Morning Brew Daily: US and China Agree to Slash Tariffs & Time to Overhaul Air Traffic Control?

Release Date: May 12, 2025

In this episode of Morning Brew Daily, hosts Neal Freyman and Toby Howell delve into significant developments impacting global trade, aviation infrastructure, consumer pricing, and emerging business ventures. Here's a detailed breakdown of the key discussions, insights, and conclusions from the episode titled "US and China Agree to Slash Tariffs & Time to Overhaul Air Traffic Control?"

1. US and China Reach Temporary Tariff Reduction Agreement

Timestamp: [01:02] – [02:52]

Neal Freyman opens the discussion by highlighting a pivotal development in US-China relations amid their ongoing trade tensions. Over the weekend, negotiations culminated in a temporary agreement to reduce tariffs, providing a 90-day cooling-off period for further discussions.

• Tariff Adjustments:
  • United States: Tariffs on Chinese goods are reduced from 145% to 30%.
  • China: Tariffs on US imports decrease from 125% to 10%.

These temporary reductions aim to alleviate the financial strain on businesses caused by high import fees and create a conducive environment for negotiating a more permanent trade agreement.

Market Impact:
The announcement sparked a positive reaction in the stock markets, with the Nasdaq surging nearly 4% and the S&P 500 climbing close to 3% by the morning of the release.

Notable Quote:

Toby Howell: "It really reads like the US and China went through marriage counseling over the weekend." [01:50]

2. Critical Overhaul Needed for US Air Traffic Control

Timestamp: [03:41] – [08:16]

The hosts shift focus to an urgent issue plaguing the US aviation sector—persistent system glitches at Newark Airport leading to significant delays and safety concerns. Recent failures included:

• Sunday Incident: FAA equipment failure causing a temporary ground stop.
• Previous Week: A radar outage that blacked out screens for 90 seconds.

Expert Insight:
Transportation Secretary Sean Duffy emphasized the severity of the problem, stating that "the problem isn't going away anytime soon," predicting "several weeks of reduced capacity and delays ahead." The reliance on outdated technology, including parts sourced from places like eBay, exacerbates the situation.

Proposed Solutions:

• Trump Administration's Plan:
  • Radars: Replace over 600 outdated radars.
  • Airport Towers: Upgrade more than 12 airport towers.
  • Telecom Network: Transition to a wireless and satellite-based system to support 45,000 daily flights.

The projected overhaul spans the next three years and requires funding in the tens of billions of dollars. Despite bipartisan support, Senate Minority Leader Chuck Schumer advocates prioritizing repairs at Newark, urging, "We need all hands on deck. Make Newark number one. Get it done and get it done fast." [07:37]

Impact on Airlines:
United Airlines, which manages 68% of Newark's flights, faces challenges with an average of 34 daily arrival cancellations since mid-April and increasing delays throughout the day. Although estimated to impact United's second-quarter capacity by less than 1%, the brand reputation has suffered significantly.

3. FTC Enforces New Rules Against Bait and Switch Pricing

Timestamp: [08:16] – [11:18]

Addressing consumer rights, Neal and Toby discuss the Federal Trade Commission's (FTC) new regulations aimed at eliminating deceptive pricing practices. Effective immediately, businesses must prominently display total costs upfront, including all known fees and charges, thus prohibiting bait and switch tactics.

Affected Industries:

• Live Event Ticket Sellers
• Short-Term Rental Providers
• Airlines and Cable Companies
• Notably U Haul: Accused by the watchdog group Truth in Advertising of misleading consumers with hidden fees in their truck rental ads.

Consumer Benefits:

• Transparency: Easier price comparisons across products and services.
• Protection: Reduces the frustration of unexpected costs during the checkout process.

Industry Response:
Some companies have already adapted to these changes:

• Airbnb: As of April 21, all-in pricing became the default display, ensuring customers see the total cost upfront.
• Marriott: Similar adjustments with optional toggles now defaulting to inclusive pricing.

Notable Quotes:

Neal Freyman: "The biggest problem here for consumers... it eliminates the possibility for you to compare prices." [09:38]

Toby Howell: "Businesses are counting on you to just accept what they are presenting your way." [10:24]

4. Weekend Winners: A Biotech Startup Echoing Theranos

Timestamp: [11:18] – [17:24]

In the Weekend Winners segment, the hosts explore a biotech startup named He Mantis (also known as Blood Lily), founded by Billy Evans, a partner of the infamous Theranos founder, Elizabeth Holmes.

Background:

• He Mantis: Aims to revolutionize diagnostic testing using light detection technology, similar in concept to Theranos' failed finger-pricking device.
• Target Market: Initially focusing on animal health, offering non-invasive testing for conditions like cancer and infections through Rayleigh Spectroscopy.

Investor Sentiment:

• Skepticism: Prominent investors like James Breyer and Michael Dell have declined to invest, citing concerns over scientific defensibility and clinical utility.
• Limited Support: Currently backed by a small-time investor owning a Mediterranean tapas bar in Austin.

Notable Quotes:

Toby Howell: "Honestly? First of all, I'm saying great name, Herman... What it is about your background that makes you uniquely equipped to tackle this problem." [13:56]

Neal Freyman: "How much is Elizabeth Holmes involved in what's going on? [...] She's been providing advice to Billy Evans from her prison cell." [14:56]

The segment concludes with a critical view of the startup's prospects, questioning the viability of attracting serious investment given the tarnished legacy of its associated figures.

5. Looking Ahead: Major Events and Market Indicators

Timestamp: [17:24] – [25:21]

The hosts outline the significant events slated for the upcoming week, emphasizing their potential impact on the economy and various industries.

Key Highlights:

• President Trump's Foreign Trip:
  • Destinations: Saudi Arabia, Qatar, and the United Arab Emirates.
  • Objectives: Secure business deals up to $1 trillion with wealthy Gulf nations.
  • Controversy: Qatar's potential $400 million gift of a tricked-out Boeing 747 as a new Air Force One raises constitutional and ethical concerns, sparking debates among Democrats and Trump's administration.

Economic Indicators:

• Inflation Report for April (Tuesday):

  • Significance: Assessing the impact of recent tariff reductions on consumer prices.
  • Federal Reserve's Focus: Monitoring inflation to guide monetary policy decisions.

• Walmart Earnings:

  • Rationale: As the world's largest retailer, Walmart's performance provides insights into consumer spending behaviors amidst changing economic conditions.

Other Notable Events:

• Cannes Film Festival:

  • Oscar Contenders: Anticipated releases like Wes Anderson's Phone Nation Scheme and the latest Mission Impossible installment.
  • Directorial Debuts: Scarlett Johansson with Eleanor the Great and Kristen Stewart with Chronology of Water.

• Sports Highlights:

  • WNBA Season Kickoff (Friday): Introduction of the expansion team, the Golden State Valkyries, and spotlight on rookie Paige Beckers.
  • PGA Championship: Rory McIlroy's performance post his emotional Masters win will be closely watched.
  • Preakness Horse Racing (Saturday): Absence of Sovereignty, the Kentucky Derby winner, due to health concerns, affecting the race's competitive edge.

Notable Quotes:

Neal Freyman: "If you're an HR pro... your HR tech stack shouldn't feel like this and Clear Company agrees." [26:04]

Toby Howell: "Scarlett Johansson is jumping behind the cameras for a movie called Eleanor the Great..." [23:45]

Conclusion

This episode of Morning Brew Daily offers a comprehensive overview of pressing economic policies, infrastructure challenges, regulatory changes, and emerging business trends. From the temporary easing of US-China tariffs potentially revitalizing stock markets to the dire need for modernization in the US air traffic control system, the discussions underscore the intricate interplay between policy decisions and their real-world impacts. Additionally, the exploration of deceptive pricing practices highlights the FTC's commitment to enhancing consumer rights, while the insight into a Theranos-like biotech startup serves as a cautionary tale for investors.

By addressing these multifaceted topics with depth and clarity, Neal Freyman and Toby Howell provide listeners with valuable perspectives to navigate the complexities of today's business and economic landscape.