Odd Lots Podcast Summary Episode: What Tariffs Are Doing to North American Freight
Release Date: April 8, 2025
Hosts: Joe Weisenthal and Tracy Alloway
Guest: Matt Silver, Co-founder and CEO of Car

Introduction

In this episode of Bloomberg's Odd Lots podcast, hosts Joe Weisenthal and Tracy Alloway delve into the ramifications of recent tariff announcements on North American freight. They are joined by Matt Silver, co-founder and CEO of Car, a software company specializing in freight brokerage for U.S.-Mexico trade lanes. The discussion centers on how new tariffs are influencing businesses that handle cross-border goods, the strategic responses of logistics companies, and the broader implications for U.S.-China trade relations.

Current Status of USMCA and Tariffs

Joe Weisenthal opens the conversation by emphasizing the pervasive impact of new tariffs on businesses globally, especially those involved in cross-border trade. Tracy Alloway humorously remarks on the breadth of their coverage, highlighting the intent to explore tariff effects across various industries.

Matt Silver provides an update on U.S.-Mexico trade, noting that "trade for Q1 is up year over year in Mexico, so it is definitely still going the right direction" ([02:33]). He clarifies that Car operates as a software firm supporting freight brokers and trucking companies dealing with cross-border shipments. Despite some reprieves for USMCA-related trade, companies importing from regions like Europe and Asia continue to face substantial tariffs, which creates uncertainty and anxiety within the logistics sector.

Impact on the Automotive Industry

The hosts revisit a previous discussion with Matt Silver about the U.S.-Mexico trade boom. Silver explains how the revised USMCA has incentivized manufacturing within North America, reducing reliance on overseas production. He states, "Trump updated NAFTA to the USMCA and that encouraged more manufacturing to happen in North America and less overseas" ([04:31]).

However, the introduction of new tariffs poses challenges, particularly for automakers importing parts from non-USMCA countries. Silver illustrates this with the automotive sector, where parts not covered under USMCA now face a 25% tariff. For instance, a car valued at $40,000 could see an additional "$1,000 added to the cost" due to these tariffs ([07:39]). This scenario forces companies to decide between absorbing the costs or pausing shipments to avoid price increases for consumers.

Tariff Calculation and Harmonized Tariff Codes

A significant portion of the discussion focuses on the complexity of applying tariffs, especially for products like automobiles that consist of numerous components from various origins. Tracy Alloway raises a pertinent question about the logistical challenges involved in calculating tariffs for each component, to which Matt Silver responds:

"It's the customs broker. ... there are very specific, it's called harmonized tariff codes that are assigned to each good and then there's a potential tax related to that along with requirements." ([07:50])

He mentions startups like Gaia Dynamics that utilize AI to streamline this process, highlighting the intricate nature of tariff assessments based on material composition, size, and other factors.

Reactions from Logistics and Trucking Companies

The conversation shifts to the responses from logistics companies and truckers facing tariff-induced uncertainties. Silver observes that most trucking companies are adopting a cautious stance, choosing to "stay calm" and "wait and see" rather than making drastic operational changes ([11:49]). This approach includes maintaining current fleet sizes and focusing on supporting existing freight flows, despite reduced volumes in certain sectors.

Joe Weisenthal draws a parallel between market sentiments and industry reactions, noting a shared disbelief that current tariffs could become the long-term status quo. Silver concurs, emphasizing that the industry anticipates negotiations that may alleviate some tariff pressures, although this is uncertain.

Future Outlook and US-China Relations

A critical aspect of the discussion centers on the broader geopolitical landscape, particularly the U.S.-China trade relationship. Matt Silver underscores the pivotal role China plays in global supply chains, stating, "China is really the big one that it's all going to depend on" ([16:39]). He suggests that if significant tariffs remain between the U.S. and China, the ripple effects would slow down overall freight movements, both international and domestic.

The hosts explore the potential for U.S.-China decoupling, which could dramatically reshape supply chains and investment patterns in North America. Tracy Alloway highlights the complexity of rerouting goods, noting that alternative destinations like Vietnam or Mexico are not straightforward solutions due to logistical and economic constraints.

Conclusion

The episode concludes with an acknowledgment of the uncertainty surrounding tariff negotiations and their long-term implications. Both the financial markets and the logistics industry exhibit a collective hope for resolution, anticipating that the current tariff structures are not permanent. Silver remains optimistic that supply chains will stabilize and that new trade agreements could restore momentum to freight movements.

Tracy Alloway emphasizes the centrality of the U.S.-China trade relationship, suggesting that its evolution will significantly influence North American freight dynamics. The discussion wraps up with the hosts expressing appreciation for Matt Silver's insights, underscoring the interconnectedness of global trade policies and their tangible effects on industries.

Notable Quotes

• Matt Silver [02:33]: "Trade for Q1 is up year over year in Mexico, so it is definitely still going the right direction."
• Matt Silver [04:31]: "Trump updated NAFTA to the USMCA and that encouraged more manufacturing to happen in North America and less overseas."
• Matt Silver [07:50]: "It's the customs broker. ... there are very specific, it's called harmonized tariff codes that are assigned to each good and then there's a potential tax related to that along with requirements."
• Matt Silver [11:49]: "Most of those trucking companies are saying, like, hey, we're going to stay calm. We're going to focus on supporting what we can support."
• Matt Silver [16:39]: "China is really the big one that it's all going to depend on."

This comprehensive summary captures the essence of the Odd Lots episode, providing insights into how tariffs are reshaping North American freight, the strategic responses of businesses, and the overarching influence of U.S.-China trade relations on the global economy.