WEBVTT - Wall Street's Big Gamble 0:00:02.560 --> 0:00:11.080 Bloomberg Audio Studios, Podcasts, Radio News. 0:00:08.960 --> 0:00:11.200 Max Chaffkin, Stacy Van Smith. 0:00:11.320 --> 0:00:13.080 Hello, Hello, it. 0:00:13.160 --> 0:00:17.800 Is another week, another giant set of confusing data from 0:00:17.840 --> 0:00:18.680 the US economy. 0:00:22.800 --> 0:00:26.360 Every big company has reported earnings or is about to 0:00:26.400 --> 0:00:29.120 report earnings. That's sending the markets all over the place. 0:00:29.320 --> 0:00:31.880 You got the Federal Reserve, you got GDP numbers, you 0:00:31.960 --> 0:00:33.920 got inflation super confidence. 0:00:34.080 --> 0:00:35.239 The economy is. 0:00:35.320 --> 0:00:39.720 Kind of teetering, maybe, and we're going to talk about that. 0:00:40.080 --> 0:00:40.880 Yes, we are. 0:00:40.960 --> 0:00:43.280 In addition to that, we are talking about tariffs. 0:00:43.320 --> 0:00:44.440 We are talking to a company. 0:00:44.280 --> 0:00:47.080 That is suing the Trump administration over this latest rounds 0:00:47.080 --> 0:00:47.680 of tariffs. 0:00:48.040 --> 0:00:51.480 And of course prediction markets, yes, your right to vote. 0:00:51.640 --> 0:00:54.920 We are going to talk about the brave prediction market 0:00:54.960 --> 0:00:59.520 traders who are having their franchise threatened by some Wisconsin. 0:00:59.000 --> 0:01:01.080 Bureaucrats of life. 0:01:01.320 --> 0:01:02.240 Or maybe you. 0:01:02.160 --> 0:01:03.240 Shouldn't bet on elections. 0:01:03.320 --> 0:01:05.560 I don't know, but we will get into it on 0:01:05.640 --> 0:01:07.160 our this week in Prediction Market segment. 0:01:07.520 --> 0:01:10.080 This is Everybody's business from Bloomberg BusinessWeek. 0:01:10.080 --> 0:01:13.240 I'm Stacey Vanocksmith, I'm Max Schafkin. We got the economy, 0:01:13.680 --> 0:01:16.039 We've got tariffs, prediction markets, it's. 0:01:15.920 --> 0:01:17.199 All there, it's all there. 0:01:17.400 --> 0:01:26.120 Stick around, Stacy. 0:01:26.440 --> 0:01:30.640 We've had just a ton of economic news, some of 0:01:30.680 --> 0:01:33.000 it related to the FED, some of it related to 0:01:33.040 --> 0:01:33.800 stock market. 0:01:34.040 --> 0:01:35.520 We've got a great person to talk about this. 0:01:35.600 --> 0:01:38.679 It's Eric Wiener, Bloomberg Senior Editor, author of The Shadow 0:01:38.720 --> 0:01:39.760 Market and What Goes Up? 0:01:39.760 --> 0:01:42.160 Hey? Eric, Hi, how you doing? Okay? So here's where 0:01:42.160 --> 0:01:42.880 I want to start. 0:01:43.160 --> 0:01:45.240 I feel like this has been going on so long 0:01:45.560 --> 0:01:47.720 that I forgot when it started. But there was a 0:01:47.760 --> 0:01:50.520 point where we started saying, like all of the stock 0:01:50.560 --> 0:01:53.120 market gains are related to the Magnificent Seven. There were 0:01:53.120 --> 0:02:00.960 these seven stocks, Microsoft, Apple, Amazon Video, Tesla forgot, I forgot, 0:02:01.040 --> 0:02:05.200 Alphabet Google, Yeah, okay, all those stocks. They are basically 0:02:05.560 --> 0:02:09.280 these sort of AI powerhouses in one way or another. 0:02:09.520 --> 0:02:13.400 Everyone's excited about AI, and you know, everyone's excited about 0:02:13.440 --> 0:02:15.600 Trump and the way he's managing AI and all. And 0:02:16.120 --> 0:02:19.079 for like about a year, maybe even longer, Eric, I 0:02:19.080 --> 0:02:21.160 don't know, these stocks just kind of ripped. 0:02:21.280 --> 0:02:24.360 They were driving so much wealth creation, and. 0:02:24.280 --> 0:02:29.079 We're kind of seeing that breakdown right now, right Eric. 0:02:29.320 --> 0:02:34.880 It is breaking down in a very strange way. The 0:02:34.919 --> 0:02:37.640 mag seven, for lack of a better term, is no 0:02:37.680 --> 0:02:42.840 longer really a coherent group AI has messed the whole 0:02:42.840 --> 0:02:46.680 thing up. And what you're seeing now is within the 0:02:46.680 --> 0:02:51.360 Magnificent seven, four of them are huge spenders on AI. 0:02:51.480 --> 0:02:56.840 That's Alphabet, Amazon, Microsoft, and Meta. Then you have Tesla, 0:02:56.960 --> 0:02:59.520 which isn't a tech company and is trying to get 0:02:59.520 --> 0:03:01.840 into AI, but isn't spending very much on it. You 0:03:01.880 --> 0:03:03.920 have Nvidia, which is the chip maker for these guys, 0:03:03.960 --> 0:03:06.320 and then you have Apple, which isn't spending at all. 0:03:06.560 --> 0:03:12.720 So this year Apple is dominating the Magnificent seven because 0:03:12.760 --> 0:03:17.079 they don't have the AI risk that the others do. Today, 0:03:17.360 --> 0:03:21.120 Microsoft is ripping higher because they had this great cloud revenue, 0:03:21.240 --> 0:03:24.000 which means that they're getting a lot of traction in 0:03:24.040 --> 0:03:28.600 their AI sales. And Meta is getting killed because well, 0:03:28.600 --> 0:03:29.720 really nobody believes in Mark. 0:03:29.639 --> 0:03:32.040 Zuckerberg because they're AI stinks. 0:03:32.120 --> 0:03:35.280 They've spent a fortune on these potentially game changing but 0:03:35.520 --> 0:03:39.720 still unproven sort of augmented reality technologies. They don't have 0:03:39.840 --> 0:03:41.640 like a clear AI revenue stream. 0:03:41.680 --> 0:03:45.600 There's a bigger problem, and it's the metaverse. Nobody buys 0:03:45.720 --> 0:03:48.520 what Zuckerberg is selling. And then so like you look 0:03:48.520 --> 0:03:53.119 at Google and or well Alphabet and they're all over 0:03:53.160 --> 0:03:55.240 the police. At this time last year, they were considered 0:03:55.320 --> 0:03:58.520 kind of an AI afterthought, and then all of a sudden, 0:03:58.640 --> 0:04:02.040 Gemini takes off, and then people realize, oh my god, 0:04:02.040 --> 0:04:03.680 they're the search engine for all of this. 0:04:04.200 --> 0:04:05.320 So they're diversified. 0:04:05.480 --> 0:04:07.920 And all of these companies which we all had lumped 0:04:07.920 --> 0:04:11.280 together into one kind of group, have fallen apart the 0:04:11.280 --> 0:04:14.160 same way that like they always do bricks or whatever else, 0:04:14.160 --> 0:04:16.880 pick your you know your name, and this happens. 0:04:17.120 --> 0:04:18.240 Well, to back up. 0:04:18.200 --> 0:04:20.880 A little bit here, we've been getting earnings from a 0:04:20.880 --> 0:04:23.000 lot of these companies that had been really not only 0:04:23.120 --> 0:04:25.320 driving the stock market, but really driving a lot of 0:04:25.360 --> 0:04:27.680 the economic growth. Like Max was saying, I mean just 0:04:27.720 --> 0:04:30.400 really seeping into all these parts of the economy. Now 0:04:30.440 --> 0:04:33.960 that there's a more mixed picture maybe within these companies, 0:04:34.240 --> 0:04:36.400 what does that mean for the economy? 0:04:36.440 --> 0:04:37.680 What does that mean for us? 0:04:38.040 --> 0:04:43.000 So the economy is actually doing pretty well when you 0:04:43.040 --> 0:04:46.400 look at the overall the top line numbers. Yeah, when 0:04:46.400 --> 0:04:50.320 you look underneath, it's not so great. The whole idea 0:04:50.400 --> 0:04:54.640 is predicated on a linear growth pattern, and if you 0:04:54.680 --> 0:04:57.240 look at the history of technology, that just isn't what happens. 0:04:57.560 --> 0:05:01.120 So right now you are looking at trying to price 0:05:01.240 --> 0:05:05.279 AI as if it's going to happen tomorrow, and that's 0:05:05.400 --> 0:05:10.560 just not the way technology evolves. So the concern about 0:05:10.640 --> 0:05:14.840 the economy is interest rates. Are these companies going to 0:05:14.880 --> 0:05:17.320 be able to continue to raise money at the levels 0:05:17.360 --> 0:05:20.599 that they were raising them at before stock prices because 0:05:20.680 --> 0:05:24.240 if they can't sell their stock, they can't offer you know, 0:05:24.240 --> 0:05:26.760 it can't do more issuance. That means they're not going 0:05:26.800 --> 0:05:28.800 to be able to get the capital. And if they 0:05:28.839 --> 0:05:32.680 can't do that, then all those those chip makers they 0:05:32.680 --> 0:05:35.560 don't get their money, and then all of this that 0:05:35.839 --> 0:05:39.159 money that filters down into the economy that creates growth. 0:05:39.160 --> 0:05:42.160 I mean right now we're seeing booming growth in construction 0:05:42.480 --> 0:05:44.600 because who's going to build the data centers? You know, 0:05:44.960 --> 0:05:48.040 all of these things flick off in different ways. When 0:05:48.160 --> 0:05:51.640 markets tighten up, it's always because of a liquidity crisis. 0:05:51.640 --> 0:05:53.440 People can't get money. And so this is what I'm 0:05:53.440 --> 0:05:57.320 describing right now, is the fear is that if interest 0:05:57.400 --> 0:05:59.880 rates get to a point where they can't raise cash, 0:06:00.279 --> 0:06:02.480 and stock prices get to a point where they're not 0:06:02.560 --> 0:06:05.760 issuing stock, then where are they going to get the money. 0:06:06.000 --> 0:06:08.760 So now they have to raise money, and if that 0:06:08.880 --> 0:06:13.599 money isn't there. Suddenly liquidity dries up and the market 0:06:13.680 --> 0:06:17.160 goes crazy over that because it means that money isn't 0:06:17.200 --> 0:06:21.279 flowing and all of commerce just slows down when that happens. 0:06:21.640 --> 0:06:24.640 Enter Kevin warsh right and Ken wars and that is 0:06:24.680 --> 0:06:27.200 one of the reasons why this FED meeting, which which 0:06:27.680 --> 0:06:31.360 happened yesterday as we're recording this on Thursday, was so interesting. 0:06:31.600 --> 0:06:34.359 So just Sacey, you follow this more closely than I do. 0:06:34.480 --> 0:06:37.359 You are a more of a FED watcher than me. 0:06:37.880 --> 0:06:39.920 Give us the kind of top line on what happened, 0:06:39.960 --> 0:06:41.920 and you know what you found interesting. 0:06:42.040 --> 0:06:45.200 So people were not sure quite what to expect. Everybody 0:06:45.279 --> 0:06:47.800 kind of thought the Federalserve Board would hold interest rates 0:06:47.839 --> 0:06:52.640 where they were because inflation is higher than we want, 0:06:53.000 --> 0:06:57.000 but also the job market is a little sluggish. 0:06:57.200 --> 0:07:02.440 And also Donald Trump set Kevin Worshed down, I want 0:07:02.440 --> 0:07:03.640 you to raise interest rates. 0:07:04.120 --> 0:07:05.719 Actually it was like you, we want you to cut 0:07:05.760 --> 0:07:06.240 interest rates. 0:07:06.240 --> 0:07:08.080 And then Kevin Wassh got into the job and was like, 0:07:08.120 --> 0:07:10.960 I really care about inflation. I feel a little bit 0:07:11.040 --> 0:07:14.840 for Trump in that way. So yeah, so Worsh basically 0:07:15.280 --> 0:07:18.080 came out and they held interest rates steady. But I 0:07:18.120 --> 0:07:21.679 think what rattled It's part of what rattled the markets 0:07:21.720 --> 0:07:24.200 this week, along with some of the mixed earnings, is 0:07:24.240 --> 0:07:27.640 that there were they show you how people vote. There 0:07:27.640 --> 0:07:30.920 are twelve voting members of the Federal Reserve Board, and 0:07:31.800 --> 0:07:35.720 three people voted to raise interest rates. So this is 0:07:35.760 --> 0:07:38.920 sort of maybe hinting that interest rates are going to 0:07:38.960 --> 0:07:39.440 go up. 0:07:39.320 --> 0:07:42.040 And just for not that's a lot for this board. 0:07:42.320 --> 0:07:45.040 Three people who stand up, raise their hand and disagree 0:07:45.080 --> 0:07:45.600 with the fetcher. 0:07:45.680 --> 0:07:46.360 That's unusual. 0:07:46.680 --> 0:07:49.360 That is yeah, they like used to like unanimity. So 0:07:49.760 --> 0:07:52.239 I'm so curious, like, how did the market see this moment? 0:07:52.760 --> 0:07:58.600 Well, they're angry, traders are are upset, and the reason is, well, 0:07:58.640 --> 0:08:02.800 they're calling it a hawkish hold. That is the terminology 0:08:02.840 --> 0:08:06.480 that they're using, which means that they are leaning toward 0:08:06.800 --> 0:08:12.040 hiking rates and they're pointing toward raising rates. But they 0:08:12.120 --> 0:08:17.200 held and to your point, Max, the idea that three 0:08:17.280 --> 0:08:22.080 people disagreed. So on the prior FED you had one 0:08:22.640 --> 0:08:26.840 member who was decidedly against Powell, so he was there 0:08:26.920 --> 0:08:30.520 to descent, but there was one meeting where he dissented, 0:08:30.640 --> 0:08:33.880 and then two people dissented the other way, and we 0:08:34.080 --> 0:08:37.280 had headlines all over the place feding crisis or feding chaos. 0:08:37.600 --> 0:08:42.360 That we're not getting feding chaos very muted opposite. Yes, 0:08:42.720 --> 0:08:44.880 we're now having a good family. 0:08:44.720 --> 0:08:46.680 Three respectful dissenting votes. Chaos. 0:08:47.400 --> 0:08:51.360 Well, so before the next meeting, we're going to have 0:08:51.600 --> 0:08:55.440 a couple of readings on inflation. We're going to have 0:08:55.559 --> 0:08:59.280 the Fed's meeting in Jackson Hole where they'll be speaking, 0:08:59.800 --> 0:09:03.720 and we should have, you know, a somewhat of a 0:09:03.720 --> 0:09:08.600 better idea. But the concern among traders is that they're 0:09:08.640 --> 0:09:11.720 not getting any guidance on where things are going. So 0:09:12.640 --> 0:09:15.880 how do you come out of this meeting When they 0:09:15.920 --> 0:09:20.760 are looking at trying to price any asset, whether it's stocks, bonds, 0:09:20.840 --> 0:09:24.760 or whatever, they are looking at what is going to 0:09:24.760 --> 0:09:27.800 happen in the future, where is where are things going 0:09:27.840 --> 0:09:32.280 down the line, and you don't know, Like so in 0:09:32.600 --> 0:09:35.200 when they were giving guidance, they you would have a 0:09:35.240 --> 0:09:37.560 sense that like, okay, we're looking probably at two or 0:09:37.559 --> 0:09:41.200 three hikes, or when inflation really got out of hand 0:09:41.440 --> 0:09:45.480 in UH twenty twenty one, twenty twenty two, it was 0:09:45.480 --> 0:09:47.560 like we're going to be going seventy five basis points 0:09:47.640 --> 0:09:49.040 or you know, three twenty five. 0:09:49.000 --> 0:09:50.360 They were like this is what we're doing this time, 0:09:50.400 --> 0:09:52.520 this is what we're probably doing next time, and worsh 0:09:52.600 --> 0:09:53.240 is like none of that. 0:09:53.559 --> 0:09:57.520 Right, and the market like that. Speaking in normal English, 0:09:57.720 --> 0:09:59.920 we need to communicate with the market frequently. 0:10:00.240 --> 0:10:02.360 We need to kind of let people know so. 0:10:02.320 --> 0:10:06.080 We don't have wild swings, so we don't get volatility, 0:10:06.120 --> 0:10:09.680 which is where traders make money. However, when things break 0:10:09.920 --> 0:10:12.240 the other way from what they were betting on, they 0:10:12.320 --> 0:10:13.080 get really angry. 0:10:13.400 --> 0:10:17.160 All right, So we're talking about the threat that you know, 0:10:17.240 --> 0:10:20.240 interest rates go up and there's a cash shortage, and 0:10:20.679 --> 0:10:22.800 all of a sudden, all these AI bets they're not 0:10:22.880 --> 0:10:26.319 generating revenue and their companies have not enough money to 0:10:26.679 --> 0:10:29.400 keep it going, and we have some kind of crisis, 0:10:29.440 --> 0:10:31.680 either a stock market crash even an economic crist But 0:10:31.720 --> 0:10:35.440 there's one thing that I think we may not be considering, Eric, 0:10:35.480 --> 0:10:39.000 which is that if the AI happens, we will have 0:10:39.040 --> 0:10:41.600 all the money we possibly need. And I bring this 0:10:41.679 --> 0:10:45.040 up because Elon Musk, in an interview with the economist 0:10:45.160 --> 0:10:47.720 I believe it was last week, said that by twenty 0:10:47.800 --> 0:10:50.679 thirty six, that's like ten years from now, we will 0:10:50.720 --> 0:10:51.920 have no need for money. 0:10:51.960 --> 0:10:54.280 And you know what, Elon Musk. He's obviously a bit 0:10:54.320 --> 0:10:57.480 of a Carnival barker. He's selling he's selling AI. 0:10:57.720 --> 0:11:01.920 He has an incentive, perhaps to exaggerate the timeline here. 0:11:02.120 --> 0:11:04.000 But you know who doesn't or who should not have 0:11:04.040 --> 0:11:07.320 an incentive to do that. It's Scott Besson, the Treasury Secretary. 0:11:07.600 --> 0:11:09.520 And I bring this up because in an interview with 0:11:09.559 --> 0:11:12.000 Sean Hannity, let's just give a listen to Scott Besson's 0:11:12.040 --> 0:11:15.160 take on the end of money purple question. 0:11:16.440 --> 0:11:19.240 Elon Musk gave an interview to I believe to the economists, 0:11:19.520 --> 0:11:22.240 and he said that in five to six years, it 0:11:22.280 --> 0:11:24.720 will have five times besides the economy we have now. 0:11:24.760 --> 0:11:28.240 And he talked about abundance. He talked about every American 0:11:28.280 --> 0:11:30.760 having every need and there won't be even a need 0:11:30.800 --> 0:11:34.080 to save, you know, for your retirement like we have 0:11:34.360 --> 0:11:37.360 historically because of this quote abundance that he believes AI 0:11:37.440 --> 0:11:37.959 will create. 0:11:38.000 --> 0:11:40.000 Do you believe that I think I would change the 0:11:40.040 --> 0:11:44.960 timeline that I've seen Elon speak for a long time, 0:11:45.080 --> 0:11:48.760 and his record speaks for itself, both in terms as 0:11:48.800 --> 0:11:52.439 an inventor, as a venture capitalist, as a great American. 0:11:52.760 --> 0:11:55.440 But he's normally early. He's just so far ahead of 0:11:55.440 --> 0:11:57.840 the curve. He sees things that no one else sees. 0:11:58.120 --> 0:12:01.600 But I do think we are building this incredible economy 0:12:01.640 --> 0:12:04.960 that we can't even imagine have sewn. Twenty five percent 0:12:05.000 --> 0:12:07.400 of the jobs that exist today did not exist in 0:12:07.440 --> 0:12:08.040 two thousand. 0:12:08.960 --> 0:12:10.000 That's an amazing thing. 0:12:11.120 --> 0:12:14.360 I love always like Elon's track record, great innovator, not 0:12:14.480 --> 0:12:15.719 so good on timelines. 0:12:16.040 --> 0:12:20.080 Well, so, look he's going to Mars. He's competing with NASA. 0:12:20.480 --> 0:12:24.400 But do you think there is an inconsistency here? 0:12:24.920 --> 0:12:27.400 You have all these guys who are saying we are 0:12:27.800 --> 0:12:33.439 mirror years away from complete abundance. Meanwhile they're doing layoffs. 0:12:33.559 --> 0:12:36.480 One of the things that I felt watching this whole 0:12:36.480 --> 0:12:38.960 AI boom play out is that the people who are 0:12:39.000 --> 0:12:43.200 participating in it don't really believe the things that they're saying, 0:12:43.200 --> 0:12:44.640 because if they did believe the things they were saying, 0:12:44.640 --> 0:12:45.640 they'd be doing different things. 0:12:45.920 --> 0:12:48.840 I feel like that actually is the big difference between 0:12:49.080 --> 0:12:52.920 this bubble and the Internet bubble, where people actually did 0:12:53.000 --> 0:12:55.600 believe all of that stuff. They did believe that pets 0:12:55.600 --> 0:12:58.920 dot Com was a technology company rather than a pet 0:12:58.920 --> 0:13:01.760 store that was on. You didn't really understand where things were. 0:13:02.440 --> 0:13:07.840 The point on all of this is technology advances the economy. 0:13:08.400 --> 0:13:12.959 It dislocates workers, Automobiles put buggy whips out of business, 0:13:13.040 --> 0:13:15.440 you know, like that that all of that's real. But 0:13:15.559 --> 0:13:19.040 the idea that we are going to reinvent the economy, 0:13:19.120 --> 0:13:26.560 the entire economy because of one area of technology, seems 0:13:26.760 --> 0:13:31.360 quite hyperbolic. And to the bond markets perspective, they're expecting 0:13:31.360 --> 0:13:35.400 the long bond five percent in thirty years, so they're 0:13:35.440 --> 0:13:37.960 still expecting there to be money. 0:13:38.040 --> 0:13:40.880 They're expecting to be paid in thirty years. 0:13:41.200 --> 0:13:43.800 That so like, well, you know, we're done, but I mean. 0:13:43.800 --> 0:13:45.920 This is in case money is still around. 0:13:47.640 --> 0:13:52.480 Five percent. Sir, Eric, thanks for being here. Come back soon. 0:13:52.840 --> 0:13:53.120 Thank you. 0:13:53.280 --> 0:14:06.760 Eric Somacs Stacy tariffs, Wait, which tariffs? 0:14:06.960 --> 0:14:07.680 Which tariffs? 0:14:07.920 --> 0:14:08.400 Is right? 0:14:08.640 --> 0:14:11.840 Because we have been through many iterations of tariffs since 0:14:11.880 --> 0:14:14.880 Liberation Day. We are on I think tariffs three point zero. 0:14:14.880 --> 0:14:18.320 Now the tariffs that were in place, the emergency tariffs 0:14:18.400 --> 0:14:20.400 expired I think there was one hundred and eighty days 0:14:20.440 --> 0:14:24.000 and now there is a new set of tariffs in place. 0:14:24.120 --> 0:14:24.320 Yeah. 0:14:24.360 --> 0:14:28.160 Well, what keeps happening is courts keep saying no, these 0:14:28.240 --> 0:14:31.920 terror dice are not allowed. You need an Act of Congress, 0:14:32.240 --> 0:14:35.360 and the Trump administration, making good on its promise, keeps 0:14:35.360 --> 0:14:38.720 coming up with new tariffs to replace the old tariffs, 0:14:38.800 --> 0:14:42.240 and then we do it all again. Meanwhile, no one 0:14:42.320 --> 0:14:45.280 knows what anything costs. It's very confusing. The thing that 0:14:45.360 --> 0:14:49.000 I've wondered, or that I've been wondering, is who are 0:14:49.040 --> 0:14:52.280 these people who are like challenging that the businesses that 0:14:52.320 --> 0:14:55.360 are that are challenging the Trump's tariffs, Like, what are 0:14:55.400 --> 0:14:56.440 they going through? 0:14:56.800 --> 0:14:58.720 I'm so glad that you asked this question. 0:14:59.120 --> 0:15:01.720 Obviously, the tariff have been incredibly hard on all kinds 0:15:01.760 --> 0:15:05.560 of businesses, especially small businesses, and we're very lucky to 0:15:05.600 --> 0:15:08.080 have or Zohar with us. He's the co founder of 0:15:08.120 --> 0:15:10.680 Burlap and Baryl, a single origin spice company. 0:15:10.760 --> 0:15:12.840 Ori, welcome, Hey, great to be here. 0:15:13.480 --> 0:15:13.760 Now. 0:15:14.320 --> 0:15:16.520 We invited you on the show because in fact, there 0:15:16.520 --> 0:15:18.560 are a couple of small businesses that are suing the 0:15:18.560 --> 0:15:21.800 Trump administration over this latest round of tariffs, and one 0:15:21.840 --> 0:15:24.920 of those businesses is your business is Burlap and Baryl. 0:15:25.160 --> 0:15:25.360 Yeah. 0:15:25.440 --> 0:15:28.600 This is actually our second lawsuit against the tariffs so far. So, 0:15:28.640 --> 0:15:30.400 as you mentioned, there have been kind of three kind 0:15:30.400 --> 0:15:32.200 of waves, three regimes of tariffs. 0:15:32.360 --> 0:15:33.600 The first one the APA. 0:15:33.360 --> 0:15:37.240 Tariffs where which got refunded, and we just got a 0:15:37.320 --> 0:15:39.200 kind of refund for all the tariffs that we paid 0:15:39.400 --> 0:15:40.360 plus interest. 0:15:40.160 --> 0:15:43.040 Because those tuck it down or were the tariffs on 0:15:43.080 --> 0:15:45.280 the big board right where where were the penguins, We're 0:15:45.280 --> 0:15:48.720 gonna get tariffed and every That was the round one. 0:15:48.680 --> 0:15:51.240 And the penguins got their tariffs back as long as 0:15:51.240 --> 0:15:51.760 they filed. 0:15:52.640 --> 0:15:53.920 You know, with. 0:15:53.880 --> 0:15:55.680 Immigrant they're not great with paperwork. 0:15:56.920 --> 0:15:58.840 But we got those tariffs back with interest, which was 0:15:58.880 --> 0:16:01.680 just like a very expensive exercise for the American tariffs 0:16:01.680 --> 0:16:04.760 and things that really increased prices and the government ended 0:16:04.800 --> 0:16:06.880 up having to pay it all back with interest. The 0:16:06.960 --> 0:16:09.520 second round came the same day that the Supreme Court 0:16:09.600 --> 0:16:11.800 struck down the EPA tariffs, the Section one twenty two, 0:16:12.160 --> 0:16:14.160 which was based on a nineteen seventy four kind of 0:16:14.200 --> 0:16:16.600 bill around America moving off of the gold standard and 0:16:16.640 --> 0:16:18.920 all that stuff said in some cases. 0:16:18.760 --> 0:16:21.080 The president can push through tariffs. 0:16:21.240 --> 0:16:23.400 We sued on that and we won at the Court 0:16:23.400 --> 0:16:26.080 of International Trade, and now that's going through the appeal process. 0:16:26.360 --> 0:16:29.160 And then as soon as these temporary six month tariffs expired, 0:16:29.480 --> 0:16:32.520 the government introduced three oh one tariffs and so we 0:16:32.560 --> 0:16:35.960 suit on those also, So we just were small business. 0:16:37.240 --> 0:16:39.320 I don't know why it's up to small businesses to 0:16:39.400 --> 0:16:42.120 kind of hold the government accountable with all the kind 0:16:42.120 --> 0:16:44.680 of enterprise in America, but it was really important to 0:16:44.760 --> 0:16:46.640 us to kind of take a stand against these tariffs 0:16:46.680 --> 0:16:48.520 that didn't make any sense to us, made things more 0:16:48.560 --> 0:16:50.760 expensive for American customers, and just seemed to not go 0:16:50.800 --> 0:16:53.280 through any of the right channels for passing tariffs and 0:16:53.280 --> 0:16:55.560 for actually managing economic policy here in the US. 0:16:55.880 --> 0:16:59.320 So you are a spice company, I am imagining you 0:16:59.360 --> 0:17:02.440 import a lot of what you sell. Can you maybe 0:17:02.560 --> 0:17:05.239 run down some of the things that you sell and 0:17:05.280 --> 0:17:08.400 how they've been affected by the tariffs and what that's 0:17:08.480 --> 0:17:09.199 kind of meant for you. 0:17:09.440 --> 0:17:12.240 Yeah, So we are a ten year old social enterprise, 0:17:12.480 --> 0:17:15.320 Burlap and Barrel. We import spices directly from small holder 0:17:15.359 --> 0:17:17.919 farmers all around the world. Our best selling one is 0:17:17.920 --> 0:17:21.000 our royal cinnamon that comes from Vietnam, a true Vietnamese cinnamon. 0:17:21.160 --> 0:17:24.600 But we import spices from about thirty different countries, all 0:17:24.640 --> 0:17:25.600 based on where they grow. 0:17:25.680 --> 0:17:27.639 So we have herbs the province from Provence. 0:17:28.040 --> 0:17:30.400 We bring in really incredible garlic and onion powder from 0:17:30.400 --> 0:17:33.800 Central Vietnam. It's kind of ancestral home and cuman from 0:17:33.840 --> 0:17:36.440 Afghanistan and all over the world. So that's been our business, 0:17:36.480 --> 0:17:39.040 is working with small holder farmers to bring in spices 0:17:39.080 --> 0:17:41.720 directly from the farm and bring them to American home cooks. 0:17:42.119 --> 0:17:44.000 We bring in about ten percent of our spices from 0:17:44.040 --> 0:17:46.760 the US. We bring in really great Chileias from California, 0:17:47.000 --> 0:17:50.399 actually salt from upstate New York wild ramps and all that. 0:17:50.440 --> 0:17:51.760 So we do import. 0:17:51.680 --> 0:17:53.520 Everything that we need to import, but we also buy 0:17:53.520 --> 0:17:56.680 domestically everything that grows domestically, and yet we're still kind 0:17:56.720 --> 0:17:58.840 of paying this broad ranges of tariffs on things that 0:17:58.880 --> 0:18:00.840 there really is no domestic industry here for. 0:18:01.280 --> 0:18:02.960 Can you talk a little bit about the cost of 0:18:03.000 --> 0:18:06.440 the tariffs for your business since Liberation Day? 0:18:06.440 --> 0:18:07.520 Like, what does this cost you? 0:18:08.040 --> 0:18:10.240 Yeah, so we've paid hundreds of thousands of dollars in 0:18:10.280 --> 0:18:14.080 tariffs so far, and it's on things that don't grow 0:18:14.080 --> 0:18:16.199 in the US. So initially tariffs we were paying on 0:18:16.240 --> 0:18:18.560 cinnamon and black pepper corns, both of which don't grow 0:18:18.560 --> 0:18:21.200 in the US. Since then, there's been about four hundred 0:18:21.240 --> 0:18:23.720 and seventy one I believe carve outs of the tariff 0:18:23.840 --> 0:18:26.639 which just shows you this is kind of a shoddy framework. 0:18:27.560 --> 0:18:29.440 Okay, right, it's for all this stuff. 0:18:29.480 --> 0:18:31.040 So now we don't pay tariffs on cinnamon and black 0:18:31.040 --> 0:18:33.560 pepper anymore, but we still do pay on herbs like 0:18:33.600 --> 0:18:36.240 herbs of province, which you know, yes, can do herbs 0:18:36.240 --> 0:18:39.159 grow in America? Absolutely? Can you get herbs of province 0:18:39.200 --> 0:18:41.919 in America? Not exactly. We bring in our Vietnamese cinnamon 0:18:41.960 --> 0:18:45.440 from Vietnam, we bring in garlic from also from Vietnam, 0:18:45.480 --> 0:18:48.760 and we do bring some stuff in domestically, but the 0:18:48.760 --> 0:18:51.239 tariffs are still this kind of very broad instrument that 0:18:51.280 --> 0:18:53.840 are kind of increasing costs for us. And as a 0:18:53.840 --> 0:18:56.560 small business, we can't bring in herbs of province not 0:18:56.600 --> 0:18:58.679 from Provence, we can't bring in all these spices not 0:18:58.720 --> 0:19:01.040 from their kind of origin, and so we find ourselves 0:19:01.080 --> 0:19:03.520 in this kind of ironic, kind of tough spot where 0:19:03.960 --> 0:19:06.400 the only place where we can cut costs is domestically. 0:19:06.640 --> 0:19:07.639 How can we kind of save. 0:19:07.560 --> 0:19:10.440 Money on our innovation, on our hiring, on our shipping speed, 0:19:10.480 --> 0:19:13.480 on our corrigate costs for our boxes. So it's had 0:19:13.480 --> 0:19:15.919 this kind of backwards impact on our business, has been 0:19:15.960 --> 0:19:19.040 pulling investment domestically while We're still kind of doubling down 0:19:19.160 --> 0:19:22.080 on our partner Farmers Abroad because that's our only option. 0:19:22.760 --> 0:19:25.640 Or how do you wind up being the one who sues? 0:19:25.720 --> 0:19:30.119 Like are there groups that are fighting these tariffs that 0:19:30.200 --> 0:19:32.960 are going out looking for plaintifs or like did you 0:19:33.280 --> 0:19:34.119 go seek somebody? 0:19:34.119 --> 0:19:34.199 Like? 0:19:34.200 --> 0:19:35.960 How does this? How does this kind of thing actually happen? 0:19:36.320 --> 0:19:38.399 So that's a great question. We have a legal partner 0:19:38.440 --> 0:19:41.240 here called the Liberty Justice Center. They're the ones that 0:19:41.240 --> 0:19:43.680 are actually bringing the legal might for this and also 0:19:43.720 --> 0:19:46.000 footing the bill because you know, taking a court, a 0:19:46.040 --> 0:19:47.560 case of the Supreme Court, as they did with the 0:19:47.600 --> 0:19:50.440 AIPA tariffs in one is literally millions of dollars in 0:19:50.480 --> 0:19:53.199 litigation for that case, we actually saw, we. 0:19:53.440 --> 0:19:54.000 Looked at suing. 0:19:54.000 --> 0:19:55.440