May 1, 2025 • 17 mins
One month after Trump’s “Liberation Day” tariffs, Q1 earnings reports for a range of US companies are in.
On today’s episode, Bloomberg’s Shelly Banjo joins host Sarah Holder to talk through what those reports are revealing about companies’ reactions to Trump’s trade war. Are they pausing, pivoting or panicking?
Read more of Shelly Banjo’s work.
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:09):
American CEOs have been trying to avoid talking about how
tariffs will impact their business for a while, but this
earning season something is starting to change.
Speaker 1 (00:19):
After months and months and months of US calling companies
and CEOs saying what do you think about tariffs? What
do you think about tariffs, we're seeing them have to
actually start making decisions for tariffs.
Speaker 2 (00:30):
Shelley Banjo oversees Bloomberg's business coverage for the Americas, and
as she sifted through a recent flurry of reports from
Q one, one thing became clear. The time for ignoring
Trump's trade war is over.
Speaker 1 (00:43):
What we are seeing now with this earning season is
that they have to quantify. Okay, this is going to
be our projected hit to our profits, to our sales,
what have you to the tariffs. Here are some of
the business decisions we're starting to make.
Speaker 2 (00:54):
One of the most sobering projections came from General Motors,
which just lowered its earning, saying it could suffer as
much as a five billion dollar hit from auto tariffs.
Speaker 1 (01:05):
That is the largest sum that we've seen quantified yet
among companies.
Speaker 2 (01:08):
But Shelley says not every company is approaching these economic
headwinds with the same level of urgency. Because there's no
one playbook for how to respond to tariff whiplash, I.
Speaker 1 (01:20):
Had to sort of figure out, Okay, how are these
companies waiting through it since no one's really telling them
what to do. Came up with these sort of three
scenarios from what we've seen people doing so far.
Speaker 2 (01:30):
Scenario one, ride the tariffs out.
Speaker 1 (01:33):
So there's a bucket of companies that are like, we
still don't know, it's too soon to tell.
Speaker 2 (01:40):
Scenario two adapt to a new normal.
Speaker 1 (01:43):
Companies that are we know that there's going to be
a tariff hit, but we think we can rejigger our
business to be able to absorb it. So that means
let me furlough employees or cut staff, or hold up
on buybacks.
Speaker 2 (01:57):
And then there's scenario three, the unerual motors route.
Speaker 1 (02:01):
Then there's this third bucket of companies, which are sort
of a holy you know what moment.
Speaker 2 (02:07):
As earning season forces some companies to get real with
their shareholders and the public about the impacts of tariffs.
Just what picture are they painting for their future and
what could that mean for their bottom line. I'm Sarah Holder,
and this is the big take from Bloomberg News today
on the show, what corporate earnings are revealing about how
(02:29):
companies plan to weather the trade war and what it
will mean for supply chains, stocks and prices. Bloomberg Shelly
Banjo says, looking at these three buckets of business reactions
to tariffs can serve as a guide to understanding how
(02:50):
US companies are navigating uncertainty, shifting their strategies, and communicating
their path forward. The first bucket are these companies that
say they won't see much of any effect from tariffs.
They're kind of waiting and seeing, but they might be
a little bit more insulated. What businesses are we talking
about there?
Speaker 1 (03:09):
So pharma is a big question mark right now because
so far they've been spared from a lot of tariffs.
There's a separate sort of investigation that they're looking into
that are going to be sector specific tariffs on pharma
two thirty two tariffs. They're trying to figure out is
this going to impact pharma? So right now it is
sort of defensible for a company like Pfizer to say
(03:29):
we're not exactly sure what's going to happen. That being said,
a lot of their competitors have come out and said, well,
we think it's going to impact us by X one
hundred million dollars. At the very least, they're giving investors
some sort of indication of how and when and why
this would hit.
Speaker 2 (03:45):
Would you say that this first bucket of companies is
being pollyanna ish about their expectations for how tariffs will affect.
Speaker 1 (03:52):
Then I think it was the norm a few weeks
ago to say, we don't know this is going to
exclude tariff impacts because we just had a lot less information.
Now that we have a little bit more information, it
becomes a little less defensible to model out because some
of the decisions that you're making now for the remainder
of the year, you really have to make them now,
(04:13):
not having a full picture. Trump is going to change
his mind probably or change things. So this whole idea
of we have to wait and see because Trump could
change his mind is a defensible argument. But if you
are running a big, multinational global business, it sort of
seems a little pollantage to say, well, we're just going
to wait and see what happens.
Speaker 2 (04:33):
Okay, so let's talk about the second bucket, which are
the companies that will face some teriff related challenges but
might ultimately be able to work around them.
Speaker 1 (04:41):
So some of the companies that came out and said
that recently this week was Coca Cola, Aultria, the cigarette maker.
These companies said, you know what, we fully realized that
tariffs are here. They are baked into our forecast, they're
baked into our outlooks. But we think we're still going
to be able to absorb them as long as they
stay the way they are, because we'll move things around.
(05:03):
These particular companies didn't get into some of the specifics,
but different CEOs that I've spoken to. So there are
multiple levers you can pull. You hold your capex, for example,
like you don't build that factory that you're going to build.
You maybe put a pause on share buybacks. We saw
that with General Motors this week, or you put a
hiring freeze, you don't go into new business lines. There
(05:27):
are going to be companies who are going to have
to cut a lot deeper, and that's going to end
up hurting those companies. But there's a sort of bucket
of companies that are saying, so far this is manageable.
It's not going to be great. We're not going to
grow for SAE like as much as we would love to,
but we're still going to be able to be okay.
Speaker 2 (05:44):
Thinking about adaptations. Government data released yesterday showed a surge
in imports from companies that are looking to take advantage
of the president's ninety day pause. Is that something you're
seeing in terms of how companies are working around these tariffs,
preparing now for or future pain.
Speaker 1 (06:01):
Definitely. We saw that with the car company, so they
had a huge run up in car sales because think
about that, it's a big ticket item. You've been thinking
about it, You've been talking to your family about buying
a car. You maybe visited a couple of car dealerships,
so you think to yourself, Okay, if I'm going to
buy a car in the next six months, now's the
time to do it before it gets more expensive. The
(06:22):
issue we're running up against now with the cars is
how much more inventory do you have left of that
Tara free inventory when our company's going to start to
raise the prices. We had one CEO of a company
that makes consumer product goods that you can find in
like a home depot or a target come in and
say you know what, this year, the best sale might
(06:42):
just be Mother's Day, which is not something you normally
think about. But if you think about the holidays, you know,
many months from now, sure you might be ten to
fifteen percent off, but if everyone's going to start to
raise prices in the next couple of weeks, your cheapest
price for that product might be right about now.
Speaker 2 (06:59):
So are telling you, you know, we are now starting
to adapt to this, We're starting to plan for this.
But why weren't they planning for it before Trump even
got elected? When he was talking about this constantly on
the campaign trail.
Speaker 1 (07:11):
Yeah, that's a good question that I've been asking. We
had someone in this morning that said, well, nobody knew
this was going to happen, And I said, well, nobody
wanted maybe this to happen. But if you were listening
to Trump on the campaign trail for many, many months,
you knew this was going to happen. I think the
issue is that it never felt certain. There wasn't like, Okay,
this is what's going to happen. Here's the percentage rates,
(07:33):
here are the countries that are going to be impacted.
It was always this very broad you know, we're going
to bring manufacturing back to the US. We're going to
give tariffs to everyone around the country, and you can't
really manage a business unless you have the specifics around that.
You did see companies even since Trump one point zero,
building up their infrastructure and manufacturing in the US. A
lot of pharma companies Johnson and Johnson, for example, Eli
(07:57):
Lilly like bringing creating manufacturing capacity in the US over
the last few years. But I think a lot of
CEOs were sort of waiting for specifics.
Speaker 2 (08:08):
When we come back, Shelley and I dig into bucket
number three, the companies that know for sure that the
tariffs are going to be a big blow. We talk
about how they plan to navigate those challenges and what
those plans mean for investors and consumers Today. General Motors
(08:32):
cut its profit outlook by billions of dollars after grappling
with the effects of auto tariffs on its business. It
revised its outlook from as much as fifteen point seven
billion dollars down to as little as ten billion dollars.
The motorcycle maker Harley Davidson withdrew its forecast for twenty
twenty five, saying tariffs could cost them as much as
(08:52):
one hundred and seventy five million dollars this year. GM
and Harley are examples of companies that can't take a
weight and see approach to tariffs. They're in that third
bucket of businesses that Bloomberg Shelly Banjo has been tracking.
Speaker 1 (09:06):
These companies are sort of seeing the rubbers hitting the road.
We saw Craft Hignds saying we need to start managing
our business for decline and consumer demand. And you saw
Jet Blues saying not only are we shifting our business
because of worsening economic demand and consumers, but that it's
getting worse, like things are not good and they seem
to be getting worse.
Speaker 2 (09:27):
What other sectors and companies might be most impacted.
Speaker 1 (09:30):
I think here the consumers really the problem, the ones
that are really consumer focused. Because you're getting dinged by
a lot of things. You're getting dinged by high prices,
by how hard it is to move supply chains quickly enough.
You don't have that customer base that is really locked in.
I mean, consumers have so much choice that when it's
(09:53):
cheaper somewhere else, I'm going to go somewhere else pretty easily.
And so that's I think the biggest weakness see is
a lot of these consumer companies. So we saw companies'
CEOs of Target, Walmart, others go up to the White
House and sort of tell Donald Trump to his face,
there will be empty shelves come holiday season if we
(10:14):
don't get a little relief. So what a lot of
them are asking for is could we have a little
bit of a grace period to shift some of our production?
Could we you know, can you work with us here?
We want to move some of our production. We want
to move some of our manufacturing. But it's not something
that can happen overnight. So that's sort of what they're
asking Donald Trump in the administration.
Speaker 2 (10:34):
For How long would that grace period have to be
for them to really prepare?
Speaker 1 (10:39):
It depends who you ask. I mean there are some
people car factories, for example, who say, you know, it
takes four or five years to build a plant. So
there is one strategy of just waiting out the administration,
right like you take pain for four years, rather than
build a plant that you might not use. It's going
to be higher cost. I mean, that is certainly a
strategy that we've seen some companies talking about. Some of
(11:02):
those weight and C strategies might actually be weighted out strategies,
but we don't. We don't really know for sure. Some
companies have talked about we can move a whole bunch
of production within six months between maybe China to India
or China to Vietnam. It's much harder to move something
from China to the US.
Speaker 2 (11:21):
When you're looking at the earning reports and seeing companies
sort of admit to themselves and to investors that tariffs
are going to have a major hit on them, what
kind of numbers are you seeing? What is the magnitude
of that challenge?
Speaker 1 (11:34):
So right now it is not as big as one
would think. I mean, so far, we saw GM come
out with the biggest number yet at five billion dollars.
Before that, we had seen things like two hundred million,
five hundred million, eight hundred and fifty million, depending on
the company. As earning season plays out, we're going to
start to get even more specificity from the Trump administration
on the tariffs, and then we'll start to see the
(11:56):
different impacts. And all of these are projections, So what
we'll get next quarter is what actually happened. The more
worrisome sign, though, is this hit to innovation. We talked
to a couple of companies that said, well, we're not
going to launch a new product this year because it's
too dangerous, it's too risky, and it takes a lot
(12:17):
of money, and we don't even know if we're going
to get it produced in the place that we want
to make it. So at that point, you're stopping companies
from actually coming out to even launch new things, which
come Christmas time is going to mean that a lot
of the hot new items won't actually even be there.
Speaker 2 (12:34):
Less investment and innovation could also mean lost jobs. Private
sector numbers released this week by ADP showed a sharp
slowdown and hiring, and that unease could also show up
in tomorrow's jobs report, which will be the first to
reflect President Trump's Liberation Day tariffs.
Speaker 1 (12:52):
When you're talking to companies, all of a sudden, job
postings are disappearing, they're not filling those jobs. With the
big companies, you have a seen huge layoff numbers. Yet
with a lot of the smaller companies, like the one
I was saying about with the innovation, they were saying, well,
we don't really need a new product development team right
now if everything is is paused. And so I said
(13:13):
to that CEO, Well, are you furlowing them? They're like,
we're just going to fire them because we'll bring them
back when we can. But right now there's nothing for
them to.
Speaker 2 (13:22):
Do, so they're making sort of short term decisions that
might have long term impacts exactly based on the current uncertainty.
What are the warning signs for investors? Is there sort
of a canary in the coal mine in these earning
reports that they're looking at right now?
Speaker 1 (13:40):
So this question has been very interesting to me. The
first couple of companies that came out and said tariffs
are going to impact us and here's how and here's why,
a lot of them, we saw their stocks go up.
And then companies that said we can't quantify the impacts
of our tariffs, we saw the stocks go down. And
I asked my porters what is going on, and we
(14:02):
spoke to a number of investors, a number of analysts
that are saying, at this moment, CEOs are actually getting
rewarded for their honesty. They're saying, we are going to
manage this business as if there was a recession coming.
At Bastian, the Delta CEO was one of the first
CEOs to stand up and say I don't know if
there's a recession. We might not know if there's a recession,
but I'm going to manage the business as if there
(14:24):
is a recession coming. I'm going to betten down the hatches,
reduce my costs, really be careful about any sort of
hiring or anything like that, and stock what up. And
I think this idea of investors and analysts rewarding these
CEOs and actually taking this seriously and actually managing their
business for the time that we're in rather than managing
(14:44):
the business for what they hope might happen.
Speaker 2 (14:46):
Is there going to be a point at which the
Trump administration needs to take some action to help out
some of these companies and these sectors.
Speaker 1 (14:53):
Well, I think you're seeing that now. So this week
you saw the auto parts tariffs exhibit and Donald Trump
coming out and saying, Okay, we see you auto companies.
We see you're trying your moving production, You're stopping production
in different parts of the country, Like we're going to
give you a break on these auto parts that really
will cripple you. So I think you sort of have
(15:15):
these companies doing this calculus saying, we know we're not
going to win everything. What can we ask for what
is a manageable thing to push for?
Speaker 2 (15:25):
Is there a point at which the negotiating power might
switch and companies might have more power to ask for
more of what they want from the Trump administration.
Speaker 1 (15:32):
I mean, that's the question, right, is that it wasn't
the media, it wasn't Trump's advisors, it wasn't a number
of different factions that sort of had him rethink is tariffs.
It was the market. So is the market sort of
this last big force that Trump takes seriously? So if
we get to a point where the stock market continues
(15:55):
to go down, where consumers stop buying, where jobs start dropping,
where there's nothing else that you can really argue with,
then you know, maybe that's when we start to see
some more of those concessions. I don't think we're there
yet at that point, but you know, you are seeing
like these different negotiations happening, and then that makes it
even harder to predict what's going on because then you
can't even count on that. You know, you can't even
(16:18):
count on these big tariffs that are impacting because if
they're going to be switched and reversed anyway, you don't
want to build a new plant. If you're not going
to have to.
Speaker 2 (16:28):
This is the Big Take from Bloomberg News. I'm Sarah Holder.
This episode was produced by Alex tie. It was edited
by Patty Hirsh, Aaron Edwards, and Patherine Larkin. It was
fact checked by Audreynatapia and Rachel Lewis Krisky and mixed
in sound designed by Alex Sugura. Our senior producer is
Naomi Shavin. Our senior editor is Elizabeth Ponso. Our deputy
executive producer is Julia Weaver. Our executive producer is Nicole
(16:51):
Beemster Boor. Sage Bauman is Bloomberg's head of Podcasts. If
you liked this episode, make sure to subscribe and review
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back tomorrow
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:09):
American CEOs have been trying to avoid talking about how
tariffs will impact their business for a while, but this
earning season something is starting to change.
Speaker 1 (00:19):
After months and months and months of US calling companies
and CEOs saying what do you think about tariffs? What
do you think about tariffs, we're seeing them have to
actually start making decisions for tariffs.
Speaker 2 (00:30):
Shelley Banjo oversees Bloomberg's business coverage for the Americas, and
as she sifted through a recent flurry of reports from
Q one, one thing became clear. The time for ignoring
Trump's trade war is over.
Speaker 1 (00:43):
What we are seeing now with this earning season is
that they have to quantify. Okay, this is going to
be our projected hit to our profits, to our sales,
what have you to the tariffs. Here are some of
the business decisions we're starting to make.
Speaker 2 (00:54):
One of the most sobering projections came from General Motors,
which just lowered its earning, saying it could suffer as
much as a five billion dollar hit from auto tariffs.
Speaker 1 (01:05):
That is the largest sum that we've seen quantified yet
among companies.
Speaker 2 (01:08):
But Shelley says not every company is approaching these economic
headwinds with the same level of urgency. Because there's no
one playbook for how to respond to tariff whiplash, I.
Speaker 1 (01:20):
Had to sort of figure out, Okay, how are these
companies waiting through it since no one's really telling them
what to do. Came up with these sort of three
scenarios from what we've seen people doing so far.
Speaker 2 (01:30):
Scenario one, ride the tariffs out.
Speaker 1 (01:33):
So there's a bucket of companies that are like, we
still don't know, it's too soon to tell.
Speaker 2 (01:40):
Scenario two adapt to a new normal.
Speaker 1 (01:43):
Companies that are we know that there's going to be
a tariff hit, but we think we can rejigger our
business to be able to absorb it. So that means
let me furlough employees or cut staff, or hold up
on buybacks.
Speaker 2 (01:57):
And then there's scenario three, the unerual motors route.
Speaker 1 (02:01):
Then there's this third bucket of companies, which are sort
of a holy you know what moment.
Speaker 2 (02:07):
As earning season forces some companies to get real with
their shareholders and the public about the impacts of tariffs.
Just what picture are they painting for their future and
what could that mean for their bottom line. I'm Sarah Holder,
and this is the big take from Bloomberg News today
on the show, what corporate earnings are revealing about how
(02:29):
companies plan to weather the trade war and what it
will mean for supply chains, stocks and prices. Bloomberg Shelly
Banjo says, looking at these three buckets of business reactions
to tariffs can serve as a guide to understanding how
(02:50):
US companies are navigating uncertainty, shifting their strategies, and communicating
their path forward. The first bucket are these companies that
say they won't see much of any effect from tariffs.
They're kind of waiting and seeing, but they might be
a little bit more insulated. What businesses are we talking
about there?
Speaker 1 (03:09):
So pharma is a big question mark right now because
so far they've been spared from a lot of tariffs.
There's a separate sort of investigation that they're looking into
that are going to be sector specific tariffs on pharma
two thirty two tariffs. They're trying to figure out is
this going to impact pharma? So right now it is
sort of defensible for a company like Pfizer to say
(03:29):
we're not exactly sure what's going to happen. That being said,
a lot of their competitors have come out and said, well,
we think it's going to impact us by X one
hundred million dollars. At the very least, they're giving investors
some sort of indication of how and when and why
this would hit.
Speaker 2 (03:45):
Would you say that this first bucket of companies is
being pollyanna ish about their expectations for how tariffs will affect.
Speaker 1 (03:52):
Then I think it was the norm a few weeks
ago to say, we don't know this is going to
exclude tariff impacts because we just had a lot less information.
Now that we have a little bit more information, it
becomes a little less defensible to model out because some
of the decisions that you're making now for the remainder
of the year, you really have to make them now,
(04:13):
not having a full picture. Trump is going to change
his mind probably or change things. So this whole idea
of we have to wait and see because Trump could
change his mind is a defensible argument. But if you
are running a big, multinational global business, it sort of
seems a little pollantage to say, well, we're just going
to wait and see what happens.
Speaker 2 (04:33):
Okay, so let's talk about the second bucket, which are
the companies that will face some teriff related challenges but
might ultimately be able to work around them.
Speaker 1 (04:41):
So some of the companies that came out and said
that recently this week was Coca Cola, Aultria, the cigarette maker.
These companies said, you know what, we fully realized that
tariffs are here. They are baked into our forecast, they're
baked into our outlooks. But we think we're still going
to be able to absorb them as long as they
stay the way they are, because we'll move things around.
(05:03):
These particular companies didn't get into some of the specifics,
but different CEOs that I've spoken to. So there are
multiple levers you can pull. You hold your capex, for example,
like you don't build that factory that you're going to build.
You maybe put a pause on share buybacks. We saw
that with General Motors this week, or you put a
hiring freeze, you don't go into new business lines. There
(05:27):
are going to be companies who are going to have
to cut a lot deeper, and that's going to end
up hurting those companies. But there's a sort of bucket
of companies that are saying, so far this is manageable.
It's not going to be great. We're not going to
grow for SAE like as much as we would love to,
but we're still going to be able to be okay.
Speaker 2 (05:44):
Thinking about adaptations. Government data released yesterday showed a surge
in imports from companies that are looking to take advantage
of the president's ninety day pause. Is that something you're
seeing in terms of how companies are working around these tariffs,
preparing now for or future pain.
Speaker 1 (06:01):
Definitely. We saw that with the car company, so they
had a huge run up in car sales because think
about that, it's a big ticket item. You've been thinking
about it, You've been talking to your family about buying
a car. You maybe visited a couple of car dealerships,
so you think to yourself, Okay, if I'm going to
buy a car in the next six months, now's the
time to do it before it gets more expensive. The
(06:22):
issue we're running up against now with the cars is
how much more inventory do you have left of that
Tara free inventory when our company's going to start to
raise the prices. We had one CEO of a company
that makes consumer product goods that you can find in
like a home depot or a target come in and
say you know what, this year, the best sale might
(06:42):
just be Mother's Day, which is not something you normally
think about. But if you think about the holidays, you know,
many months from now, sure you might be ten to
fifteen percent off, but if everyone's going to start to
raise prices in the next couple of weeks, your cheapest
price for that product might be right about now.
Speaker 2 (06:59):
So are telling you, you know, we are now starting
to adapt to this, We're starting to plan for this.
But why weren't they planning for it before Trump even
got elected? When he was talking about this constantly on
the campaign trail.
Speaker 1 (07:11):
Yeah, that's a good question that I've been asking. We
had someone in this morning that said, well, nobody knew
this was going to happen, And I said, well, nobody
wanted maybe this to happen. But if you were listening
to Trump on the campaign trail for many, many months,
you knew this was going to happen. I think the
issue is that it never felt certain. There wasn't like, Okay,
this is what's going to happen. Here's the percentage rates,
(07:33):
here are the countries that are going to be impacted.
It was always this very broad you know, we're going
to bring manufacturing back to the US. We're going to
give tariffs to everyone around the country, and you can't
really manage a business unless you have the specifics around that.
You did see companies even since Trump one point zero,
building up their infrastructure and manufacturing in the US. A
lot of pharma companies Johnson and Johnson, for example, Eli
(07:57):
Lilly like bringing creating manufacturing capacity in the US over
the last few years. But I think a lot of
CEOs were sort of waiting for specifics.
Speaker 2 (08:08):
When we come back, Shelley and I dig into bucket
number three, the companies that know for sure that the
tariffs are going to be a big blow. We talk
about how they plan to navigate those challenges and what
those plans mean for investors and consumers Today. General Motors
(08:32):
cut its profit outlook by billions of dollars after grappling
with the effects of auto tariffs on its business. It
revised its outlook from as much as fifteen point seven
billion dollars down to as little as ten billion dollars.
The motorcycle maker Harley Davidson withdrew its forecast for twenty
twenty five, saying tariffs could cost them as much as
(08:52):
one hundred and seventy five million dollars this year. GM
and Harley are examples of companies that can't take a
weight and see approach to tariffs. They're in that third
bucket of businesses that Bloomberg Shelly Banjo has been tracking.
Speaker 1 (09:06):
These companies are sort of seeing the rubbers hitting the road.
We saw Craft Hignds saying we need to start managing
our business for decline and consumer demand. And you saw
Jet Blues saying not only are we shifting our business
because of worsening economic demand and consumers, but that it's
getting worse, like things are not good and they seem
to be getting worse.
Speaker 2 (09:27):
What other sectors and companies might be most impacted.
Speaker 1 (09:30):
I think here the consumers really the problem, the ones
that are really consumer focused. Because you're getting dinged by
a lot of things. You're getting dinged by high prices,
by how hard it is to move supply chains quickly enough.
You don't have that customer base that is really locked in.
I mean, consumers have so much choice that when it's
(09:53):
cheaper somewhere else, I'm going to go somewhere else pretty easily.
And so that's I think the biggest weakness see is
a lot of these consumer companies. So we saw companies'
CEOs of Target, Walmart, others go up to the White
House and sort of tell Donald Trump to his face,
there will be empty shelves come holiday season if we
(10:14):
don't get a little relief. So what a lot of
them are asking for is could we have a little
bit of a grace period to shift some of our production?
Could we you know, can you work with us here?
We want to move some of our production. We want
to move some of our manufacturing. But it's not something
that can happen overnight. So that's sort of what they're
asking Donald Trump in the administration.
Speaker 2 (10:34):
For How long would that grace period have to be
for them to really prepare?
Speaker 1 (10:39):
It depends who you ask. I mean there are some
people car factories, for example, who say, you know, it
takes four or five years to build a plant. So
there is one strategy of just waiting out the administration,
right like you take pain for four years, rather than
build a plant that you might not use. It's going
to be higher cost. I mean, that is certainly a
strategy that we've seen some companies talking about. Some of
(11:02):
those weight and C strategies might actually be weighted out strategies,
but we don't. We don't really know for sure. Some
companies have talked about we can move a whole bunch
of production within six months between maybe China to India
or China to Vietnam. It's much harder to move something
from China to the US.
Speaker 2 (11:21):
When you're looking at the earning reports and seeing companies
sort of admit to themselves and to investors that tariffs
are going to have a major hit on them, what
kind of numbers are you seeing? What is the magnitude
of that challenge?
Speaker 1 (11:34):
So right now it is not as big as one
would think. I mean, so far, we saw GM come
out with the biggest number yet at five billion dollars.
Before that, we had seen things like two hundred million,
five hundred million, eight hundred and fifty million, depending on
the company. As earning season plays out, we're going to
start to get even more specificity from the Trump administration
on the tariffs, and then we'll start to see the
(11:56):
different impacts. And all of these are projections, So what
we'll get next quarter is what actually happened. The more
worrisome sign, though, is this hit to innovation. We talked
to a couple of companies that said, well, we're not
going to launch a new product this year because it's
too dangerous, it's too risky, and it takes a lot
(12:17):
of money, and we don't even know if we're going
to get it produced in the place that we want
to make it. So at that point, you're stopping companies
from actually coming out to even launch new things, which
come Christmas time is going to mean that a lot
of the hot new items won't actually even be there.
Speaker 2 (12:34):
Less investment and innovation could also mean lost jobs. Private
sector numbers released this week by ADP showed a sharp
slowdown and hiring, and that unease could also show up
in tomorrow's jobs report, which will be the first to
reflect President Trump's Liberation Day tariffs.
Speaker 1 (12:52):
When you're talking to companies, all of a sudden, job
postings are disappearing, they're not filling those jobs. With the
big companies, you have a seen huge layoff numbers. Yet
with a lot of the smaller companies, like the one
I was saying about with the innovation, they were saying, well,
we don't really need a new product development team right
now if everything is is paused. And so I said
(13:13):
to that CEO, Well, are you furlowing them? They're like,
we're just going to fire them because we'll bring them
back when we can. But right now there's nothing for
them to.
Speaker 2 (13:22):
Do, so they're making sort of short term decisions that
might have long term impacts exactly based on the current uncertainty.
What are the warning signs for investors? Is there sort
of a canary in the coal mine in these earning
reports that they're looking at right now?
Speaker 1 (13:40):
So this question has been very interesting to me. The
first couple of companies that came out and said tariffs
are going to impact us and here's how and here's why,
a lot of them, we saw their stocks go up.
And then companies that said we can't quantify the impacts
of our tariffs, we saw the stocks go down. And
I asked my porters what is going on, and we
(14:02):
spoke to a number of investors, a number of analysts
that are saying, at this moment, CEOs are actually getting
rewarded for their honesty. They're saying, we are going to
manage this business as if there was a recession coming.
At Bastian, the Delta CEO was one of the first
CEOs to stand up and say I don't know if
there's a recession. We might not know if there's a recession,
but I'm going to manage the business as if there
(14:24):
is a recession coming. I'm going to betten down the hatches,
reduce my costs, really be careful about any sort of
hiring or anything like that, and stock what up. And
I think this idea of investors and analysts rewarding these
CEOs and actually taking this seriously and actually managing their
business for the time that we're in rather than managing
(14:44):
the business for what they hope might happen.
Speaker 2 (14:46):
Is there going to be a point at which the
Trump administration needs to take some action to help out
some of these companies and these sectors.
Speaker 1 (14:53):
Well, I think you're seeing that now. So this week
you saw the auto parts tariffs exhibit and Donald Trump
coming out and saying, Okay, we see you auto companies.
We see you're trying your moving production, You're stopping production
in different parts of the country, Like we're going to
give you a break on these auto parts that really
will cripple you. So I think you sort of have
(15:15):
these companies doing this calculus saying, we know we're not
going to win everything. What can we ask for what
is a manageable thing to push for?
Speaker 2 (15:25):
Is there a point at which the negotiating power might
switch and companies might have more power to ask for
more of what they want from the Trump administration.
Speaker 1 (15:32):
I mean, that's the question, right, is that it wasn't
the media, it wasn't Trump's advisors, it wasn't a number
of different factions that sort of had him rethink is tariffs.
It was the market. So is the market sort of
this last big force that Trump takes seriously? So if
we get to a point where the stock market continues
(15:55):
to go down, where consumers stop buying, where jobs start dropping,
where there's nothing else that you can really argue with,
then you know, maybe that's when we start to see
some more of those concessions. I don't think we're there
yet at that point, but you know, you are seeing
like these different negotiations happening, and then that makes it
even harder to predict what's going on because then you
can't even count on that. You know, you can't even
(16:18):
count on these big tariffs that are impacting because if
they're going to be switched and reversed anyway, you don't
want to build a new plant. If you're not going
to have to.
Speaker 2 (16:28):
This is the Big Take from Bloomberg News. I'm Sarah Holder.
This episode was produced by Alex tie. It was edited
by Patty Hirsh, Aaron Edwards, and Patherine Larkin. It was
fact checked by Audreynatapia and Rachel Lewis Krisky and mixed
in sound designed by Alex Sugura. Our senior producer is
Naomi Shavin. Our senior editor is Elizabeth Ponso. Our deputy
executive producer is Julia Weaver. Our executive producer is Nicole
(16:51):
Beemster Boor. Sage Bauman is Bloomberg's head of Podcasts. If
you liked this episode, make sure to subscribe and review
The Big Take or where you listen to podcasts. It
helps people find the show. Thanks for listening. We'll be
back tomorrow
Hosts And Creators
Sarah Holder
Saleha Mohsin
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