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

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Speaker 2: Hello and welcome to another episode of the Odd Thoughts Podcast.

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Speaker 2: I'm Tracy Allaway.

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Speaker 3: And I'm Joe Wisenthal.

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Speaker 2: Joe tariffs.

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Speaker 4: One word. One word.

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Speaker 2: This is going to start all the episodes by saying

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Speaker 2: tariffs from now on, at least for the foreseeable future.

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Speaker 3: No, there's no other story.

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Speaker 4: There really isn't.

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Speaker 3: It's only tariffs for the foreseeable future. And I think

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Speaker 3: you know, we talked about a little bit last week

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Speaker 3: with Brad. I believe plausibly, I don't know in terms

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Speaker 3: of quote damage and all that stuff, but plausibly, this

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Speaker 3: is the biggest.

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Speaker 4: Story of our lives.

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Speaker 2: The thing I don't want to say like about the story,

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Speaker 2: but one notable thing about this story is it hits

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Speaker 2: both markets, which you and I have been financial journalists

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Speaker 2: for a very long time, as well as the world economy, right,

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Speaker 2: and we kind of got really into that during the

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Speaker 2: pandemic when we saw all these supply chain disruptions, ports, rerouting,

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Speaker 2: ships and things like that. So this is a chance

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Speaker 2: for us to unite two of our major interests.

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Speaker 4: That's right.

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Speaker 3: This is what every guest that we talked to for

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Speaker 3: years about how supply chains work. It's like, all right,

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Speaker 3: let's just go down the list and call them all

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Speaker 3: back up again and find out what's happening. Run it

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Speaker 3: all back.

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Speaker 4: Let's do it all right.

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Speaker 2: In the spirit of running it all back, we are

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Speaker 2: going to be speaking to someone we've spoken to quite

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Speaker 2: a bit before. Actually, this was one of our first

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Speaker 2: ever sort of ports shipping disruption guests back in the

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Speaker 2: early twenty twenty days, and I remember he came recommended

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Speaker 2: to me back when. Do you remember when I was

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Speaker 2: trying to ship a Teddy Bear I do from Hong

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Speaker 2: Kong to the US and I failed miserably. Well, someone

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Speaker 2: said you should talk to Ryan Peterson. He's the guy

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Speaker 2: who knows exactly what's going on. So we're going to

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Speaker 2: be talking to him again today. That's Ryan Peterson, founder

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Speaker 2: and CEO of Flexport. Welcome back to the show.

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Speaker 5: Great to be back. It seems like whenever there's something really.

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Speaker 4: Bad, call you up.

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Speaker 2: That's right, that's right. Okay, So first question, let's see

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Speaker 2: we are recording this on Monday, April seventh. The ten

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Speaker 2: percent tariffs went into effect on Saturday, I think, and

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Speaker 2: then the higher reciprocal tariffs like up to fifty percent

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Speaker 2: are due to take effect on Wednesday, April ninth. How

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Speaker 2: are tariffs actually enacted and communicated? Like, yeah and collected?

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Speaker 2: What exactly happens when tariffs are increased? Like, walk us

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Speaker 2: through the process?

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Speaker 6: Yeah, so, well, the terifts are applied in this case

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Speaker 6: as a blanket based on the country of origin for

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Speaker 6: the products, but typically they're applied based on the category

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Speaker 6: of the product. So these new arriffs get added to

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Speaker 6: those product category tariffs, so it's cumulative.

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Speaker 5: These are additional tariffs, and.

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Speaker 6: It happens with an acch payment to the US Treasury that.

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Speaker 5: You make via the CP the Customs of Border Protection.

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Speaker 6: Most of the time you can send a check to Actually,

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Speaker 6: interestingly enough, if you get a refund on duties, you

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Speaker 6: apply and make some change and they approve it, they'll

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Speaker 6: actually send you a check in the mail.

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Speaker 5: And those have keep getting lost. But that's a story

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Speaker 5: front of the time.

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Speaker 3: I think it's worth noting I don't want to have

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Speaker 3: to re record a bunch of intros to episodes because

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Speaker 3: things could theoretically change so fast. So we are recording

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Speaker 3: this literally at nine oh six. If something about this

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Speaker 3: conversation is out of date by the time you listen

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Speaker 3: to this in a few hours. Sorry, but we're doing

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Speaker 3: the best that we can. But given all of that,

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Speaker 3: who pays the tariffs? If something is on the water

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Speaker 3: right now but it's not going to get here until

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Speaker 3: the tenth, do they pay the tariffs? What actually is

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Speaker 3: going to get tariffed? And what can avoid the tariffs

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Speaker 3: that hit on April nine.

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Speaker 6: Yeah, this is a really interesting and important point for normally,

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Speaker 6: under normal circumstances, the duties rates or the duty is

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Speaker 6: due based on when the goods enter into the United States,

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Speaker 6: when they arrive at the port, and your clear customs.

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Speaker 5: For these reciprocal.

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Speaker 6: Tariffs, they made the rule that it's based on when

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Speaker 6: the vessel departs.

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Speaker 5: And so therefore there's a mad scramble right now here

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Speaker 5: we are is April seventh.

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Speaker 6: It was went on over the weekend to get cargo

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Speaker 6: loaded and ships out the you know, out of the

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Speaker 6: port or planes taking off before that April fifth deadline.

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Speaker 6: And that's happening again right now before the April ninth deadline.

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Speaker 6: The difference being, you know, if you got out before

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Speaker 6: April fifty, you paid no additional duty.

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Speaker 5: You get it out by.

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Speaker 6: The ninth, it's ten percent, and then it'll go up

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Speaker 6: to whatever your country's duty rate is.

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Speaker 5: That's new.

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Speaker 6: That's something that's a little different for this time around.

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Speaker 6: Usually it's based on when the goods enter the United States,

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Speaker 6: So we actually won't see those payments made until the

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Speaker 6: goods arrive, right because it's that's the date that they're

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Speaker 6: using to trigger what duty rate road. But it won't

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Speaker 6: hit the federal government's treasury until, you know, for another

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Speaker 6: month usually.

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Speaker 2: So one of the reasons we like talking to you

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Speaker 2: is because we get a sort of early read on

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Speaker 2: what's app actually happening with shipping traffic as well. But okay,

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Speaker 2: so we had this is a little boost, you know

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Speaker 2: in the first quarter, people trying to build up their

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Speaker 2: inventories potentially get ahead of the tariffs. What are you

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Speaker 2: seeing now that they've been actually announced.

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Speaker 6: So we Flag Sports were one of the largest customs

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Speaker 6: brokers in the United States. So helping these companies deal

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Speaker 6: with this is like what we do every day. We

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Speaker 6: obviously are very worried about our customer base and how

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Speaker 6: they're going to adapt to this and push through it.

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Speaker 6: So on Thursday Friday last week, we did a call

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Speaker 6: down we called as many customers as we could and

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Speaker 6: just ask them what they're doing, what their plan is,

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Speaker 6: what bookings are coming through with, what we should expect.

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Speaker 5: And what we.

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Speaker 6: Found is that twenty eight percent of the companies that

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Speaker 6: we got a hold of told us that they're pausing

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Speaker 6: all ocean freight bookings. Now that's pretty catastrophic, but we

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Speaker 6: don't want to read too much into it, because one

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Speaker 6: is what you said, Tracy, is that they have been

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Speaker 6: importing quite a lot. This date was known for a while,

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Speaker 6: since the January twentieth or so, and so they're well

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Speaker 6: stocked on inventory. They bought it, they brought as much

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Speaker 6: stuff as they could in before the higher duty rates hit.

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Speaker 6: So that's one thing is that they've got a lot

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Speaker 6: of inventory. They planned for this. And then the second

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Speaker 6: is there's a lot of ongoing negotiations happening. And you know,

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Speaker 6: a cabinet member told me that they that liberation Day

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Speaker 6: is the beginning and not the end of the process,

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Speaker 6: and that they will be negotiating deals and that you know,

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Speaker 6: over the weekend we heard over fifty countries have come

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Speaker 6: to try to negotiate something. And so if you think

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Speaker 6: your duty rate might come back down. You're you know,

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Speaker 6: you're kind of pause. Pausing is what I would do too.

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Speaker 3: You know, I'm a little unclear, you know, I know

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Speaker 3: that there are those headlines about other leaders having come

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Speaker 3: to negotiate, and some people are talking about negotiating position,

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Speaker 3: et cetera. At other times you hear from people in

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Speaker 3: the White House like there's not a negotiation or there

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Speaker 3: we're certainly not in a hurry to negotiate, regardless of

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Speaker 3: like what the actual truth is or to the extent

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Speaker 3: that truth can be divined. In the meantime, I just

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Speaker 3: can't measure doing any business.

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Speaker 5: Yeah, I mean, you got to run your business, okay,

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Speaker 5: but it's very hard to make longer term decisions.

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Speaker 6: You know, every decision is kind of week to week,

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Speaker 6: and supply chains need much longer term planning. You know,

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Speaker 6: if the goal is to get manufactured, the goal is

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Speaker 6: the stated goal is to move manufacturing back to the

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Speaker 6: United States, but you can't do that in a world

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Speaker 6: where you don't know what duty rates are going to

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Speaker 6: change next week, next month, or next administration, right, I mean,

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Speaker 6: so it's just a really hard environment to actually operate in.

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Speaker 6: And all this time, you know, people have been moving

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Speaker 6: manufacturing out of China into Southeast Asia, India, Mexico, and

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Speaker 6: then they find out out that duties are coming for

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Speaker 6: all those places too. So it's just like a very

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Speaker 6: tricky to have any kind of long term view in

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Speaker 6: this market.

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Speaker 2: Speaking of long term views, I have to ask you

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Speaker 2: sort of I guess personal question, but flexports business model

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Speaker 2: is basically all about global trade, right and bringing stuff

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Speaker 2: into and out of America. How much of an issue

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Speaker 2: is this for your own business?

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Speaker 5: Definitely a challenge.

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Speaker 6: I mean, our revenue is the price times the volume,

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Speaker 6: and if the volume goes down and the price goes down,

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Speaker 6: our revenue is going to be under threat. So we

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Speaker 6: don't want to sugarcoat it. It's a challenge for sure.

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Speaker 6: At the same time, we take I look at two things.

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Speaker 6: One is you can look at the long run, the

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Speaker 6: truly long run. We've had four percent annual growth of

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Speaker 6: global trade since the Mongol invasions and four percent annual

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Speaker 6: growth over eight hundred years. It gets you a hockey

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Speaker 6: stick curve like you you know, you wouldn't believe it

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Speaker 6: looks like it looked like a straight vertical line basically.

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Speaker 6: And so the result of that is what I into

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Speaker 6: it from that is, I have pretty strong conviction you

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Speaker 6: fast forward ten years, people will want to do more

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Speaker 6: trade than they do now.

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Speaker 5: I don't need that.

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Speaker 6: To be true for Flexport to be successful, but that

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Speaker 6: is my conviction what I know for certain will be true,

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Speaker 6: because I don't know for certain that will be growth

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Speaker 6: in trade, but I am certain that people will value

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Speaker 6: lower costs, everything that we're doing to automate trans actions

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Speaker 6: and eliminate costs. They'll appreciate more reliable service, higher quality

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Speaker 6: data so they can make plans on how much, how

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Speaker 6: many units to order, when to buy the goods, how

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Speaker 6: to ship them, where to ship them, so they'll value

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Speaker 6: compliance technology, So all the stuff.

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Speaker 5: That we're building will be incredibly valuable.

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Speaker 6: Right now, we're saying, okay, we got to focus really

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Speaker 6: hard on our customers, make sure that we help them

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Speaker 6: and we earn every single shipment that they do, and

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Speaker 6: then we have to go really hard after growth.

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Speaker 5: You know, prices are going to fall. Price of freight

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Speaker 5: is going to fall.

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Speaker 6: We have a pretty strong conviction of that that the

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Speaker 6: price of ocean freight's going to be really low, possibly

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Speaker 6: historically low, later this year, and that gives us an opportunity.

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Speaker 6: We should be the ones that are passing that through

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Speaker 6: to customers and making ourselves, you know, the best place

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Speaker 6: to get affordable ocean freight in the world, and that

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Speaker 6: should lead to growth. We've seen that in the past

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Speaker 6: when we've had market disruptions, twenty sixteen being the most

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Speaker 6: obvious example. Is probably before odd lots of time, but

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Speaker 6: in twenty sixteen the price of ocean freight was so

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Speaker 6: cheap that a ocean carrier went bank rupped, Hanjin, the

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Speaker 6: Korean carrier, and that was a year that Flexport grew

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Speaker 6: sixteen x in volume that year.

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Speaker 5: So we know, you know, we haven't been through.

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Speaker 6: Something exactly like this, but we've definitely seen you know,

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Speaker 6: history rhymes.

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Speaker 3: I've always wanted to declare force measure in my life,

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Speaker 3: but I've never had the opportunity for it to come up.

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Speaker 3: There was a headline that I think hit Friday about

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Speaker 3: how met Aerospace saying it could halt orders declaring a

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Speaker 3: force measure. I don't know what how whether you know

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Speaker 3: that could go through legally. Do you anticipate though, like,

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Speaker 3: let's just say again the possibility, which I think is

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Speaker 3: very real, that you know, the tariffs are sort of

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Speaker 3: fixed in place. Did you see like we're you know,

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Speaker 3: companies to play even and that's a US based manufacturer,

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Speaker 3: but obviously presumably it has you know, intermediate goods that

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Speaker 3: it imports, like serious, various types of players trying to

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Speaker 3: get out of existing contracts or existing relationships.

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Speaker 6: You're going to see a lot of that, yeah, because

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Speaker 6: you know, let's say you're a vendor to a big

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Speaker 6: box retailer and you sign the contract and sell something

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Speaker 6: at this price and then all of a sudden and

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Speaker 6: there was no clause in there about tariff changes, and

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Speaker 6: all of a sudden, you're way underwater on contract and

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Speaker 6: you have to choose. You're going to either go bankrupt

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Speaker 6: or hurt your reputation. Almost everyone's going to choose to

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Speaker 6: hurt their reputation.

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Speaker 4: Rather than die.

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Speaker 6: So I think you'll see a lot of those types

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Speaker 6: of things. There may be some We do a lot

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Speaker 6: of air freight out of China and a lot of

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Speaker 6: it is for e commerce companies. Yeah, and so we're

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Speaker 6: looking hard. It's not a force mature situation, I don't think,

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Speaker 6: but like we're looking hard at do we redeploy those

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Speaker 6: aircraft to fly from other places? Maybe Taiwan to take

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Speaker 6: advantage of all the chip growth growth in.

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Speaker 5: Chips, maybe Vietnam. We're going to study the teriffs and

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Speaker 5: see what makes the most sense.

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Speaker 6: I mean, it's possible we stay in China and just

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Speaker 6: continue to do what we're doing, but I suspect there

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Speaker 6: just won't be enough volume.

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Speaker 2: On this note. You touched on the earlier round of

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Speaker 2: tariffs back during Trump's first presidency. What are the big

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Speaker 2: differences between now versus then, Because my impression is okay, Obviously,

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Speaker 2: the tariffs the first time around, you know, around twenty eighteen,

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Speaker 2: those weren't as high as the ones being talked about

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Speaker 2: right now. But also, and I think you mentioned this

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Speaker 2: earlier as well, we had a lot of companies who

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Speaker 2: adjusted to the China tariffs just by rerouting some manufacturing

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Speaker 2: into places like Vietnam or Mexico. That doesn't seem to

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Speaker 2: be an option this time around.

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Speaker 6: Yeah, I mean, so that's the most obvious you hit

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Speaker 6: on it. The first thing is these tariffs are much

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Speaker 6: higher so China. Even twenty five percent eight years ago

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Speaker 6: seemed like a really big deal on China like that,

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Speaker 6: people did reorient their whole supply chain. And now for

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Speaker 6: those same products that got hit with twenty five percent.

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Speaker 6: This stacks fifty four percent on top of that. So

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Speaker 6: you know, it's just it's so far from China has

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Speaker 6: a seventy nine percent duty, and if you're importing that

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Speaker 6: from Vietnam it's now forty six percent duty.

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Speaker 5: It's probably it's still worth going to Vietnam. I don't

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Speaker 5: know yet.

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Speaker 6: I haven't run the math if it's worth coming back

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Speaker 6: to North Carolina. I think that's a The furniture industry

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Speaker 6: is one to watch because those we used to manufacture

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Speaker 6: all this furniture down in North Carolina. Maybe odd lots

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Speaker 6: to do an episode from the North Carolina they have.

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Speaker 5: That we did? We did?

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Speaker 3: We actually funny use so you did last year Tracy

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Speaker 3: and I were not only in North Carolina, but we

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Speaker 3: went to multiple textile operations there. So thank you for

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Speaker 3: the opportunity. Thank you for the opportunity to let us

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Speaker 3: plug our own work. But actually that makes me I

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Speaker 3: was going to ask you, you know, one region that

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Speaker 3: seems relatively spared is Latam. Could you see just sort

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Speaker 3: of like a more hemispheric supply chain for a lot

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Speaker 3: of stuff?

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Speaker 6: Yeah, And TERNSA was getting at that is like well,

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Speaker 6: companies moved their supply chain, some to Mexico, some to Vietnam.

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Speaker 6: I think before I an said the lattipe thing, I

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Speaker 6: think it's possible that's part of why they put high

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Speaker 6: terrace on these other kinds trees, is that a lot

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Speaker 6: of what was happening with the Chinese good Chinese companies

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Speaker 6: were shipping components to in many cases subsidiaries companies that

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Speaker 6: they owned in those other countries in doing assembly there.

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Speaker 6: And maybe the US looked at that and said, hey,

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Speaker 6: we've got a.

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Speaker 5: Kind of like leaky bow here.

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Speaker 6: We got to plug all these holes and put terrace

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Speaker 6: on everybody. But they did go pretty light on Latin

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Speaker 6: ten percent tariff across Latin America except for I look

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Speaker 6: at the bat, but I think that's Guyana, which is

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Speaker 6: like an oil producer, and so I guess we buy

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Speaker 6: too much oil from them, and we want them to

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Speaker 6: buy stuff from US or something. But it was basically

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Speaker 6: ten percent across all of Latin America on the first read.

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Speaker 6: When I first saw that, That's what I thought, is like, Oh,

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Speaker 6: I guess they're trying to send a signal this is

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Speaker 6: going to be like our strategic backyard.

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Speaker 5: You should manufacture in Latin America.

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Speaker 6: But then you look at actually how they calculated the formula,

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Speaker 6: and I think it might just be an accident of like.

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Speaker 3: Right right, right, that they just don't sell that much

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Speaker 3: to US, And so.

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Speaker 5: Yeah, yeah, I got it. I don't know if that

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Speaker 5: was strategic.

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Speaker 6: It looks I was hoping now was like, hey, there's

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Speaker 6: some forethought to how this is all gonna work, But

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Speaker 6: I don't think so.

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Speaker 2: No, the penguins would suggest otherwise. So, actually, Joe, do

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Speaker 2: you remember one of the companies we spoke to in

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Speaker 2: North Carolina, like a relatively small textile producer. They had

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Speaker 2: moved a bunch of production out of the US into Mexico,

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Speaker 2: and when we talked to them, they were in the

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Speaker 2: process of moving from Mexico to I think it was

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Speaker 2: El Salvador. And now, I mean, I don't know what

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Speaker 2: they're planning now. But on that note, Ryan, is there

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Speaker 2: any scenario where like shifting some capacity to the US

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Speaker 2: to prepare for a boom in exports? You know, ostensibly

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Speaker 2: that's what Trump is aiming for here, the return of

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Speaker 2: manufacturing to America. Is there any scenario that you planned

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Speaker 2: for where you're sort of reorienting some of your capacity

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Speaker 2: to the US to prepare for that export boom.

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Speaker 5: I don't really believe in it. Firstly.

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Speaker 6: I mean I've talked to two different people who had

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Speaker 6: to really pause their factory buildouts because of the tariffs,

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Speaker 6: because the machines that they were going to buy too expensive.

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Speaker 5: Now, you know, like.

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Speaker 6: Factories require machinery and components from other countries, So if

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Speaker 6: you make that really expensive, you're gonna have less manufacturing,

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Speaker 6: not more.

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Speaker 5: So I think this is just like very unlikely to

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Speaker 5: yield the results that they want.

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Speaker 3: It's darkly funny, but there's really grim all right. There's

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Speaker 3: this wide, bipartisan, so strongly held view that reindustrialization should

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Speaker 3: be some sort of priority. And the first thing you're

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Speaker 3: I mean, that's very dark that already you're hearing about

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Speaker 3: companies putting paws on their factory efforts for obvious reasons.

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Speaker 3: And it's the same reason I mentioned with that aircraft supplier.

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Speaker 5: But that's pretty dark.

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Speaker 6: Yeah, I mean, these machines like Germany makes the best machine.

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Speaker 6: One of our customers makes the machines that you put

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Speaker 6: that fill.

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Speaker 5: Beer bottles and water cans and stuff.

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Speaker 6: And this company, I got to see one of these

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Speaker 6: machines in person because I was asking the guy, I'm like,

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Speaker 6: how many bottles can it fill?

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Speaker 5: These?

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Speaker 6: One hundred and forty thousand per hour? He's like a billion,

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Speaker 6: you know, doing a billion bottles.

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Speaker 5: Of year per machine.

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Speaker 6: I'm like, we don't make a machine like that. And

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Speaker 6: if you want to cite that does it beer bottling?

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Speaker 6: You gotta have that machine, like you know, and we

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Speaker 6: want these plants. You can't just manufacture every aspect of

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Speaker 6: it all overnight. It reminds me a little bit of like,

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Speaker 6: you know, you're a guy who.

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Speaker 5: Hasn't been to the gym in thirty years. Yeah, and

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Speaker 5: like you see to.

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Speaker 6: Go to the gym, but like, don't try to deadlist.

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Speaker 5: In a marathon.

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Speaker 2: No, No, he could do it. He's totally fit. He

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Speaker 2: could do it.

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Speaker 3: I went to an exercise class last summer and I

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Speaker 3: was like a little too vigorous, and the teacher of it,

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Speaker 3: I was like, swing some kettlebells, like, bro, I know

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Speaker 3: what you're trying to do, but seriously, like he's awful

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Speaker 3: little bit he was like he's like he's like, I

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Speaker 3: know your psych to get in shape for this summer,

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Speaker 3: but like, trust me, you want to slow down a

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Speaker 3: little bit.

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Speaker 2: So yeah, I can relate Ryan, what are you watching

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Speaker 2: out for next in terms of the sequence of events here?

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Speaker 2: So I guess obviously all of this could turn around

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Speaker 2: very quickly if you know, some phone calls are made

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Speaker 2: and either you know, a big trading partner announces some

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Speaker 2: new amazing deal for the US, or if Trump starts

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Speaker 2: to you know, back away from the tariffs, maybe water

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Speaker 2: things down.

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Speaker 6: But what are you.

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Speaker 2: Watching for specifically in the sort of shipping and transportation

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Speaker 2: and logistics world, for the next stage of how this unfolds?

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Speaker 6: Yeah, I mean apart from watching everything the White House

401
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Speaker 6: is doing, everything that comes out, and you know, watching

402
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Speaker 6: interviews with the administration STU, it's really just about our

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Speaker 6: customers and what are they doing.

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Speaker 5: What are they what are their plans to adapt to this?

405
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Speaker 5: How are they booking their booking volumes?

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Speaker 6: But also yeah, are they are they changing sourcing strategies?

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Speaker 5: Are they raising prices?

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Speaker 6: We've seen thus far just kind of monitoring the e

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Speaker 6: comm websites of our customers about a five to ten

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Speaker 6: percent increase. Interesting, so monitoring that trying to figure out

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Speaker 6: is that enough to cover the duties of these products?

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Speaker 5: Like we have quite a lot of data to go

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Speaker 5: off of because we know that as their.

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Speaker 6: Customs broker, we know how much they're paying for the

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Speaker 6: goods and how much duty they're paying, so that we

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Speaker 6: can monitor is that flowing through to the consumer. So

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Speaker 6: there's a lot of that type of analysis that we

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Speaker 6: want to understand. And yeah, just trying to really just

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Speaker 6: talk to every single customer out there and see where

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Speaker 6: we can help them. It's like pretty grim, as you've

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Speaker 6: said already, but I'm pretty hopeful. I did you know,

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Speaker 6: someone in the administration told me that they were going

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Speaker 6: to be negotiation, So I think you're gonna see some

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Speaker 6: deals get cut.

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Speaker 2: Well, figures crossed. Ryan, thank you so much for coming

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Speaker 2: back on Adlots. In classic Audlots fashion, when something bad

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Speaker 2: is happening, we chucked to Ryan, thanks for having me.

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Speaker 4: Take care Ryan, Good luck, Joe.

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Speaker 2: There's a lot to pull out of that conversation. I

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Speaker 2: thought Ryan's last point about prices already starting to go

431
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Speaker 2: up was pretty interesting, And this is where a lot

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Speaker 2: of the macroeconomic implication kind of lies. It's what part

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Speaker 2: of the manufacturing process do the tariffs the extra expense

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Speaker 2: of the tariffs actually lie Because there are a bunch

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Speaker 2: of companies that could absorb the costs. It's not just

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Speaker 2: the manufacturer or the retailer. There is also this layer

437
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Speaker 2: of basically middlemen, right, Yeah, they have margins too, but

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Speaker 2: ostensibly they could also absorb some of this.

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Speaker 4: Well, the way I.

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Speaker 3: Think about it is, you know, yeah, like how much

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Speaker 3: flows through to consumer prices as measured in the traditional

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Speaker 3: inflation industries.

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Speaker 4: I don't think we.

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Speaker 3: Know the only thing we do know for sure is

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00:20:44,040 --> 00:20:46,840
Speaker 3: that it's going to make running businesses in the less

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00:20:46,840 --> 00:20:50,880
Speaker 3: profitable and less profitable businesses hire and invest less. And

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00:20:51,560 --> 00:20:53,720
Speaker 3: on top of the fact that you have these sort

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00:20:53,720 --> 00:20:57,000
Speaker 3: of lower profit impulse, so a less inclination to invest

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00:20:57,040 --> 00:21:00,960
Speaker 3: and build things, then per Ryan, you're already have entities

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00:21:01,040 --> 00:21:04,200
Speaker 3: putting the pause button on their actual manufacturing. Yeah, that's why,

451
00:21:04,240 --> 00:21:06,600
Speaker 3: Which is the ostensible thing that we wanted to build

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00:21:06,640 --> 00:21:09,439
Speaker 3: out here, And so then you have the second layer

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00:21:09,480 --> 00:21:10,640
Speaker 3: of the industrialization.

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Speaker 4: I really think like there is.

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00:21:12,440 --> 00:21:14,359
Speaker 3: A chance, you know, I mean, I don't want to

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00:21:14,400 --> 00:21:21,040
Speaker 3: like get too dramatic, but really accomplishes literally the exact

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00:21:21,080 --> 00:21:24,640
Speaker 3: opposite of what the stated aims are here.

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00:21:24,680 --> 00:21:27,240
Speaker 2: Well, also, this is the thing, like it accomplishes the

459
00:21:27,280 --> 00:21:31,040
Speaker 2: exact opposite. We're seeing that already, but it can reverberate

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00:21:31,200 --> 00:21:34,639
Speaker 2: for years and years and years, right, because we know

461
00:21:35,280 --> 00:21:38,560
Speaker 2: we know that it takes an enormous amount of time, money,

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00:21:38,640 --> 00:21:42,359
Speaker 2: and energy to do these types of industrial investments in

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00:21:42,400 --> 00:21:46,440
Speaker 2: the US. And if you're uncertain at any point in time,

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00:21:46,600 --> 00:21:49,720
Speaker 2: like memories are long, yes in this particular sector, and

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00:21:49,800 --> 00:21:53,760
Speaker 2: so you could have lower investment for years. And the

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00:21:53,840 --> 00:21:56,400
Speaker 2: example that we've used frequently on this podcast is home

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00:21:56,400 --> 00:21:59,280
Speaker 2: building after two thousand and eight, Right, it's going to

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00:21:59,359 --> 00:22:03,159
Speaker 2: take a long time, I'm for investors' companies, businesses to

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00:22:03,240 --> 00:22:04,600
Speaker 2: actually regain confidence.

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Speaker 4: Here's a question.

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00:22:06,520 --> 00:22:08,840
Speaker 3: Let's see there was a deal and Ryan says, maybe

472
00:22:08,880 --> 00:22:12,120
Speaker 3: there's talking and I believe that somewhere someone who's having

473
00:22:12,119 --> 00:22:15,879
Speaker 3: a conversation with Ye. Sure, can Trump credibly commit to

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00:22:16,000 --> 00:22:18,920
Speaker 3: never using the tariff three? That's the rest of this administration.

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00:22:19,119 --> 00:22:22,240
Speaker 2: That's exactly it, Like, the uncertainty will never be off

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00:22:22,280 --> 00:22:25,280
Speaker 2: the table. Yeah, it's always there, hovering in the background.

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Speaker 2: On that note, shall we leave it there?

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00:22:27,560 --> 00:22:28,200
Speaker 4: Let's leave it there?

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Speaker 2: Okay, This has been another episode of the Odd Thoughts podcast.

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00:22:31,200 --> 00:22:34,320
Speaker 2: I'm Tracy Alloway. You can follow me at Tracy Alloway and.

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00:22:34,280 --> 00:22:37,160
Speaker 3: I'm Joe Wisenthal. You can follow me at the Stalwart,

482
00:22:37,280 --> 00:22:41,240
Speaker 3: Follow our guest Ryan Peterson, He's at types Fast, Follow

483
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Speaker 3: our producers Carman Rodriguez at Carman Arma, dash O Bennett

484
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Speaker 3: odd Laws content, go to Bloomberg dot com slash odd Lots,

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Speaker 3: where we have all of our episodes in the daily newsletter,

487
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488
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Speaker 3: supply chains, economics, Trump, tariffs, et cetera, in our discord

489
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Speaker 3: discord dot gg slash lots.

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