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CEOs Warn of Price Bumps From Tariffs & Waymo Rolls Out in Austin
00:28:53
Everyday goods could be expensive & Driverless lands in Austin
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- [00:01]
Toby Howell
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- [00:25]
Neal Freyman
Good morning, Brew Daily Show I'm Neal Freyman.
- [00:28]
Toby Howell
And I'm Toby Howell.
- [00:29]
Neal Freyman
Today, day one of the trade war sent stocks tumbling, business scrambling and Canadians ditching their politeness.
- [00:35]
Toby Howell
Then Uber and Waymo are teaming up Power Ranger style this week to offer driverless rides in Austin. It's Wednesday, March 5th. Let's ride.
- [00:48]
Neal Freyman
2025 is quickly becoming the year of the Very Long Speech. Days after Adrien Brody set the record for the longest Oscars acceptance speech in history, President Trump last night delivered the longest speech ever before a joint session of Congress. The unofficial State of The union lasted one hour and 39 minutes, topping the previous record set by President Bill Clinton in 2000, who spoke for one hour and 29 minutes. No one longs for the days of Richard Nixon, but he gave the shortest State of the Union on record, clocking out after 29 minutes in 1972 or just about to curb your enthusiasm episode.
- [01:23]
Toby Howell
So what the heck did he talk about? CNN calculated the exact minutes and seconds Trump spent on each topic. Immigrants and crime got the most airtime with just under 10 minutes, followed closely by trade in tariffs at 8 and a half minutes, which we'll get into what he actually said about that topic in our top story, Elon Musk, who was in attendance, got a 40 second shout out to go along with the two minutes spent talking doge. That was more than the minute and 30 seconds he devoted to inflation, which was likely intentional. Neil. Zero time spent thinking that the Academy, though, which thankfully moved things along. Now a word from our sponsor, Invesco QQ Neil, I was thinking about longevity today.
- [02:04]
Neal Freyman
Don't tell me you're taking magnesium pills and cold plunging.
- [02:07]
Toby Howell
No, I'm thinking much bigger than that about companies that have stood the test of time, companies that make up the Invesco QQQ ETF.
- [02:14]
Neal Freyman
It's been tracking the NASDAQ 100 for over 25 years.
- [02:18]
Toby Howell
It's basically been around longer than me.
- [02:20]
Neal Freyman
Aren't you 28?
- [02:21]
Toby Howell
Ah, the last three years don't really count. But think about that. Invesco QQQ has been giving investors access to innovative companies since before we had.
- [02:29]
Neal Freyman
Iphones it's one of the OGs of innovation funds.
- [02:32]
Toby Howell
With Invesco Cuckoo Q. You can rethink what is possible before investing. Consider the fund's investment objectives, risk charges and expenses. Visit Invesco.com for a prospectus with this information. Read it carefully before investing. Full disclosure in Podcast Discussion Description well, Trump's long promised tariffs are here, which means that price hikes for everyday consumers like you and me on everyday goods like electronics and gas are looming unless a compromise can be reached, which we'll get to in a little bit. Target and Best Buy set the mood yesterday, warning that prices will increase following Trump's 25% levies on imported goods from Mexico, Canada and China, with some hikes hitting shelves almost immediately due to short supply chains. Target CEO Brian Cornell told CNBC yesterday that they may be forced to raise prices on fruits and veggies as soon as this week due to a heavy reliance on Mexican imports in the winter. Best Buy saying a similar tune, telling investors on an earnings call yesterday that price increases on its gadgets and gizmos aplenty are highly likely due to tariffs. China and Mexico are the company's top two supply chain sources, with over three fourths of its products sourced from those countries. The market didn't like the sound of that at all and best buy fell 12% to be the biggest loser in the S&P 500. It looked like the red wedding out there in general yesterday to The S&P 500 fell 1.2%, with more than 80% of the stocks in the index closing lower after a great start to the year. All the post election gains for the S&P 500 have been wiped out. Neil the vibes were not great yesterday though later in the day Commerce Secretary Howard Lutnick did say that the US Would likely meet Canada and Mexico quote in the middle, with an announcement coming as soon as today. Stock futures did tick up as of that announcement, but in the meantime, vibes are still not great.
- [04:21]
Neal Freyman
No economists have warned for ever that they've been around that tariffs will lead to price increases for consumers, for for businesses, and that's what we saw from the earnings reports from Target and Best Buy yesterday. Trump did acknowledge that prices may go up due to his tariffs in that unofficial State of the Union last night, he said tariffs are making America rich again and making America great again and will happen rather quickly. There will be a little disturbance but we're okay with that. It won't be much. So there's Trump acknowledging that prices may go up for Americans due to these tariffs on the three largest US Trading partners. How much should that is? The typical US Family might see price increase as well. The Peterson Institute calculated that the average U.S. household will pay more than twelve hundred dollars a year under the current tariff regime.
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Toby Howell
And let's go through what those tariffs might impact. I said everyday goods affecting everyday people. And it really is because one of the biggest things that will go up is the price of gas. Oil refineries process and transport Canada, Mexico's crude to the United States. So they are being tariffed multiple times. And so about two thirds of all crude oil imports into the US Will take a hit with. Which means that the Northeast especially could see an estimated 20 to 40% increase in gas prices per gallon by March. West coast and the Midwest are likely to follow as well. And then also, if you have young kids, you're probably looking at this going, oh my gosh, because 80% of toys are imported from China. So you could see price increases on stuff like, you know, the mighty dump truck that could get a $10 increase, according to Basic Fund CEO Jay Forman. And then also the auto industry. We've talked about this a lot at this point, but the auto industry has a very complicated supply chain. A lot of parts go back and forth over the border. So that is expected to be especially vulnerable to these tariffs.
- [06:14]
Neal Freyman
Yeah, for some numbers on that, the average pickup truck is expected to cost $10,000 more that is sold in the United States. And that's why you saw shares of Ford and General Motors take a beating. Yet yesterday, the average crossover utility vehicle will rise by at least $4,000. That's according to the Anderson Economic Growth Group. While the cost of an electric vehicle will rise three times as much. So that's $12,000. That's why you have auto industry executives basically calling Howard Ludnick, the Commerce Secretary, calling President Trump and saying, please stop, we need an exemption here because without that, our production is going to shrivel up. And estimates say that in the next few weeks, a third of US North American auto production could halt altogether because all of the flow of all of these parts across Canada, the United States and Mexico will essentially stop.
- [07:08]
Toby Howell
And we mentioned the international response because it has come in hot and fast. Canadian Prime Minister Justin Trudeau said that the 25% tariffs and Canadian imports is, quote, very dumb and vowed to fight back with 25% tariffs of its own. China also announced countermeasures. Those are starting in mid March. 15% tariff on chicken, wheat, corn and cotton, 10% on stuff like pork fruits or pork, beef fruits and veggies. And then Mexico also is scheduled to announce their retaliatory tariffs sometime later this week. So especially the comments coming out of Justin Trudeau yesterday were, I mean, using the words, quote, very dumb, is, you know, as in Canadian terms, as about as inflammatory as you can get up there. So definitely you saw some pushback from United States allies.
- [07:59]
Neal Freyman
So looking ahead, we had these with these comments from the Commerce Secretary, Howard Lutnick yesterday saying that maybe Trump will meet Canada and Mexico in the middle. We might get an announcement today about some rolling back of terrorists. But a vibe of uncertainty is still permeating the markets, is still permeating businesses who, these auto manufacturers especially, who need to figure out where they're setting up plants. This is a multi year process. When you make a large capital expenditure, where are you going to do it? Are you going to do it at all? So the uncertainty is going to lead to just essentially a regime of savings where people just don't spend money because they don't know what US Policy will be. And you saw that even before tariffs were implemented in that manufacturing survey that we talked about yesterday, where manufacturing in the United States is almost at a state of contraction because manufacturers are just not, not investing when they don't know what, what the tariff policy will be one day to the next.
- [08:57]
Toby Howell
The final embodiment of that vibe that you were just describing, I think newsletter from the information put it very well. I was reading it this morning and it started with a line, if you're unhappy about the weather in San Francisco, you only have to wait a few minutes until it changes. That line is starting to seem very applicable to the Trump administration's terrorist plans. There are, there is this feeling of uncertainty around it. It does change day to day, hour to hour, minute to minute, it feels like. So you are right that there is still this uneasiness permeating kind of the business landscape.
- [09:27]
Neal Freyman
And we'll see maybe tomorrow. We have a completely different story to tell. For eight decades, gross domestic product, or gdp, has been the standard for measuring economic growth in countries around the world. But some Trump administration officials say they want to change how it's calculated in the United States. Over the weekend, Commerce Secretary Howard Lutnick, he's getting a lot of airplay today, mentioned he wants to strip out government spending from gdp, saying that governments have historically messed with the figure and that removing it from the ingredient mix would lead to more transparency. That remark came a few days after Elon Musk said that a quote, more Accurate measure of GDP would exclude government spending. And adding that governments can artificially inflate GDP to make it seem like the economy is doing better than it actually is. These comments raised a lot of eyebrows among economists who went to bat for the current way GDP is measured. Their defense had two main points. Number one, GDP is already sliced and diced in numerous ways. So if you want to get a sense of economic growth without government spending, you can easily do that. Number two, it would set a concerning precedent for lawmakers to meddle in with what is supposed to be an independent economic statistic. In the word of David Wilcox, a former director of research and statistics at the Federal Reserve, the implication is that it is okay to manipulate economic data for political gain. Toby, never before has three letters caused so much drama.
- [10:47]
Toby Howell
Yeah, the real fear is that it is a slippery slope. You do not want political meddling in these supposedly independent federal statistics. You could undermine trust in that federal government data, and especially if it is being perceived as an attempt to, you know, mask the impacts of Doge's cost cutting on the broader economy. You are right. We already have those statistics to calculate GDP minus government spending. So why are we putting forth this idea that we are. That it is somehow this thing that needs to be separated? We already can separate it. But some conservative economists do see it a different way. They think isolating government spending from other economic measures, we would paint a more accurate picture of the current economy. Because they were pushing back and saying under the Biden administration, a lot of the increase in GDP we are seeing was a result of government growth, not private sector growth. So they, to them, that is growth in the wrong places. And they just want to make it clear that we want to separate that off and see what the real economy is actually functioning like. So that is generally the thrust of the argument you're seeing from maybe Elon and the rest of those economists.
- [11:51]
Neal Freyman
Yeah, Lutnick. Here's how Lutnick put it. He said, 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, wasted money. And cutting that while it shows in gdp, we're going to get rid of that. So he's saying essentially the government, if they wanted to inflate GDP numbers to make it look better, they could just pay a thousand people to sit there and play solitaire. The, the pushback on that is that GDP in and of itself is. Does not make any value judgments about how money it's spent. If you Pay for something and you buy something. That should be counted in gdp. If the company, company buys pencils or the government buys pencils, pencils were bought and that should be accounted for. And you don't make any value judgments. Maybe somebody makes a horrible movie. What's his name? Francis ford Coppola spent $250 million of his own money making Megalopolis. No one watched it. You could make the case that that was extremely inefficient. But did he spend that $250 million? Yes. And that should be counted as GDP.
- [12:52]
Toby Howell
Of all the directors names coming out of your mouth there I was not expecting.
- [12:55]
Neal Freyman
And I just watched Apocalypse now on the plane coming back. It was so good. So no smear to him, but he may have thrown a lot of his money in the trash.
- [13:03]
Toby Howell
All right, let's move on here. We're going to take a quick break so you can go refill your coffee. But we'll be right back.
- [13:09]
Neal Freyman
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- [13:11]
Toby Howell
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Neal Freyman
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Neal Freyman
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- [14:01]
Neal Freyman
So one day as I was scrolling the web, I got hit with an ad for patio furniture. Dude, I live in a small New York City apartment. Not relevant. So if that's happening to me, imagine the incorrect spaces your B2B marketing could be ending up. If you want to reach the right professionals, start with LinkedIn ads. LinkedIn has grown to a network of over 1 billion professionals and 130 million decision makers. And in this vast pool of potential, you can target your buyers by job title, industry, company role, skills, seniority and more. If you can't believe it, if you think you're wasting budget on the wrong audiences, stop that first and foremost and start targeting the right people with LinkedIn ads instead. LinkedIn will even give you a $100 credit on your next campaign. So you can take LinkedIn ads for a spin, just go to LinkedIn.com/mbd. That's LinkedIn.com MBD terms and conditions apply only on LinkedIn ads.
- [14:56]
Toby Howell
If you're a no talk in the Uber kind of person, good news. Your next ride might be dead silent because it might not have a driver at all. Starting this week, Uber is rolling out self driving Waymo Robo taxis in Austin, Texas, marking a major expansion for the Google backed company. Waymo's robo taxis will be available across 37 square miles of Austin. So your next ride from Terry Blacks to Franklin's to compare brisket quality might be solo dolo without a driver. If you're not quite ready to trust a car with no one at the wheel, fear not, Uber is giving you the option to switch to a human controlled vehicle instead. This expansion marks another big momentum moment for autonomous vehicles as Waymo looks to prove it can spread its wings beyond Phoenix, San Francisco and Los Angeles where it's been cranking out rides. Its robo taxis are now averaging 200,000 paid rides per week, up from about 10,000 weekly rides just two years ago. Now the goal is to keep expanding without running into the kind of safety issues that derailed GM's cruise robotaxis in San Francisco last year. Neil with south by Southwest, the big tech and media conference kicking out this week, Waymo is getting a shot to impress thousands of visitors. This is the big time.
- [16:10]
Neal Freyman
You know that this date was circled on their calendar saying we need to release this partnership, this robo taxi service before south by Southwest so all of these techies and media people can come in, take some rides and then go back to their respective cities and you know, brag about how they took a self driving taxi and how great it was. And we should mention that you're not guaranteed to get a robo taxi. You can change your preferences in your Uber profile so that you are more likely to get a robot, a Waymo Robotaxi to ride in. So you can't just select one or the other. And then in the other case, if you don't want one, you can also select preferences that won't let you. But this is live. It's another major milestone moment for, for self driving cars. And it is a very unlikely partnership because if you go back to 2016, Uber and Waymo hated each other. Waymo sued Uber and its subsidiary Otto for stealing trade secrets. Two years later, five days into that trial, which was a really big deal, encapsulating the self driving car industry. The two sides settled and now they're, you know, linking back up with each other in a very interesting partnership that shows how maybe we're seeing the fledgling business model of a self driving robotaxi fleet would work.
- [17:21]
Toby Howell
Yeah, it's a classic enemies to friends arc right here. I do have to mention too that it's not just south by Southwest that made them roll out in Austin. It's also symbolic because that is the backyard of Tesla and Elon Musk, because Tesla reincorporated its headquarters in Austin, Texas. So Waymo is kind planting its flag in its backyard and saying, hey, we're hitting the streets of Austin before you are Elon, with your fleet of Robo taxis that it plans to roll out in June. So really I think there's two races going on here. One, there's the autonomous vehicle supremacy race between companies like Tesla, companies like Waymo and a few other challengers. But then there's also a race between the provider networks. Think Uber, think Lyft, who manage and dispatch the vehicles. Because Lyft is also planning to add Robo taxis to to its network in Atlanta later this year, they are partnering with a different company called May Mobility. They hope to have self driving cars in that market as well as Dallas by next year. Uber has also joined forces with a V ride to begin dispatching robotaxis in Dallas next year as well. So I think we are seeing two simultaneous races right now between the people creating the technology and the people dispatching that technology. So the race is on.
- [18:32]
Neal Freyman
It's kind of insane to think about that self driving cars are here, right? They're literally here. You can take a self driving car in Phoenix, Austin, now San Francisco and Los Angeles. I mean, after years and years of saying that these things are coming or they're not coming, they're literally here. We are in a self driving world now.
- [18:52]
Toby Howell
I know. And the one thing that you just have to avoid though is those big egg on the face safety moments, which is, is really the thing that sunk if I mentioned GM subsidiary Cruise that just no longer exists anymore because it had its California license suspended back in 2023 after one of its cars, you know, dragged a pedestrian. So there are these, there is a risk factor here. But so far Waymo has been pretty squeaky clean on its safety record. So it's just looking to continue that momentum.
- [19:19]
Neal Freyman
Let's sprint to the finish with some final headlines. BlackRock may have prevented a geopolitical spat from escalating at the Panama Canal. The Asset management giant agreed to buy two major ports along the canal from their Hong Kong based owner as part of a $23 billion deal, perhaps placating President Trump, who threatened to take back control of the canal over Chinese encroachment. CK Hutchinson, the Hong Kong company in question, owned ports at either end of the Panama Canal, a key trade route used by many American ships as a shortcut between the Atlantic and Pacific Oceans, and maintained that the transaction was, quote, purely commercial in nature and wholly unrelated to recent political news reports concerning the Panama ports. But you're allowed to be skeptical since US Pressure was building on Panama to cancel its contract with CK Hutchinson over its control of the ports. Thanks to the deal, CK Hutchinson now has billions of fresh cash in its pockets. An American company is taking over, and maybe everyone can move on with their day.
- [20:16]
Toby Howell
This move definitely aligns with the Trump's administration's concerns about this area of the world with foreign influence over the canal. So it is shifting, you know, strategic, very strategic ports into American corporate hands. But I will say that BlackRock is happy to play, you know, the America's white knight here because they have been, you know, investing a lot in infrastructure. They acquired this company, gip two years ago, which massively expanded, like the firm's plunge into infrastructure play. It manages this huge portfolio of energy, transportation, utility assets. They, they manage London Gatwick Airport. They, they manage U.S. natural Gas Pipeline. So them saying, like, hey, Trump, like, I know you're concerned about Chinese influence here. What if we just came in and, you know, bought these, you know, very lucrative, very strategic port. So I think that Larry Fink and BlackRock are saying, licking their chops, saying, wow, what a great opportunity to step in here while also getting the blessing of the current administration. Kraft Heinz is entering the alcohol market, but not with boozy ketchup, thank goodness. Yesterday, the company announced that it will be introducing Crystal Light vodka refreshers at certain retailers starting this month. They'll come in at a sprightly 77 calories and 0 sugar, which Kraft Heinz touts as the lowest calorie cocktail on the market. The idea behind launching a boozy version of its powdered drink additives was that its customers were already using them for mixed drinks. Nearly one in five Crystal Light customers make cocktails using the brand's drink mixes already, according to the company. Neal, it looks like in this instance, they're just skating where the puck is already going.
- [21:51]
Neal Freyman
It's certainly one of a number of companies who are just scrolling on social media every day and saying, hey, what are people doing with our products? And then making that product for them in the hopes of selling it and boosting sales. We've seen Chipotle do this. A number of fast food companies seeing Starbucks, seeing what, what concoctions that people are making, and then posting on Tik Tok and then creating that product themselves. We'll see if it sells. Kraft Heinz needs this to work because they have declining sales for five consecutive quarters. It's Lunchables brand is not doing well. It's other consumer package brands are not doing so great. So hopefully Crystal Light, which has been around for many decades, will spur a little growth here.
- [22:31]
Toby Howell
And it's not just that, you know, corporate America is looking at what Tik Tok consumers are actually creating. It's also specifically beverage companies are seeing how their beverages are being used to make alcoholic drinks. Because think about, we've seen these alcoholic concoctions pop up from companies. Coca Cola has partnered with Jack Daniels to make a Jack and a Coke in a can. Sunny D debuted Sunny D Vodka Seltzer in 2023, which is just messed up to people who grew up drinking Sunny D. And then Vita Cocoa, you know, the coconut water company, they partnered with Captain Morgan on premium canned cocktails. So, I mean, you're making a face here. I agree with you on that one. And then PepsiCo and Boston Beer launched Hard Mountain Dew. So this is definitely a vein that, you know, these companies are trying to tap. Alcohol plus insert drink here. And now we have the latest one to come our way.
- [23:23]
Neal Freyman
Not all heroes wear capes. Some get poked by a needle thousands of times and save millions of babies lives in the process. I'm talking about James Harrison, one of the world's most prolific blood donors who died at age 88 last month after being credited with saving the lives of more than 2 million babies. Known as the man with the golden arm, Harrison has a rare antibody in his blood, anti D that is used to make medication given to pregnant mothers whose immune systems may attack their unborn babies. Harrison started giving blood at age 18, and get this, didn't miss a single appointment, which happened every two weeks until he was 81, getting pricked a total of 1173 times. An amazing story. In case you're wondering, though, he hated needles.
- [24:09]
Toby Howell
Yeah, that's the craziest part about this. He has this big aversion to needles. But the backstory to why he even figured out he had this rare antibody is that he had his own major lung surgery when he was 14, which required this big blood transfusion. So after his surgery, his dad told him that you're only alive because people donated blood. So the day he turned 18, the day he was allowed to, he started giving blood. And that's another crazy part. The application of anti D this, this fighting, this newborn disease fighting antibody was not discovered until the 1960s. He started donating in 1954. So before he even knew he had, you know, this magic thing in his blood, he before he knew he had the golden arm he was donating, which to me is just call it fate or call it whatever. But it is pretty amazing that he was on this path before he even knew that this path was going to save so many millions of lives.
- [25:01]
Neal Freyman
Finally, a new version of Monopoly is coming out and it's going to be a lot harder to cheat by volunteering to be the banker. That's because the new edition Monopoly app Banking includes a mobile app that handles all of the games transactions for you, eliminating the need for a banker and that famous Monopoly cash. Hasbro says the goal is to attract a new generation of younger players and speed up the notoriously slow gameplay. But at the same time it introduces screens to one of the last analog holdouts, board games. And it'll probably make kids even worse at math by not requiring them to do any. Toby, I say throw them straight in jail. Do not pass Go.
- [25:38]
Toby Howell
Yeah, I don't like it either because doing a money spread and flaunting your cold hard Monopoly cast was one of the best parts about playing Monopoly. I do like it from an anti cheating perspective because we've all played with someone who is given a little off the top when they went to the bank. I do think Monopoly 2 just has this way of evolving to stay current. I mean they came out with Monopoly Deal, which is this card game. If you ever played that it it usually leads to the end of relationships with your family members. It has Monopoly Go, which is this mobile app. It's done $3 billion in revenue, so I wouldn't bet against this latest iteration of this iconic property.
- [26:13]
Neal Freyman
Let's wrap it up there. Thanks so much for starting your morning with us and have a wonderful Wednesday. For any questions, comments or feedback, send an email to Morning Brew daily at Morning Bukom. And if you're enjoying the show, share it with a friend, family member or coworker Toby who should everyone listening share it with today.
- [26:30]
Toby Howell
I want you to share the podcast with your board game friends. We all have them. They're great at explaining rules are way too competitive and could probably use a fun and informative business news podcast to start their day.
- [26:41]
Neal Freyman
Never met a single person who is great at explaining rules of a board game.
- [26:45]
Toby Howell
I'm throwing them a bone because as someone who has explained board game rules, everyone's eyes glazes over. So I'm saying that you guys are doing great. Board game friends.
- [26:53]
Neal Freyman
Let's roll the credits. Emily Milian is our executive producer. Raymond Lu is our producer. Olivia Graham is our associate producer. Uchenawaogu is our technical director. Garrett Peck is on audio, hair and makeup is just visiting. Devin Emery is our chief content officer, and our show is a production of Morning Brew.
- [27:09]
Toby Howell
Great show today, Neil. Let's run it back tomorrow.