Morning Brew Daily: CEOs Warn of Price Bumps From Tariffs & Waymo Rolls Out in Austin

Release Date: March 5, 2025
Hosts: Neal Freyman & Toby Howell
Duration: 27 minutes
Platform: All podcasting platforms and YouTube

1. Trump’s Historic Long State of the Union Speech

Timestamp: [00:28 - 01:22]

Neal Freyman opens the episode by highlighting President Trump's unprecedented State of the Union address, which lasted an astonishing one hour and 39 minutes—breaking the previous record set by President Bill Clinton in 2000 by a full ten minutes. This marathon speech came shortly after Adrien Brody set a record for the longest Oscars acceptance speech. Freyman remarks on the shift from histories like Nixon's shortest speech to Trump's extensive discourse, setting the stage for the discussions that follow.

2. Impact of Tariffs: CEOs Warn of Price Increases

Timestamp: [02:03 - 08:57]

The core of the episode centers around the economic repercussions of the newly imposed tariffs by President Trump. Toby Howell delves into how major retailers like Target and Best Buy have already signaled impending price hikes on everyday goods due to the 25% tariffs on imports from Mexico, Canada, and China.

• Target's CEO, Brian Cornell, informed CNBC that price increases on fruits and vegetables could occur as early as the following week because of heavy reliance on Mexican imports (04:21).

• Best Buy echoed similar concerns, forecasting significant price hikes on electronics and gadgets. This negative outlook led to Best Buy's stock plummeting by 12%, making it the biggest loser in the S&P 500.

Freyman underscores the market's negative reaction, noting that the S&P 500 fell by 1.2%, erasing post-election gains and highlighting the widespread uncertainty permeating the business environment. The conversation explores the Peterson Institute's estimation that the average U.S. household could face an additional $1,200 in costs annually due to these tariffs.

Key Quote:

Neal Freyman: “No economists have warned that tariffs would lead to price increases for consumers and businesses, and that’s exactly what we’re seeing from Target and Best Buy.”

The impact extends to various sectors:

• Gas Prices: Expected to rise by 20-40% in the Northeast due to tariffs on crude oil imports.
• Automotive Industry: An average pickup truck may cost $10,000 more, while electric vehicles could see increases up to $12,000 (06:13). This has already affected stocks of major car manufacturers like Ford and General Motors.

Internationally, the tariffs have provoked swift retaliation:

• Canadian Prime Minister Justin Trudeau criticized the tariffs as “very dumb” and promised a 25% tariff in response.
• China announced retaliatory measures, starting mid-March, affecting products like chicken, wheat, corn, and cotton.

Commerce Secretary Howard Lutnick provided a glimmer of hope, suggesting a possible middle ground with Canada and Mexico, which briefly lifted stock futures. However, the overarching sentiment remains one of caution and unpredictability.

3. Debate on Changing GDP Measurement

Timestamp: [09:26 - 12:51]

Neal and Toby shift focus to a controversial proposal within the Trump administration to alter how Gross Domestic Product (GDP) is calculated. Commerce Secretary Howard Lutnick suggested removing government spending from GDP metrics to enhance transparency, arguing that government expenditures can artificially inflate GDP figures.

Key Quote:

Howard Lutnick: “If the government buys a tank, that's GDP. But paying a thousand people to think about buying a tank is not GDP. That is wasted inefficiency.”

However, this proposal has sparked significant backlash from economists who defend the current GDP measurement:

1. Comprehensive Analysis: GDP is already analyzed in various segments, allowing for the exclusion of specific components like government spending without altering the fundamental metric.
2. Preservation of Integrity: Altering GDP calculations could set a dangerous precedent, enabling political manipulation of economic data for partisan gains.

Toby emphasizes the slippery slope concern, asserting that political interference could erode trust in federal statistics. The hosts reference Elon Musk's earlier comments advocating for a more accurate GDP measure excluding government spending, echoing Lutnick's stance but highlighting the potential risks of such changes.

4. Waymo and Uber’s Autonomous Taxi Rollout in Austin

Timestamp: [14:56 - 19:19]

Transitioning to technology, the podcast discusses Uber and Waymo's collaboration to introduce driverless rides in Austin, Texas. This partnership marks a significant expansion for Waymo, signaling a broader acceptance and deployment of autonomous vehicles.

• Coverage Area: 37 square miles of Austin with the option for passengers to choose between robo-taxis or human-operated vehicles.
• Ridership Growth: Waymo’s robo-taxis now handle approximately 200,000 paid rides per week, a stark increase from 10,000 two years prior.

Neal underscores the strategic timing of this rollout, aligning it with the South by Southwest conference to showcase the technology to a tech-savvy audience. The partnership signifies a turnaround from past conflicts, notably the 2016 legal battle where Waymo sued Uber for trade secret theft, leading to a settlement and renewed collaboration.

Toby adds that this expansion is also a strategic move against competitors like Tesla, which recently moved its headquarters to Austin. The race for autonomous vehicle supremacy is now twofold:

1. Technology Providers: Companies like Waymo and Tesla are advancing the self-driving technology itself.
2. Service Providers: Firms like Uber and Lyft are vying to integrate and manage these autonomous fleets within their transportation networks.

While the advancement is promising, both hosts caution about maintaining safety standards. Waymo has maintained a strong safety record, especially in contrast to incidents like those involving GM’s Cruise robotaxis, which faced setbacks due to safety violations.

Key Quote:

Neal Freyman: “Self-driving cars are here. They’re literally here. We are in a self-driving world now.”

5. Other Headlines

Timestamp: [19:19 - 26:13]

The latter portion of the episode covers a variety of news snippets:

• BlackRock's Acquisition of Panama Ports:
  BlackRock secures a $23 billion deal to purchase two major ports along the Panama Canal from a Hong Kong-based company, CK Hutchinson. This move potentially averts geopolitical tensions with the U.S. and aligns with President Trump's concerns over foreign influence in strategic trade routes.

  Key Quote:

  Toby Howell: “BlackRock is playing America’s white knight here, stepping in to manage strategic ports and appease the current administration.”

• Kraft Heinz Enters the Alcohol Market:
  Kraft Heinz introduces Crystal Light Vodka Refreshers, aiming to capitalize on the trend of consumers mixing their powdered drink additives with alcohol. This move is part of the company's strategy to rejuvenate declining sales in traditional brands like Lunchables.

  Key Quote:

  Neal Freyman: “Crystal Light vodka refreshers are touted as the lowest calorie cocktail on the market, aligning with consumer preferences for healthier alcoholic options.”

• James Harrison’s Legacy:
  A heartfelt segment honoring James Harrison, a blood donor whose rare antibody, anti-D, has saved over 2 million babies. Despite his aversion to needles, Harrison's unwavering commitment to donating blood since age 18 exemplifies extraordinary altruism.

  Key Quote:

  Neal Freyman: “James Harrison was on this path before he knew that his donations would save millions of lives. It’s a remarkable story of fate and dedication.”

• Monopoly’s Digital Transformation:
  Hasbro announces a new edition of Monopoly featuring a mobile app that automates transactions, aiming to attract younger players and expedite gameplay. While the innovation addresses anti-cheating concerns, it also introduces digital elements to a traditionally analog game, sparking mixed reactions.

  Key Quote:

  Neal Freyman: “The new Monopoly app Banking eliminates the need for a human banker and physical cash, modernizing the classic game but possibly making it less engaging for some players.”

6. Sponsor Messages and Advertisements

Timestamp: [00:00 - 14:56]

Throughout the episode, sponsors Discover, Invesco QQQ ETF, VO Bank, and LinkedIn are briefly promoted. These segments include advertisements for cash back credit cards, investment opportunities, high-interest savings accounts, and targeted LinkedIn advertising solutions. While these portions are integral to the podcast's structure, they were minimized in this summary to focus on substantive content.

Conclusion

Timestamp: [26:13 - 27:08]

Neal and Toby wrap up the episode by encouraging listeners to share the podcast with others, particularly highlighting board game enthusiasts who might appreciate the blend of business news with relatable commentary. They acknowledge the production team and tease the continuation of engaging content in future episodes.

Notable Quotes with Timestamps

• Neal Freyman:
  “[No economists have warned that tariffs would lead to price increases for consumers and businesses, and that’s exactly what we’re seeing from Target and Best Buy.]” [04:21]

• Howard Lutnick:
  “If the government buys a tank, that's GDP. But paying a thousand people to think about buying a tank is not GDP. That is wasted inefficiency.” [11:51]

• Neal Freyman:
  “Self-driving cars are here. They’re literally here. We are in a self-driving world now.” [18:32]

• Toby Howell:
  “[BlackRock is playing America’s white knight here, stepping in to manage strategic ports and appease the current administration.]” [20:15]

Key Takeaways

• Economic Uncertainty: The introduction of substantial tariffs has led to immediate price hikes and market volatility, with significant impacts anticipated across various consumer sectors.

• Autonomous Technology Advancements: The collaboration between Uber and Waymo signifies a pivotal moment in the adoption and normalization of self-driving vehicles, although safety remains a critical concern.

• Policy and Measurement Debates: The proposed changes to GDP calculation reflect ongoing tensions between political motivations and economic objectivity, highlighting the complexities of maintaining unbiased economic indicators.

• Corporate Strategy and Innovation: Companies like Kraft Heinz and BlackRock continue to navigate evolving markets by diversifying their offerings and engaging in strategic acquisitions to sustain growth.

• Human Stories and Legacy: The tribute to James Harrison underscores the profound impact individual contributions can have on society, inspiring listeners with tales of dedication and altruism.

For more insights and daily updates, subscribe to Morning Brew Daily available on all podcasting platforms and YouTube. Share this episode with friends, family, and colleagues to keep everyone informed and engaged with the latest in business and economic news.