --> 0:20:11.040 really it's a it's a really interesting story. It's also 0:20:11.240 --> 0:20:13.520 a tragic story about why you ended up taking it over. 0:20:13.640 --> 0:20:17.359 But I imagine there's a lot of emotions with this. 0:20:17.440 --> 0:20:19.560 I mean, do you do you want to sell it? 0:20:21.520 --> 0:20:25.439 I mean, you know, there's a board, there's an advisor. 0:20:26.200 --> 0:20:30.560 Evercore has been brought into be the the financial advisor, 0:20:30.760 --> 0:20:35.760 mesment banker. We have a very acclaimed legal team, so 0:20:36.320 --> 0:20:40.159 you know, you know what I want is that necessarily 0:20:40.200 --> 0:20:42.920 really relevant? But what I can tell you is that 0:20:43.520 --> 0:20:47.160 LifeWay and Kaper is in my DNA, and like you said, 0:20:47.160 --> 0:20:52.640 my father started a company. It originated from the Caucasus 0:20:52.680 --> 0:20:57.440