Odd Lots Podcast Summary Episode: What Trump's Tariffs Are Already Doing to World Trade
Release Date: April 7, 2025
Hosts: Joe Weisenthal and Tracy Alloway
Guest: Ryan Peterson, Founder and CEO of Flexport

Introduction to the Episode

In this episode of Odd Lots, Bloomberg's Joe Weisenthal and Tracy Alloway delve into the significant impact of President Donald Trump's tariffs on global trade. As tariffs persist into what appears to be the foreseeable future, the hosts explore the multifaceted repercussions on both financial markets and the real-world economy, bringing together their extensive experience in financial journalism and economic analysis.

Understanding the Tariff Implementation Process

Ryan Peterson begins by elucidating the mechanics of how tariffs are enacted, communicated, and collected:

"[03:20] Ryan Peterson: The tariffs are applied based on the country of origin for the products, typically categorized by product type. These new tariffs are cumulative and added to existing product category tariffs. Payments are made to the US Treasury via ACH or check, though refunds often get lost in the mail."

Key Points:

• Tariffs are typically applied based on the product category and country of origin.
• The recent tariffs are additional, making them cumulative.
• Payment methods include ACH transfers to the US Treasury or traditional checks.

Impact on Businesses and Supply Chains

The discussion shifts to the immediate effects of the tariffs on businesses and global supply chains.

Ryan Peterson explains the altered groundwork for importing goods:

"[04:28] Ryan Peterson: Under normal circumstances, duty rates are determined when goods enter the US. However, the current reciprocal tariffs are based on the vessel's departure date, causing businesses to hurriedly ship goods before the higher tariffs take effect on April 9th."

Key Insights:

• The shift from arrival-based to departure-based tariff assessment is unprecedented.
• Businesses are scrambling to adjust shipping schedules to minimize tariff costs.
• 28% of surveyed companies are pausing ocean freight bookings, indicating significant disruption.

Historical Context and Comparisons

Tracy Alloway draws parallels between the current tariff scenario and past events, particularly the supply chain disruptions during the COVID-19 pandemic.

Ryan Peterson reflects on historical patterns:

"[08:46] Ryan Peterson: Our revenue depends on both the price and volume of shipments. Despite current challenges, historical data shows persistent growth in global trade, suggesting long-term optimism despite short-term disruptions."

Notable Comparison:

• In 2016, when ocean freight prices plummeted due to a carrier bankruptcy, Flexport experienced a 16-fold increase in volume, illustrating how market disruptions can create growth opportunities.

Strategic Shifts and Manufacturing Decisions

Tracy Alloway probes into the strategic adjustments companies are making in response to tariffs, particularly regarding manufacturing locations.

Ryan Peterson addresses the feasibility of shifting manufacturing:

"[15:02] Ryan Peterson: Current tariffs are significantly higher than previous rounds, making it financially unviable for many companies to relocate manufacturing back to the US. For example, furniture import duties have skyrocketed, discouraging companies from moving production domestically."

Key Points:

• The escalation of tariffs makes relocating manufacturing to the US economically challenging.
• Previous strategies of shifting production to countries like Vietnam or Mexico are less effective due to compounded tariff rates.
• There's skepticism about the administration's aim to reindustrialize the US, given the financial impracticalities highlighted by businesses.

Future Outlook and Potential Negotiations

The hosts and Ryan Peterson explore the uncertain future of tariffs and potential avenues for negotiation.

"[20:50] Ryan Peterson: We're closely monitoring our customers' strategies, including price adjustments and sourcing changes. Despite the grim outlook, there is hope for negotiations, as indicated by administration officials, which could lead to some tariff concessions."

Key Insights:

• Flexport is actively engaging with customers to navigate the tariff-induced turmoil.
• Monitoring consumer price adjustments helps Flexport gauge the transmission of tariff costs through the supply chain.
• Potential negotiations by global trading partners may offer some relief, but uncertainty remains high.

Economic Implications and Long-Term Consequences

The conversation concludes with reflections on the broader economic implications of sustained tariffs.

Tracy Alloway emphasizes the long-term uncertainties:

"[22:24] Tracy Alloway: The macroeconomic implications hinge on how tariff costs are absorbed across the supply chain. Middlemen and retailers have margins that could either absorb or pass on these costs to consumers."

Joe Weisenthal adds his perspective on business profitability and investment:

"[22:48] Joe Weisenthal: Tariffs make running businesses in the US less profitable, leading to reduced hiring and investment. This environment counters the administration's goal of reindustrialization, fostering a cycle of deindustrialization instead."

Long-Term Concerns:

• Persistent tariffs may lead to sustained higher costs for consumers and reduced profitability for businesses.
• The uncertainty hampers long-term investment and confidence in the manufacturing sector.
• The potential for delayed industrial investments mirrors post-2008 economic hesitations, indicating prolonged economic repercussions.

Conclusion: Navigating Uncertainty

The episode wraps up with a somber acknowledgment of the challenges ahead:

"[24:40] Tracy Alloway: The uncertainty will never be off the table, always hovering in the background."

Final Thoughts:

• The enduring uncertainty surrounding tariff policies creates a precarious environment for businesses and global trade.
• While negotiations might offer temporary relief, the structural challenges posed by high tariffs present significant hurdles to achieving desired economic outcomes.

Notable Quotes with Timestamps

• Ryan Peterson [03:20]: "These new tariffs get added to those product category tariffs. So it's cumulative."
• Ryan Peterson [04:28]: "Under normal circumstances, the duties are determined when goods enter the US, but now it's based on departure."
• Ryan Peterson [08:46]: "Historically, global trade has grown 4% annually, and I have a strong conviction that this will continue."
• Tracy Alloway [22:24]: "The macroeconomic implications hinge on how tariff costs are absorbed across the supply chain."
• Joe Weisenthal [22:48]: "Tariffs make running businesses in the US less profitable, leading to reduced hiring and investment."

Implications for Stakeholders

For Businesses:

• Immediate need to adjust supply chains and shipping schedules to minimize tariff impacts.
• Reevaluation of manufacturing locations is financially constrained due to elevated tariff rates.
• Increased operational costs may lead to higher prices for consumers or reduced profit margins.

For Consumers:

• Potential rise in prices of imported goods as businesses pass on tariff costs.
• Limited availability of certain products if businesses reduce imports.

For the Economy:

• Reduced business profitability and investment could slow economic growth.
• Long-term deindustrialization risks undermining reindustrialization efforts.
• Persistent uncertainty hampers confidence and strategic planning within the manufacturing sector.

Looking Ahead

As tariffs continue to influence global trade dynamics, Odd Lots underscores the necessity for businesses to remain adaptable and vigilant. While historical trends offer a backdrop of potential long-term growth, the current environment of high tariffs and uncertainty poses significant challenges that could reshape the landscape of global manufacturing and trade.

Follow-Up and Additional Resources: For more insights and detailed discussions, listeners are encouraged to follow the hosts and guest on social media and explore additional episodes and content available on Bloomberg's Odd Lots platform.