1
00:00:02,720 --> 00:00:07,200
Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

2
00:00:09,200 --> 00:00:12,640
Speaker 2: American CEOs have been trying to avoid talking about how

3
00:00:12,720 --> 00:00:15,880
Speaker 2: tariffs will impact their business for a while, but this

4
00:00:15,960 --> 00:00:19,279
Speaker 2: earning season something is starting to change.

5
00:00:19,600 --> 00:00:22,960
Speaker 1: After months and months and months of US calling companies

6
00:00:23,000 --> 00:00:25,079
Speaker 1: and CEOs saying what do you think about tariffs? What

7
00:00:25,079 --> 00:00:27,280
Speaker 1: do you think about tariffs, we're seeing them have to

8
00:00:27,320 --> 00:00:30,120
Speaker 1: actually start making decisions for tariffs.

9
00:00:30,400 --> 00:00:34,440
Speaker 2: Shelley Banjo oversees Bloomberg's business coverage for the Americas, and

10
00:00:34,479 --> 00:00:37,199
Speaker 2: as she sifted through a recent flurry of reports from

11
00:00:37,280 --> 00:00:41,639
Speaker 2: Q one, one thing became clear. The time for ignoring

12
00:00:41,680 --> 00:00:43,480
Speaker 2: Trump's trade war is over.

13
00:00:43,720 --> 00:00:45,960
Speaker 1: What we are seeing now with this earning season is

14
00:00:46,000 --> 00:00:48,120
Speaker 1: that they have to quantify. Okay, this is going to

15
00:00:48,120 --> 00:00:50,640
Speaker 1: be our projected hit to our profits, to our sales,

16
00:00:50,720 --> 00:00:52,880
Speaker 1: what have you to the tariffs. Here are some of

17
00:00:52,920 --> 00:00:54,680
Speaker 1: the business decisions we're starting to make.

18
00:00:54,960 --> 00:00:58,200
Speaker 2: One of the most sobering projections came from General Motors,

19
00:00:58,360 --> 00:01:01,720
Speaker 2: which just lowered its earning, saying it could suffer as

20
00:01:01,800 --> 00:01:04,880
Speaker 2: much as a five billion dollar hit from auto tariffs.

21
00:01:05,120 --> 00:01:07,560
Speaker 1: That is the largest sum that we've seen quantified yet

22
00:01:07,760 --> 00:01:08,600
Speaker 1: among companies.

23
00:01:08,959 --> 00:01:12,720
Speaker 2: But Shelley says not every company is approaching these economic

24
00:01:12,760 --> 00:01:16,160
Speaker 2: headwinds with the same level of urgency. Because there's no

25
00:01:16,360 --> 00:01:20,160
Speaker 2: one playbook for how to respond to tariff whiplash, I.

26
00:01:20,080 --> 00:01:22,360
Speaker 1: Had to sort of figure out, Okay, how are these

27
00:01:22,360 --> 00:01:25,280
Speaker 1: companies waiting through it since no one's really telling them

28
00:01:25,360 --> 00:01:27,440
Speaker 1: what to do. Came up with these sort of three

29
00:01:27,480 --> 00:01:29,960
Speaker 1: scenarios from what we've seen people doing so far.

30
00:01:30,480 --> 00:01:33,039
Speaker 2: Scenario one, ride the tariffs out.

31
00:01:33,360 --> 00:01:37,640
Speaker 1: So there's a bucket of companies that are like, we

32
00:01:37,680 --> 00:01:39,760
Speaker 1: still don't know, it's too soon to tell.

33
00:01:40,120 --> 00:01:43,160
Speaker 2: Scenario two adapt to a new normal.

34
00:01:43,360 --> 00:01:46,840
Speaker 1: Companies that are we know that there's going to be

35
00:01:46,880 --> 00:01:49,240
Speaker 1: a tariff hit, but we think we can rejigger our

36
00:01:49,280 --> 00:01:51,600
Speaker 1: business to be able to absorb it. So that means

37
00:01:51,680 --> 00:01:56,280
Speaker 1: let me furlough employees or cut staff, or hold up

38
00:01:56,280 --> 00:01:56,960
Speaker 1: on buybacks.

39
00:01:57,120 --> 00:02:01,280
Speaker 2: And then there's scenario three, the unerual motors route.

40
00:02:01,400 --> 00:02:04,000
Speaker 1: Then there's this third bucket of companies, which are sort

41
00:02:04,000 --> 00:02:07,400
Speaker 1: of a holy you know what moment.

42
00:02:07,720 --> 00:02:10,720
Speaker 2: As earning season forces some companies to get real with

43
00:02:10,760 --> 00:02:14,079
Speaker 2: their shareholders and the public about the impacts of tariffs.

44
00:02:14,680 --> 00:02:17,480
Speaker 2: Just what picture are they painting for their future and

45
00:02:17,520 --> 00:02:23,560
Speaker 2: what could that mean for their bottom line. I'm Sarah Holder,

46
00:02:23,680 --> 00:02:26,680
Speaker 2: and this is the big take from Bloomberg News today

47
00:02:26,680 --> 00:02:29,799
Speaker 2: on the show, what corporate earnings are revealing about how

48
00:02:29,880 --> 00:02:32,720
Speaker 2: companies plan to weather the trade war and what it

49
00:02:32,760 --> 00:02:43,440
Speaker 2: will mean for supply chains, stocks and prices. Bloomberg Shelly

50
00:02:43,480 --> 00:02:47,400
Speaker 2: Banjo says, looking at these three buckets of business reactions

51
00:02:47,400 --> 00:02:50,480
Speaker 2: to tariffs can serve as a guide to understanding how

52
00:02:50,600 --> 00:02:55,760
Speaker 2: US companies are navigating uncertainty, shifting their strategies, and communicating

53
00:02:55,880 --> 00:02:59,680
Speaker 2: their path forward. The first bucket are these companies that

54
00:02:59,760 --> 00:03:02,400
Speaker 2: say they won't see much of any effect from tariffs.

55
00:03:02,400 --> 00:03:04,520
Speaker 2: They're kind of waiting and seeing, but they might be

56
00:03:04,560 --> 00:03:08,560
Speaker 2: a little bit more insulated. What businesses are we talking

57
00:03:08,600 --> 00:03:09,080
Speaker 2: about there?

58
00:03:09,520 --> 00:03:12,600
Speaker 1: So pharma is a big question mark right now because

59
00:03:12,639 --> 00:03:15,000
Speaker 1: so far they've been spared from a lot of tariffs.

60
00:03:15,000 --> 00:03:18,200
Speaker 1: There's a separate sort of investigation that they're looking into

61
00:03:18,680 --> 00:03:21,280
Speaker 1: that are going to be sector specific tariffs on pharma

62
00:03:21,600 --> 00:03:23,800
Speaker 1: two thirty two tariffs. They're trying to figure out is

63
00:03:23,800 --> 00:03:27,040
Speaker 1: this going to impact pharma? So right now it is

64
00:03:27,120 --> 00:03:29,720
Speaker 1: sort of defensible for a company like Pfizer to say

65
00:03:29,720 --> 00:03:32,920
Speaker 1: we're not exactly sure what's going to happen. That being said,

66
00:03:33,000 --> 00:03:35,040
Speaker 1: a lot of their competitors have come out and said, well,

67
00:03:35,080 --> 00:03:37,200
Speaker 1: we think it's going to impact us by X one

68
00:03:37,280 --> 00:03:41,000
Speaker 1: hundred million dollars. At the very least, they're giving investors

69
00:03:41,000 --> 00:03:44,960
Speaker 1: some sort of indication of how and when and why

70
00:03:45,000 --> 00:03:45,600
Speaker 1: this would hit.

71
00:03:45,880 --> 00:03:48,080
Speaker 2: Would you say that this first bucket of companies is

72
00:03:48,160 --> 00:03:53,240
Speaker 2: being pollyanna ish about their expectations for how tariffs will affect.

73
00:03:52,920 --> 00:03:55,880
Speaker 1: Then I think it was the norm a few weeks

74
00:03:55,880 --> 00:03:58,520
Speaker 1: ago to say, we don't know this is going to

75
00:03:58,520 --> 00:04:02,040
Speaker 1: exclude tariff impacts because we just had a lot less information.

76
00:04:02,520 --> 00:04:05,480
Speaker 1: Now that we have a little bit more information, it

77
00:04:05,600 --> 00:04:08,680
Speaker 1: becomes a little less defensible to model out because some

78
00:04:08,720 --> 00:04:11,000
Speaker 1: of the decisions that you're making now for the remainder

79
00:04:11,040 --> 00:04:13,320
Speaker 1: of the year, you really have to make them now,

80
00:04:13,360 --> 00:04:15,920
Speaker 1: not having a full picture. Trump is going to change

81
00:04:15,920 --> 00:04:19,279
Speaker 1: his mind probably or change things. So this whole idea

82
00:04:19,320 --> 00:04:21,200
Speaker 1: of we have to wait and see because Trump could

83
00:04:21,279 --> 00:04:25,440
Speaker 1: change his mind is a defensible argument. But if you

84
00:04:25,480 --> 00:04:28,640
Speaker 1: are running a big, multinational global business, it sort of

85
00:04:28,760 --> 00:04:31,280
Speaker 1: seems a little pollantage to say, well, we're just going

86
00:04:31,320 --> 00:04:32,520
Speaker 1: to wait and see what happens.

87
00:04:33,000 --> 00:04:34,919
Speaker 2: Okay, so let's talk about the second bucket, which are

88
00:04:34,960 --> 00:04:38,680
Speaker 2: the companies that will face some teriff related challenges but

89
00:04:38,800 --> 00:04:41,120
Speaker 2: might ultimately be able to work around them.

90
00:04:41,680 --> 00:04:43,360
Speaker 1: So some of the companies that came out and said

91
00:04:43,400 --> 00:04:47,920
Speaker 1: that recently this week was Coca Cola, Aultria, the cigarette maker.

92
00:04:48,440 --> 00:04:51,320
Speaker 1: These companies said, you know what, we fully realized that

93
00:04:51,560 --> 00:04:54,960
Speaker 1: tariffs are here. They are baked into our forecast, they're

94
00:04:54,960 --> 00:04:58,720
Speaker 1: baked into our outlooks. But we think we're still going

95
00:04:58,760 --> 00:05:00,480
Speaker 1: to be able to absorb them as long as they

96
00:05:00,480 --> 00:05:03,719
Speaker 1: stay the way they are, because we'll move things around.

97
00:05:03,920 --> 00:05:06,760
Speaker 1: These particular companies didn't get into some of the specifics,

98
00:05:06,760 --> 00:05:09,080
Speaker 1: but different CEOs that I've spoken to. So there are

99
00:05:09,200 --> 00:05:12,760
Speaker 1: multiple levers you can pull. You hold your capex, for example,

100
00:05:12,880 --> 00:05:15,640
Speaker 1: like you don't build that factory that you're going to build.

101
00:05:15,960 --> 00:05:19,800
Speaker 1: You maybe put a pause on share buybacks. We saw

102
00:05:19,839 --> 00:05:23,279
Speaker 1: that with General Motors this week, or you put a

103
00:05:23,360 --> 00:05:27,200
Speaker 1: hiring freeze, you don't go into new business lines. There

104
00:05:27,200 --> 00:05:28,480
Speaker 1: are going to be companies who are going to have

105
00:05:28,520 --> 00:05:30,520
Speaker 1: to cut a lot deeper, and that's going to end

106
00:05:30,600 --> 00:05:33,560
Speaker 1: up hurting those companies. But there's a sort of bucket

107
00:05:33,600 --> 00:05:37,160
Speaker 1: of companies that are saying, so far this is manageable.

108
00:05:37,360 --> 00:05:38,960
Speaker 1: It's not going to be great. We're not going to

109
00:05:39,040 --> 00:05:41,720
Speaker 1: grow for SAE like as much as we would love to,

110
00:05:42,160 --> 00:05:44,440
Speaker 1: but we're still going to be able to be okay.

111
00:05:44,880 --> 00:05:49,240
Speaker 2: Thinking about adaptations. Government data released yesterday showed a surge

112
00:05:49,320 --> 00:05:52,240
Speaker 2: in imports from companies that are looking to take advantage

113
00:05:52,279 --> 00:05:55,000
Speaker 2: of the president's ninety day pause. Is that something you're

114
00:05:55,040 --> 00:05:58,680
Speaker 2: seeing in terms of how companies are working around these tariffs,

115
00:05:58,720 --> 00:06:01,480
Speaker 2: preparing now for or future pain.

116
00:06:01,839 --> 00:06:04,360
Speaker 1: Definitely. We saw that with the car company, so they

117
00:06:04,400 --> 00:06:06,839
Speaker 1: had a huge run up in car sales because think

118
00:06:06,839 --> 00:06:10,240
Speaker 1: about that, it's a big ticket item. You've been thinking

119
00:06:10,320 --> 00:06:12,440
Speaker 1: about it, You've been talking to your family about buying

120
00:06:12,440 --> 00:06:15,240
Speaker 1: a car. You maybe visited a couple of car dealerships,

121
00:06:15,279 --> 00:06:17,160
Speaker 1: so you think to yourself, Okay, if I'm going to

122
00:06:17,200 --> 00:06:19,200
Speaker 1: buy a car in the next six months, now's the

123
00:06:19,200 --> 00:06:22,400
Speaker 1: time to do it before it gets more expensive. The

124
00:06:22,400 --> 00:06:24,719
Speaker 1: issue we're running up against now with the cars is

125
00:06:25,680 --> 00:06:28,039
Speaker 1: how much more inventory do you have left of that

126
00:06:28,120 --> 00:06:31,080
Speaker 1: Tara free inventory when our company's going to start to

127
00:06:31,160 --> 00:06:34,240
Speaker 1: raise the prices. We had one CEO of a company

128
00:06:34,240 --> 00:06:36,760
Speaker 1: that makes consumer product goods that you can find in

129
00:06:36,800 --> 00:06:39,480
Speaker 1: like a home depot or a target come in and

130
00:06:39,520 --> 00:06:42,360
Speaker 1: say you know what, this year, the best sale might

131
00:06:42,480 --> 00:06:45,320
Speaker 1: just be Mother's Day, which is not something you normally

132
00:06:45,320 --> 00:06:49,200
Speaker 1: think about. But if you think about the holidays, you know,

133
00:06:49,240 --> 00:06:51,760
Speaker 1: many months from now, sure you might be ten to

134
00:06:51,800 --> 00:06:53,880
Speaker 1: fifteen percent off, but if everyone's going to start to

135
00:06:53,960 --> 00:06:56,880
Speaker 1: raise prices in the next couple of weeks, your cheapest

136
00:06:56,880 --> 00:06:58,920
Speaker 1: price for that product might be right about now.

137
00:06:59,320 --> 00:07:02,880
Speaker 2: So are telling you, you know, we are now starting

138
00:07:02,920 --> 00:07:04,919
Speaker 2: to adapt to this, We're starting to plan for this.

139
00:07:05,000 --> 00:07:07,320
Speaker 2: But why weren't they planning for it before Trump even

140
00:07:07,320 --> 00:07:09,720
Speaker 2: got elected? When he was talking about this constantly on

141
00:07:09,760 --> 00:07:10,480
Speaker 2: the campaign trail.

142
00:07:11,000 --> 00:07:13,600
Speaker 1: Yeah, that's a good question that I've been asking. We

143
00:07:13,720 --> 00:07:17,080
Speaker 1: had someone in this morning that said, well, nobody knew

144
00:07:17,120 --> 00:07:19,840
Speaker 1: this was going to happen, And I said, well, nobody

145
00:07:20,440 --> 00:07:23,720
Speaker 1: wanted maybe this to happen. But if you were listening

146
00:07:23,760 --> 00:07:26,120
Speaker 1: to Trump on the campaign trail for many, many months,

147
00:07:26,120 --> 00:07:28,320
Speaker 1: you knew this was going to happen. I think the

148
00:07:28,360 --> 00:07:30,880
Speaker 1: issue is that it never felt certain. There wasn't like, Okay,

149
00:07:30,920 --> 00:07:33,360
Speaker 1: this is what's going to happen. Here's the percentage rates,

150
00:07:33,360 --> 00:07:35,160
Speaker 1: here are the countries that are going to be impacted.

151
00:07:35,440 --> 00:07:38,320
Speaker 1: It was always this very broad you know, we're going

152
00:07:38,360 --> 00:07:40,600
Speaker 1: to bring manufacturing back to the US. We're going to

153
00:07:41,280 --> 00:07:43,640
Speaker 1: give tariffs to everyone around the country, and you can't

154
00:07:43,680 --> 00:07:46,560
Speaker 1: really manage a business unless you have the specifics around that.

155
00:07:47,160 --> 00:07:49,840
Speaker 1: You did see companies even since Trump one point zero,

156
00:07:49,880 --> 00:07:53,160
Speaker 1: building up their infrastructure and manufacturing in the US. A

157
00:07:53,160 --> 00:07:57,360
Speaker 1: lot of pharma companies Johnson and Johnson, for example, Eli

158
00:07:57,400 --> 00:08:01,000
Speaker 1: Lilly like bringing creating manufacturing capacity in the US over

159
00:08:01,000 --> 00:08:03,720
Speaker 1: the last few years. But I think a lot of

160
00:08:04,160 --> 00:08:06,760
Speaker 1: CEOs were sort of waiting for specifics.

161
00:08:08,240 --> 00:08:10,880
Speaker 2: When we come back, Shelley and I dig into bucket

162
00:08:10,960 --> 00:08:13,920
Speaker 2: number three, the companies that know for sure that the

163
00:08:14,000 --> 00:08:16,880
Speaker 2: tariffs are going to be a big blow. We talk

164
00:08:16,920 --> 00:08:19,800
Speaker 2: about how they plan to navigate those challenges and what

165
00:08:19,880 --> 00:08:32,120
Speaker 2: those plans mean for investors and consumers Today. General Motors

166
00:08:32,160 --> 00:08:35,800
Speaker 2: cut its profit outlook by billions of dollars after grappling

167
00:08:35,800 --> 00:08:38,360
Speaker 2: with the effects of auto tariffs on its business. It

168
00:08:38,480 --> 00:08:41,559
Speaker 2: revised its outlook from as much as fifteen point seven

169
00:08:41,559 --> 00:08:44,840
Speaker 2: billion dollars down to as little as ten billion dollars.

170
00:08:45,400 --> 00:08:49,440
Speaker 2: The motorcycle maker Harley Davidson withdrew its forecast for twenty

171
00:08:49,520 --> 00:08:52,480
Speaker 2: twenty five, saying tariffs could cost them as much as

172
00:08:52,480 --> 00:08:56,720
Speaker 2: one hundred and seventy five million dollars this year. GM

173
00:08:56,760 --> 00:08:59,640
Speaker 2: and Harley are examples of companies that can't take a

174
00:08:59,679 --> 00:09:02,720
Speaker 2: weight and see approach to tariffs. They're in that third

175
00:09:02,760 --> 00:09:06,160
Speaker 2: bucket of businesses that Bloomberg Shelly Banjo has been tracking.

176
00:09:06,880 --> 00:09:10,360
Speaker 1: These companies are sort of seeing the rubbers hitting the road.

177
00:09:10,640 --> 00:09:12,920
Speaker 1: We saw Craft Hignds saying we need to start managing

178
00:09:12,920 --> 00:09:15,880
Speaker 1: our business for decline and consumer demand. And you saw

179
00:09:15,960 --> 00:09:18,520
Speaker 1: Jet Blues saying not only are we shifting our business

180
00:09:18,760 --> 00:09:22,480
Speaker 1: because of worsening economic demand and consumers, but that it's

181
00:09:22,520 --> 00:09:25,959
Speaker 1: getting worse, like things are not good and they seem

182
00:09:26,000 --> 00:09:26,760
Speaker 1: to be getting worse.

183
00:09:27,200 --> 00:09:30,600
Speaker 2: What other sectors and companies might be most impacted.

184
00:09:30,880 --> 00:09:35,079
Speaker 1: I think here the consumers really the problem, the ones

185
00:09:35,120 --> 00:09:38,400
Speaker 1: that are really consumer focused. Because you're getting dinged by

186
00:09:38,440 --> 00:09:41,120
Speaker 1: a lot of things. You're getting dinged by high prices,

187
00:09:41,559 --> 00:09:44,960
Speaker 1: by how hard it is to move supply chains quickly enough.

188
00:09:45,400 --> 00:09:49,679
Speaker 1: You don't have that customer base that is really locked in.

189
00:09:49,720 --> 00:09:53,319
Speaker 1: I mean, consumers have so much choice that when it's

190
00:09:53,400 --> 00:09:56,199
Speaker 1: cheaper somewhere else, I'm going to go somewhere else pretty easily.

191
00:09:56,440 --> 00:10:00,800
Speaker 1: And so that's I think the biggest weakness see is

192
00:10:00,880 --> 00:10:03,800
Speaker 1: a lot of these consumer companies. So we saw companies'

193
00:10:03,840 --> 00:10:07,200
Speaker 1: CEOs of Target, Walmart, others go up to the White

194
00:10:07,240 --> 00:10:10,520
Speaker 1: House and sort of tell Donald Trump to his face,

195
00:10:10,920 --> 00:10:14,040
Speaker 1: there will be empty shelves come holiday season if we

196
00:10:14,120 --> 00:10:16,520
Speaker 1: don't get a little relief. So what a lot of

197
00:10:16,559 --> 00:10:19,320
Speaker 1: them are asking for is could we have a little

198
00:10:19,320 --> 00:10:21,960
Speaker 1: bit of a grace period to shift some of our production?

199
00:10:22,240 --> 00:10:24,440
Speaker 1: Could we you know, can you work with us here?

200
00:10:24,800 --> 00:10:27,520
Speaker 1: We want to move some of our production. We want

201
00:10:27,559 --> 00:10:30,040
Speaker 1: to move some of our manufacturing. But it's not something

202
00:10:30,080 --> 00:10:32,360
Speaker 1: that can happen overnight. So that's sort of what they're

203
00:10:32,400 --> 00:10:34,760
Speaker 1: asking Donald Trump in the administration.

204
00:10:34,880 --> 00:10:37,440
Speaker 2: For How long would that grace period have to be

205
00:10:37,679 --> 00:10:39,240
Speaker 2: for them to really prepare?

206
00:10:39,480 --> 00:10:42,160
Speaker 1: It depends who you ask. I mean there are some

207
00:10:42,280 --> 00:10:45,480
Speaker 1: people car factories, for example, who say, you know, it

208
00:10:45,600 --> 00:10:47,960
Speaker 1: takes four or five years to build a plant. So

209
00:10:49,440 --> 00:10:52,080
Speaker 1: there is one strategy of just waiting out the administration,

210
00:10:52,400 --> 00:10:54,640
Speaker 1: right like you take pain for four years, rather than

211
00:10:54,679 --> 00:10:56,640
Speaker 1: build a plant that you might not use. It's going

212
00:10:56,720 --> 00:10:58,760
Speaker 1: to be higher cost. I mean, that is certainly a

213
00:10:58,880 --> 00:11:02,360
Speaker 1: strategy that we've seen some companies talking about. Some of

214
00:11:02,360 --> 00:11:05,839
Speaker 1: those weight and C strategies might actually be weighted out strategies,

215
00:11:06,440 --> 00:11:09,200
Speaker 1: but we don't. We don't really know for sure. Some

216
00:11:09,640 --> 00:11:12,920
Speaker 1: companies have talked about we can move a whole bunch

217
00:11:12,920 --> 00:11:17,000
Speaker 1: of production within six months between maybe China to India

218
00:11:17,080 --> 00:11:19,800
Speaker 1: or China to Vietnam. It's much harder to move something

219
00:11:19,800 --> 00:11:21,319
Speaker 1: from China to the US.

220
00:11:21,679 --> 00:11:24,120
Speaker 2: When you're looking at the earning reports and seeing companies

221
00:11:24,280 --> 00:11:27,560
Speaker 2: sort of admit to themselves and to investors that tariffs

222
00:11:27,559 --> 00:11:30,120
Speaker 2: are going to have a major hit on them, what

223
00:11:30,240 --> 00:11:32,920
Speaker 2: kind of numbers are you seeing? What is the magnitude

224
00:11:33,240 --> 00:11:34,160
Speaker 2: of that challenge?

225
00:11:34,480 --> 00:11:36,840
Speaker 1: So right now it is not as big as one

226
00:11:36,880 --> 00:11:39,880
Speaker 1: would think. I mean, so far, we saw GM come

227
00:11:39,880 --> 00:11:42,600
Speaker 1: out with the biggest number yet at five billion dollars.

228
00:11:42,679 --> 00:11:45,240
Speaker 1: Before that, we had seen things like two hundred million,

229
00:11:45,280 --> 00:11:48,040
Speaker 1: five hundred million, eight hundred and fifty million, depending on

230
00:11:48,080 --> 00:11:51,080
Speaker 1: the company. As earning season plays out, we're going to

231
00:11:51,080 --> 00:11:54,199
Speaker 1: start to get even more specificity from the Trump administration

232
00:11:54,320 --> 00:11:56,200
Speaker 1: on the tariffs, and then we'll start to see the

233
00:11:56,679 --> 00:11:59,760
Speaker 1: different impacts. And all of these are projections, So what

234
00:11:59,800 --> 00:12:02,880
Speaker 1: we'll get next quarter is what actually happened. The more

235
00:12:02,960 --> 00:12:06,720
Speaker 1: worrisome sign, though, is this hit to innovation. We talked

236
00:12:06,720 --> 00:12:09,720
Speaker 1: to a couple of companies that said, well, we're not

237
00:12:09,760 --> 00:12:13,240
Speaker 1: going to launch a new product this year because it's

238
00:12:13,280 --> 00:12:17,480
Speaker 1: too dangerous, it's too risky, and it takes a lot

239
00:12:17,480 --> 00:12:19,400
Speaker 1: of money, and we don't even know if we're going

240
00:12:19,480 --> 00:12:21,160
Speaker 1: to get it produced in the place that we want

241
00:12:21,160 --> 00:12:24,600
Speaker 1: to make it. So at that point, you're stopping companies

242
00:12:24,600 --> 00:12:27,920
Speaker 1: from actually coming out to even launch new things, which

243
00:12:28,000 --> 00:12:30,720
Speaker 1: come Christmas time is going to mean that a lot

244
00:12:30,720 --> 00:12:33,480
Speaker 1: of the hot new items won't actually even be there.

245
00:12:34,559 --> 00:12:39,200
Speaker 2: Less investment and innovation could also mean lost jobs. Private

246
00:12:39,200 --> 00:12:42,480
Speaker 2: sector numbers released this week by ADP showed a sharp

247
00:12:42,559 --> 00:12:46,199
Speaker 2: slowdown and hiring, and that unease could also show up

248
00:12:46,200 --> 00:12:48,800
Speaker 2: in tomorrow's jobs report, which will be the first to

249
00:12:48,800 --> 00:12:51,680
Speaker 2: reflect President Trump's Liberation Day tariffs.

250
00:12:52,480 --> 00:12:55,240
Speaker 1: When you're talking to companies, all of a sudden, job

251
00:12:55,280 --> 00:12:59,080
Speaker 1: postings are disappearing, they're not filling those jobs. With the

252
00:12:59,080 --> 00:13:01,880
Speaker 1: big companies, you have a seen huge layoff numbers. Yet

253
00:13:01,920 --> 00:13:04,679
Speaker 1: with a lot of the smaller companies, like the one

254
00:13:04,720 --> 00:13:07,640
Speaker 1: I was saying about with the innovation, they were saying, well,

255
00:13:07,640 --> 00:13:09,640
Speaker 1: we don't really need a new product development team right

256
00:13:09,640 --> 00:13:13,480
Speaker 1: now if everything is is paused. And so I said

257
00:13:13,520 --> 00:13:16,840
Speaker 1: to that CEO, Well, are you furlowing them? They're like,

258
00:13:16,960 --> 00:13:19,520
Speaker 1: we're just going to fire them because we'll bring them

259
00:13:19,520 --> 00:13:22,080
Speaker 1: back when we can. But right now there's nothing for

260
00:13:22,120 --> 00:13:22,600
Speaker 1: them to.

261
00:13:22,520 --> 00:13:26,040
Speaker 2: Do, so they're making sort of short term decisions that

262
00:13:26,160 --> 00:13:29,199
Speaker 2: might have long term impacts exactly based on the current uncertainty.

263
00:13:29,760 --> 00:13:34,640
Speaker 2: What are the warning signs for investors? Is there sort

264
00:13:34,679 --> 00:13:37,080
Speaker 2: of a canary in the coal mine in these earning

265
00:13:37,120 --> 00:13:40,080
Speaker 2: reports that they're looking at right now?

266
00:13:40,559 --> 00:13:44,360
Speaker 1: So this question has been very interesting to me. The

267
00:13:44,400 --> 00:13:47,680
Speaker 1: first couple of companies that came out and said tariffs

268
00:13:47,679 --> 00:13:50,400
Speaker 1: are going to impact us and here's how and here's why,

269
00:13:50,760 --> 00:13:52,400
Speaker 1: a lot of them, we saw their stocks go up.

270
00:13:52,640 --> 00:13:55,480
Speaker 1: And then companies that said we can't quantify the impacts

271
00:13:55,480 --> 00:13:58,400
Speaker 1: of our tariffs, we saw the stocks go down. And

272
00:13:58,960 --> 00:14:01,959
Speaker 1: I asked my porters what is going on, and we

273
00:14:02,000 --> 00:14:04,280
Speaker 1: spoke to a number of investors, a number of analysts

274
00:14:04,320 --> 00:14:07,040
Speaker 1: that are saying, at this moment, CEOs are actually getting

275
00:14:07,080 --> 00:14:10,320
Speaker 1: rewarded for their honesty. They're saying, we are going to

276
00:14:10,400 --> 00:14:13,440
Speaker 1: manage this business as if there was a recession coming.

277
00:14:13,600 --> 00:14:16,559
Speaker 1: At Bastian, the Delta CEO was one of the first

278
00:14:16,559 --> 00:14:18,959
Speaker 1: CEOs to stand up and say I don't know if

279
00:14:18,960 --> 00:14:21,480
Speaker 1: there's a recession. We might not know if there's a recession,

280
00:14:21,480 --> 00:14:24,000
Speaker 1: but I'm going to manage the business as if there

281
00:14:24,080 --> 00:14:27,040
Speaker 1: is a recession coming. I'm going to betten down the hatches,

282
00:14:27,120 --> 00:14:30,760
Speaker 1: reduce my costs, really be careful about any sort of

283
00:14:30,840 --> 00:14:34,440
Speaker 1: hiring or anything like that, and stock what up. And

284
00:14:34,480 --> 00:14:38,280
Speaker 1: I think this idea of investors and analysts rewarding these

285
00:14:38,280 --> 00:14:41,280
Speaker 1: CEOs and actually taking this seriously and actually managing their

286
00:14:41,320 --> 00:14:44,040
Speaker 1: business for the time that we're in rather than managing

287
00:14:44,120 --> 00:14:45,760
Speaker 1: the business for what they hope might happen.

288
00:14:46,080 --> 00:14:48,640
Speaker 2: Is there going to be a point at which the

289
00:14:48,640 --> 00:14:51,680
Speaker 2: Trump administration needs to take some action to help out

290
00:14:51,960 --> 00:14:53,840
Speaker 2: some of these companies and these sectors.

291
00:14:53,920 --> 00:14:56,000
Speaker 1: Well, I think you're seeing that now. So this week

292
00:14:56,040 --> 00:15:02,000
Speaker 1: you saw the auto parts tariffs exhibit and Donald Trump

293
00:15:02,080 --> 00:15:05,080
Speaker 1: coming out and saying, Okay, we see you auto companies.

294
00:15:05,120 --> 00:15:07,920
Speaker 1: We see you're trying your moving production, You're stopping production

295
00:15:08,000 --> 00:15:10,560
Speaker 1: in different parts of the country, Like we're going to

296
00:15:10,720 --> 00:15:12,760
Speaker 1: give you a break on these auto parts that really

297
00:15:12,800 --> 00:15:15,800
Speaker 1: will cripple you. So I think you sort of have

298
00:15:15,920 --> 00:15:19,480
Speaker 1: these companies doing this calculus saying, we know we're not

299
00:15:19,560 --> 00:15:21,920
Speaker 1: going to win everything. What can we ask for what

300
00:15:22,000 --> 00:15:23,480
Speaker 1: is a manageable thing to push for?

301
00:15:25,080 --> 00:15:27,200
Speaker 2: Is there a point at which the negotiating power might

302
00:15:27,240 --> 00:15:30,240
Speaker 2: switch and companies might have more power to ask for

303
00:15:30,280 --> 00:15:32,560
Speaker 2: more of what they want from the Trump administration.

304
00:15:32,760 --> 00:15:36,320
Speaker 1: I mean, that's the question, right, is that it wasn't

305
00:15:36,360 --> 00:15:40,600
Speaker 1: the media, it wasn't Trump's advisors, it wasn't a number

306
00:15:40,600 --> 00:15:44,680
Speaker 1: of different factions that sort of had him rethink is tariffs.

307
00:15:44,720 --> 00:15:46,880
Speaker 1: It was the market. So is the market sort of

308
00:15:46,920 --> 00:15:52,720
Speaker 1: this last big force that Trump takes seriously? So if

309
00:15:52,760 --> 00:15:55,200
Speaker 1: we get to a point where the stock market continues

310
00:15:55,240 --> 00:15:58,520
Speaker 1: to go down, where consumers stop buying, where jobs start dropping,

311
00:15:58,560 --> 00:16:01,440
Speaker 1: where there's nothing else that you can really argue with,

312
00:16:01,640 --> 00:16:04,120
Speaker 1: then you know, maybe that's when we start to see

313
00:16:04,120 --> 00:16:06,920
Speaker 1: some more of those concessions. I don't think we're there

314
00:16:07,040 --> 00:16:09,120
Speaker 1: yet at that point, but you know, you are seeing

315
00:16:09,200 --> 00:16:12,360
Speaker 1: like these different negotiations happening, and then that makes it

316
00:16:12,400 --> 00:16:15,160
Speaker 1: even harder to predict what's going on because then you

317
00:16:15,200 --> 00:16:18,280
Speaker 1: can't even count on that. You know, you can't even

318
00:16:18,280 --> 00:16:20,560
Speaker 1: count on these big tariffs that are impacting because if

319
00:16:20,560 --> 00:16:23,240
Speaker 1: they're going to be switched and reversed anyway, you don't

320
00:16:23,280 --> 00:16:25,480
Speaker 1: want to build a new plant. If you're not going

321
00:16:25,560 --> 00:16:25,920
Speaker 1: to have to.

322
00:16:28,360 --> 00:16:31,200
Speaker 2: This is the Big Take from Bloomberg News. I'm Sarah Holder.

323
00:16:31,440 --> 00:16:34,280
Speaker 2: This episode was produced by Alex tie. It was edited

324
00:16:34,280 --> 00:16:37,520
Speaker 2: by Patty Hirsh, Aaron Edwards, and Patherine Larkin. It was

325
00:16:37,560 --> 00:16:41,040
Speaker 2: fact checked by Audreynatapia and Rachel Lewis Krisky and mixed

326
00:16:41,080 --> 00:16:44,120
Speaker 2: in sound designed by Alex Sugura. Our senior producer is

327
00:16:44,200 --> 00:16:48,040
Speaker 2: Naomi Shavin. Our senior editor is Elizabeth Ponso. Our deputy

328
00:16:48,040 --> 00:16:51,880
Speaker 2: executive producer is Julia Weaver. Our executive producer is Nicole

329
00:16:51,920 --> 00:16:56,040
Speaker 2: Beemster Boor. Sage Bauman is Bloomberg's head of Podcasts. If

330
00:16:56,040 --> 00:16:58,960
Speaker 2: you liked this episode, make sure to subscribe and review

331
00:16:58,960 --> 00:17:01,480
Speaker 2: The Big Take or where you listen to podcasts. It

332
00:17:01,560 --> 00:17:05,159
Speaker 2: helps people find the show. Thanks for listening. We'll be

333
00:17:05,240 --> 00:17:06,119
Speaker 2: back tomorrow