July 7, 2025 • 41 mins
Watch Bloomberg Businessweek Daily LIVE every day on YouTube: http://bit.ly/3vTiACF.
President Donald Trump unveiled the first in a wave of promised letters that threaten to impose higher tariffs rates on key trading partners, including levies of 25% on goods from Japan and South Korea beginning Aug. 1.
Trump also announced 25% rates on Malaysia and Kazakhstan, while South Africa would see a 30% tariff and Laos and Myanmar would face a 40% levy. The nations were the first in what the president promised would be a flurry of unilateral warnings and trade deals announced on Monday, two days before agreements are due from trading partners facing his April 2 so-called reciprocal levies.
“Our relationship has been, unfortunately, far from Reciprocal,” Trump wrote in the letters.
Trump’s second-term rush to overhaul US trade policies has served as a steady source of uncertainty for markets, central bankers and executives trying to game out the effect on production, inventories, hiring, inflation and consumer demand — routine planning that’s hard enough without costs like tariffs that are on one day, off the next.
Today's show features:
- US Representative Kathy Castor (D-FL) on new tariff announcements from the White House and the passage of President Donald Trump’s tax and spending bill
- Bloomberg Economics Geo-Economic Analyst for Latin America Jimena Zuniga on this week’s BRICS summit in Rio de Janeiro
- Bloomberg News Texas Bureau Chief Julie Fine on deadly flash flooding in the Lone Star State
- Bryan Fairbanks, President and CEO of Trex, on the company outlook and key trends in US manufacturing
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg business
Weekdaily reporting from the magazine that helps global leaders stay
ahead with insight on the people, companies, and trends shaping
today's complex economy. Plus global business, finance and tech news
(00:23):
as it happens. The Bloomberg Business Week Daily Podcast with
Carol Masser and Tim Steneveek on Bloomberg Radio.
Speaker 2 (00:32):
We're continuing to get headlines updates on everything related to
trade as the US does get toward that July ninth
deadline that is set to be extended to August first.
For tariffs. Some headlines that we're just getting in the
last few minutes. The US will impose twenty five percent
tariff on imports from Kazakhstan, forty percent tariffs on Laos imports.
Malaysia will see twenty five percent tariffs on Malaysian products.
(00:56):
South Africa thirty percent tariffs on their products come after.
Earlier this afternoon, we heard from the President who said
that the US will impose the twenty five percent tariff
on goods from Japan and a twenty five percent tariff
on South Korean goods effective August first. I want to
bring in Representative Kathy Caster. She's a Democrat who represents
the fourteenth District of Florida. It includes Tampa and parts
(01:18):
of Hillsboro County. Representative, it's good to have you with us.
Thanks so much for joining us. While we have you on,
we had you booked to talk about what Democrats have
as their path forward after the passage of what President
Trump refers to as the one big, Beautiful Bill. We'll
get to that in a few minutes. But because of
your work with commerce and because of your work on manufacturing,
(01:40):
we got to start with tariffs. And what we're hearing
from the White House right now are tariffs the right
way in your view to bring manufacturing back to the
United States.
Speaker 3 (01:47):
Tariffs can play a very important role when they're targeted
and strategic. The problem is that the president is all
over the map. This is chaotic. Businesses do not know
how to rapple with them and respond.
Speaker 4 (02:01):
And these recent.
Speaker 3 (02:03):
Tariffs announced today against our allies Japan and South Korea
and other Asian nations. You know, we were trying to
build a wall to counter China and everything all of
their malign activities when it comes to trade.
Speaker 4 (02:18):
So I really this is a head scratcher.
Speaker 3 (02:21):
Why you build up these tensions with our best trading
partners and allies, and business owners here across the state
of Florida are wondering that as well.
Speaker 4 (02:34):
Why are they facing higher.
Speaker 3 (02:36):
Costs at a time when now with the big ugly bill,
you're adding almost four trillion dollars to the national debt.
Speaker 4 (02:45):
That's also sure to fuel inflation.
Speaker 2 (02:47):
We'll talk about the bill in just a minute. One
more on tariffs, though, I want to also say the
S and BF i've been down about one point one percent.
It did fall a little more than that just after
we heard from the President via truth Social and the
announcement of those additional tariffs or those tariffs, the clarification
of those tariffs on those countries that I just mentioned.
You did say that if tariffs are targeted, they can
(03:09):
play a role in bringing manufacturing back to the United States.
Of the tariffs that the President has implemented or that
are implemented right now, which ones do you agree with?
Which ones are the right way to bring manufacturing back
to the US.
Speaker 4 (03:21):
I can't really point to some.
Speaker 3 (03:23):
I mean, a few years ago, we had targeted solar
modules because we know that the Chinese has been dumping
solar panels and all of those kind of and that
was one strategic way to at a time when we're
trying to reshore all of the clean energy elements to
build up our own supply chains that we used to
(03:44):
own in America. By the way, a targeted effort like
that could be very smart as part of a broad
based strategy, and I just don't see a broad based
strategic strategy right now when it comes to manufacturing. As
a matter of fact, the Big ol Bill just throws
a wrench into the manufacturing boom we had underway in
(04:05):
the US.
Speaker 5 (04:06):
Well, let's talk about that bill, Trump's big beautiful Bill
that you have publicly called the Big Ugly Bill. You've
also said that it's fiscally irresponsible and morally wrong and
an abdominal transfer of wealth from the working class to
the wealthy. What specific provisions in the bill that has
now become law do you find most troubling.
Speaker 3 (04:27):
Well, never before have we adopted a piece of legislation
that gives tex cuts to the wealthiest Americans while at
the same time you are cutting healthcare for seventeen million Americans,
you're taking away food assistance from seniors and veterans and children.
(04:48):
You're cutting pelgrants and student loans. So this is completely
out of whack and it's going to be very costly
ultimately for many American businesses and polly American consumers and families.
Speaker 2 (05:02):
You know, the bill, though at this point, has become law.
So it's essentially what we're talking about is water under
the bridge. And we'll get to the idea of whether
or not Democratic leadership did enough to stop this from
becoming law. But where do you go now? What are
you going to do about this?
Speaker 3 (05:20):
It will be very important for American businesses and families.
Speaker 4 (05:24):
To understand the impact.
Speaker 3 (05:26):
The one piece of it that has not gotten a
lot of attention are the energy provisions. You remember, the
President ran on a promise that he's going to lower
electricity bills, But all of the analysis now say that
when you yank back all of the clean energy tax credits,
it's a recipe for higher electric cost All of the
(05:49):
analysis coming in say higher electric bills for businesses and
consumers alike. They're throwing a wrench in this manufacturing boom
with that we had underway due to our climate and
Clean energy law, we had seen over one thousand factories
open across the country, over four hundred thousand jobs created.
Now what we're hearing our business cancelations all across the
(06:14):
evy battery supply chain. And again, this is not smart
because it's a gift to China. China wants to own,
they want the competitive edge on all clean tech manufacturing.
And we were just starting to build up our supply chains,
our manufacturing so that we can work with allies to
dominate the clean energy sector. And Republicans and the President
(06:38):
now have thrown that all away at a time when
we're also grappling with the higher costs and impacts of
the climate crisis. What a tragic situation. In Texas, My
community is still rebuilding from Hurricanes Helena and Milton that
was supercharged by hotter Gulf waters. And that, you know,
(06:59):
climate isn't just about the weather, it's about your wallet.
And now they have pretty much said we're not going
to be a leader. We're going to see that to China,
and our Americans are going to have to grapple with
rising costs over time. It's it's really a sabotaging, a
self sabotage of this big, ugly bill.
Speaker 4 (07:22):
Continuing on the subject of climate here.
Speaker 5 (07:24):
Do you think that the last minute changes that remove
the excise tax on wind and solar by that industry,
those industries any breathing room.
Speaker 4 (07:33):
It helped, but it just wasn't as harmful.
Speaker 3 (07:38):
So you would have seen just a complete death knell
for clean tech right now if that if that excise
tax has had passed. But right now we're going to
be grappling with rising cost and closure of factories. And
when you're comparing the impacts of tariffs, if tariffs are
intended to boost the stick manufacturing in the US, then
(08:02):
why in the world would you throw a wrench into
our manufacturing boom that we had underway in this country.
Hopefully many of those businesses will hang on, but still
China will continue to try to eat away at a
competitive advantage. And while we are imposing tariffs on our
allies and friends and other countries around the world, China
(08:24):
is going to move in and try to develop those partnerships.
It's just it's a crazy way to do business, and
I'm afraid it's going to cost us a lot.
Speaker 2 (08:33):
The Congressman, I want to shift gears and talk a
little bit about medicaid and the health aspect of this.
Our producer Elizabeth Cedrin crunch some numbers here and found
some really interesting stuff. If you're watching on YouTuber, Bloomberg
Television or Bloomberg Originals, you can see here. The yellow
is Hillsboro County, Florida, a portion of that which falls
(08:55):
which falls into your district. Additionally, other counties as well
are in your district. But if you look at this,
a higher portion of folks in this county versus the
statewide total are actually on annual Medicaid and CHIP enrollment
in the year twenty twenty four more than twenty percent
versus the statewide of eighteen point seven percent. So clearly
(09:16):
a lot of people in your district are going to
be affected by this. How do you plan to counter
these rollbacks?
Speaker 4 (09:24):
This is going to be very difficult.
Speaker 3 (09:25):
Hospitals, doctors, nurses, the American Cancer Society, you name it.
They oppose these draconian cuts to people's healthcare because it's
going to cost lives. The other major impact besides Medicaid,
especially here in the state of Florida, that people will
feel by the end of the year, is the end
(09:46):
to the tax credits for policies offered through the exchange
through the healthcare dot gov marketplace. Under Obamacare, the Affordable
Care Act, there are four million Floridians that rely on
those tax credits that help make their premiums and copays affordable.
We have a lot of small business owners, we have
a lot of entrepreneurs, many in hospitality, and that has
(10:08):
been the go to place for affordable, high quality health insurance.
So while the Republicans sneakily said the Medicaid cuts will
happen maybe in a couple of years, what we're going
to see in Florida is a real roll back in
the ability of folks to afford health insurance for their families.
That mean small business owners will have to grapple with that,
(10:29):
and our health care providers too, who have been waving
red flags and saying danger, danger.
Speaker 4 (10:34):
This is going to cost lives and it's going to
cost money.
Speaker 5 (10:37):
We only have about thirty seconds left, but I want
to get your take on whether you think Democratic leadership
did enough to stop this bill from becoming a.
Speaker 3 (10:46):
Law because of the dire consequences, I would say we
have not done enough. But this has very unpopular. Everywhere
I go. People are very angry. They're saying we are
suffering through an affordability squeeze, and how dear the President
and the Congress try to pull one over on us
and make our lives more expensive at a time when
we really need help in our pocketbooks.
Speaker 2 (11:08):
Congress Women, really appreciate you taking the time and joining us.
Kathy Caster, Representative, a Democrat who represents the fourteenth District
of Florida. It includes Tampa parts of Hillsboro County. She
voted against the bill. Joining us once again from Tampa, Congresswoman,
thanks so much.
Speaker 1 (11:24):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
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Speaker 2 (11:38):
As we've been covering throughout the day, we're hearing more
from the White House about different parts of the world
and different tariffs that will be imposed. South Africa thirty
percent rate, Japan twenty five percent rate, Kazakhstan twenty five percent,
Laos forty percent, Malaysia twenty five percent, me and mar
forty percent. In South Korea twenty five percent. That's just
(11:58):
a quick recap of some of the tariff rates that
the President has announced today. We will bring you more
if we do hear more from the White House and
from Washington, d C. Once again, the President is set
to sign executive order at four o'clock that would extend
that tariff deadline to August first. Well, speaking of some
(12:19):
of these countries, South Africa, for example, the President did
warn on Sunday night that tariffs on countries aligning themselves
with bricks policies. Just as the Group of nations that
includes Brazil, Russia, India, China and South Africa holds a
two day summit in Rio de Janio, the President posting
on True Social over the weekend that he would put
an additional ten percent tariff on any country aligning themselves
(12:41):
with the quote anti American policies of bricks. We welcome
Himana Suniga, Bloomberg Economics geoeconomic analyst for Latin America. She
joins us from the Bloomberg Buenos Aires Bureau. Himya, good
to have you with us. I just want to get
to understand from you about how the tariff news like
(13:02):
we heard over the weekend, but we also heard from
the President on South Africa just in the last couple
of hours. How is this all being absorbed at the
Brick summit.
Speaker 6 (13:10):
Well, according to the press conference that was hosted by
President Lula, who was the host of the summit, the
Bricks did not tried not to react to this message.
President Lula said he considered the imposition or the thread
of tariffs over social media irresponsible, and prompted by one
(13:31):
of the questions from the reporters on the room about
whether the threat had impacted the dynamics of the group
or its cohesiveness, Lula said no, we tried to stay
focused on our agenda and for now there's nothing certain
in terms of whether these tariffs will be implemented or not,
(13:53):
and we kept along.
Speaker 5 (13:56):
This summit held for two days in Brazil. War what
is its actual purpose here for the Bricks nations.
Speaker 7 (14:04):
A bigger problem.
Speaker 5 (14:04):
What is the exact what's the purpose of the Bricks
summit that's being held right now?
Speaker 6 (14:10):
I see, of course, Yeah, so the summit the Bricks
it ssued a lengthy declaration covering multiple policy issues. But yes,
the glass have full is that the Bricks, which is
a very diverse group, managed to achieve consensus on a
(14:31):
lot of the principles that are reflected in the declaration.
The class have empty is that they didn'tive a lot
in terms of very tangible outcomes, except perhaps we're having
unleashed this potential US response. So we are in a
situation in which the most tangible outcome of the summit,
ironically maybe that the it has increased the risk that
(14:53):
the US imposes sanctions on the group. Why because a
lot of the declarations of principles statements of principle in
the in the Leader's Declaration can be considered adults or
tacitly criticizing the US right. So for example, they talked
about their serious concern about unilateral tariffs. They talked about
(15:16):
they need to address health shared health challenges through the who,
which Trump, as you know, has criticized. They talked about
shared environmental challenges, and they need to uphold the Paris Agreement.
A lot of things that President Trumps seems to have
felt the US policies were being criticized for, and that
(15:37):
he seemed he had he thought he had to react to.
Speaker 2 (15:41):
I'm wondering how you're looking at the body right now?
And then like who encompasses bricks? For example, because Brazil
is a lot different than Russia, uh and India has
very different goals than China and South Africa, for example.
And given what we've seen from Russia over the last
three plus years with its invasion of Ukraine and also
(16:03):
with China, and the way that the US now sees
China as more of an adversary in the last eight
years or so, six to eight years than it has
in the past, I'm wondering if that threatens to sort
of splinter the Bricks groups, if you'd have countries not
necessarily want to be part of it, if those other
countries that are seen as hostile to the US are
(16:25):
part of it.
Speaker 6 (16:27):
Yeah, you underscore a key issue, right. The Bricks is
a very diverse group, and that is one of the
key issues that undermines its effectiveness, as you say it
under Unlike the G seven that was traditionally the driver
of the global order and its main enforcer, and that
was a very compact group and cohesive group, all democracies,
(16:51):
all advanced countries, all behind until recently at least behind
the global trade order that was put in place after
World War Two. Bricks span different geographies, different levels of development,
regional rivalries that those of India and China, and they
are held together primarily by a shared sense that emerging
(17:13):
markets should have a more clear and louder voice in
the in the in the in the global policy agenda.
And they want to build a multilateral world. But yeah,
their lack of cohesiveness is something undermining, uh their effectiveness
in terms of achieving tangible outcomes. And as you say,
(17:35):
the fact that now the group is being perceived as
the US perhaps incorrectly perceived as anti US. Some countries
maybe may have an anti Western or anti US bias,
but definitely not all, certainly not Brazil or India, for example.
But the fact that the US targets bricks may lead
some countries to think it over twice before joining the group,
(17:59):
which is one of the strategies that the group has
been pursuing to increment its geo political gravitus. One has
come naturally because the group members grow on average more
than the world does, and so the body is increasing
its share of the global economy. It's currently a twenty
(18:19):
seven percent, which is slightly above that of the US alone.
But the other thing it has been doing and considering
doing further is expanding its membership and now that other
avenue might be complicated or at least slow down by
the US threats.
Speaker 2 (18:37):
You alluded just now to something that I read in
the intro at the beginning of our conversation, and it
was what President Trump posted on his social media platform,
the anti American policies of bricks. Those are his words.
What do you construe as him meaning by the anti
American policies of bricks. Certainly we understand, you know, countries
(18:59):
such as as China and why the US use it
as an adversary in the country such as Russia, for example.
But is there anything else that we should understand about
how the US views this group in terms of what
could be construed as anti American.
Speaker 6 (19:14):
I think the most tangible thing that bricks could do
to undermine the US, even though they don't do it
too undermine the US is to pursue digitarization, but ironic,
and that would be something very concrete that would undermine
US interest. But ironically that does not seem to be
the main thing that President Trump responded to, because the
(19:35):
timing of his comments on Sunday night suggests that he
might have reacted to the content of the Leader's declaration,
which was issued a little before, and we've had very
little in terms of concrete progress towards cigularization. Actually, some
of the Big Bricks members, notably India, are opposed to
this goal, and so the Bricks stayed kind of clear
(19:59):
from but they did write things like, you know, we
condemned the attacks, the traction run, we support the parties agreement,
the WHO the WTO. And it appears that Trump read
criticism in those statesments even though they were not framed
as anti US and they avoided mentioning explicitly US policies.
Speaker 2 (20:22):
He may. I'm going to have to leave it there.
Thanks for joining us on this Monday afternoon. Jimena Zuniga,
Bloomberg Economics geoeconomic analyst for Latin America, joining us from
the Bloomberg Buenos Etis Bureau. For more on the Brick Summit,
check out everything that we have on the Bloomberg termin
and of course at Bloomberg dot com as well.
Speaker 1 (20:43):
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Speaker 2 (21:01):
Well, three days after cataclysmic floods tore through a stretch
of the Texas Hill Country, officials have confirmed the deaths
of twenty seven children and counselors who've been missing from
a girl's summer camp. Authorities counted more than ninety deaths statewide,
and so the number was almost certain to climb as
rescuers sorted through mounds of debris. Julie Fine is Bloomberg
(21:22):
News Texas Bureau chief. She joins us from our Dallas bureau. Julian,
absolutely tragic story that we just cannot begin to imagine,
the devastation, the loss here, we see images. All of
us are so heartbroken about what happened and what is
still happening. First the latest, is this at this point
(21:42):
still search and rescue or is this a recovery operation?
Speaker 8 (21:46):
Well, Governor Abbott was very very quick to say, and
this was in his news conference yesterday. He's not had
one today that he continues to look at this.
Speaker 7 (21:55):
Like a search and rescue.
Speaker 8 (21:56):
Obviously, as we know, as time goes on, that becomes
more difficult. But he wanted to assure the families that
they would do everything they can to try to find
these children. There are still ten campers and one counselor
missing tonight. There's many more still missing throughout the state
of Texas. Also, when you hear from the first responders,
(22:17):
it's just the debris they have to get through. We've
had more bad weather here since the initial flooding, so
they continue to search. That search is still twenty four
to seven and will go on for some time.
Speaker 5 (22:30):
Is there any more bad weather coming and how does
that fact impact this rescue mission now?
Speaker 7 (22:37):
Well, luckily the weather is getting better. There is still
some bad weather.
Speaker 8 (22:42):
But yesterday, for instance, while they were searching, they had
to stop at one point because the rain got so bad.
Speaker 7 (22:48):
However, the forecast.
Speaker 8 (22:49):
Does seem to be improving, which should make it a
little bit easier on the first responders who are here
from across the nation. They are here from the federal government,
from the state and local governments.
Speaker 2 (23:01):
Julie, how does flooding like this happen so suddenly and
ostensibly without warning?
Speaker 7 (23:10):
Well, there were there were warnings.
Speaker 8 (23:12):
The National Weather Service had warnings for three days, and
the warnings.
Speaker 7 (23:16):
Continue to go.
Speaker 8 (23:17):
Here's one thing that everybody has to also recognize the
warnings can be going all day long. They started two
days before they were warned. They were watches, then that
turned into warnings. You can have the warnings out. The
question is are they received. You're talking about a camp
where children, of course don't have cell phones in the
(23:38):
camp and in the area. A big question is was
their internet? Were people able to get them? Also, sirens
the city I believe did not have certain sirens in
certain areas. In terms of the weather, one thing to
understand about Texas weather is it is not predictable, even
for forecasters. At times, you can have a tornado coming,
(24:01):
but at the last minute, because of the weather, it
could veer seventy eighty miles. So there will be a
lot of questions about the warning systems why certain people
didn't know about that, And I'm sorry, go ahead.
Speaker 2 (24:12):
Well, I just want to clarify this a little bit.
When you say there were warnings three days ahead of time,
two days ahead of time, one day ahead of time,
how specific are we talking here? Are we talking like, okay, well,
there could be a storm surge here as a result
of rain that could climb this high and affect this camp.
Speaker 8 (24:31):
I don't know if they were specifically for that camp,
but they were for the area, and I believe there
was a pinpointing of the certain times that the warnings
came out. There were several the evening before and in
the morning. They had stronger storm surges as the.
Speaker 7 (24:46):
Day went on.
Speaker 8 (24:48):
But I think the big question that the local authorities
have to answer is was that soon enough?
Speaker 7 (24:53):
And did those warnings.
Speaker 8 (24:55):
Get to the people who needed to see them immediately?
Speaker 5 (24:59):
What do we understand right now about just the timing
of events and the timing of the worst of the flooding,
Because if it happened early in the morning, isn't it
possible that warnings were simply not heard by people who
were asleep.
Speaker 7 (25:15):
Well, yes, there was.
Speaker 8 (25:16):
The worst of the flooding really began at one o'clock
in the morning, so it's pitch black. So when you're
hearing the stories from survivors, they have flashlights where they're
trying to get out of their cabin. There is one
story of a night watch that had to hold the
kids up on mattresses get them out the window because
the water was coming in so quickly. Again, it was
(25:36):
extremely early in the morning.
Speaker 7 (25:38):
And there was darkness. Clearly that did not help.
Speaker 8 (25:41):
And if you have warnings coming at one o'clock in
the morning, people aren't necessarily going to see them. Here's
another thing to know about Texas. Some people say.
Speaker 7 (25:49):
There is warning fatigue here.
Speaker 8 (25:51):
You get warning so often here because of the weather,
because of the rain and tornadoes. Not everybody always has
their alerts on.
Speaker 2 (26:00):
Listen as you're saying that I've turned my alerts off here,
I turned my alerts off on my phone years ago
here because we are getting warnings. And I get it.
I get it. This is an absolute tragedy, and I
know that everybody's going to try to put pieces together
to try to understand how something like this can be
prevented in the future. And that's where I want to go. Now,
(26:21):
how can a community I can't say rebuild, but how
can an area such as this move forward from something
so tragic.
Speaker 8 (26:31):
They will definitely have a look at what happened in
terms of warning systems. There was a news conference this
morning and that.
Speaker 7 (26:38):
Was specifically discussed.
Speaker 8 (26:40):
Obviously, they'll go back and look at it. Currently you're
still in the middle of search and rescue or search
and recover, so I think they're trying to keep the
focus on that. I mean, clearly, this is something that
has to be dealt with. I think a question about
that as well, is the Texas legislature is finished for
the year after I don't know if if you remember
(27:00):
the storm Yury when there were so much freezing in
the state. State basically stopped for days. Because of that,
they had to make a lot of legislative new laws,
take a lot of action to address that. I'm curious
to see at the end of the month there's a
legislative special session for a few items, if this gets
added to it, or what happens in the next few years,
(27:23):
to see how this can be addressed so that it
never happens again. Texas again is a place of wild weather.
You have a power grid that has been dealt with
for some point. There's a question about infrastructure and water.
This will just add to it. And then there's the
question of who will pay for it. Is it up
to the locals to deal with the warnings in certain cities,
Is the state going to have to kick in? Will
(27:45):
they ask for federal dollars? All of this is going
to have to be addressed.
Speaker 2 (27:49):
You know, because this is America. In twenty twenty five,
it's already become polarized, even though this is still a
search and rescue operation. Democrats in some areas have pointed
to cuts in the federal government, specifically at the National
Weather Service, having an effect on this. Is there anything there.
Speaker 8 (28:06):
Well at this point, you know, the National Weather Service
has said the National Weather Service had the alerts out
that were correct. There were a few vacancies in some
of the offices, but so far what they've been saying
is not enough to affect this. There were certainly enough
people there that evening and the morning to get the
alerts out. Now, will that be looked into more? Sure,
(28:28):
will they look at cuts over the year, Sure, But
at this point, you know, I think really what the
focus still is on is the search and recovery, and
then they're going to have to figure out and that
is certainly a question that we'll be asked.
Speaker 2 (28:42):
Julie, thank you so much for joining us. Do appreciate it.
Julie Fine is Bloomberg News Texas Bureau chief, joining us
from our Dallas bureau.
Speaker 1 (28:52):
You're listening to the Bloomberg Business Week Daily podcast. Catch
us live weekday afternoons from two to five yeas during
Listen on ALP CarPlay and Android Auto with the Bloomberg
Business app, or watch us live on YouTube.
Speaker 2 (29:06):
Well, if you've built a deck in the last few years,
you probably know about Treks. The company makes composite decking
for mostly recycled materials, including reclaimed wood and polyethylene film.
Trex is publicly traded. It's got a market cap of
about six point one billion dollars. The stocks down around
seventeen percent so far this year. Like many companies in
housing and home improvement, it has been a challenging first
(29:27):
half of the year. Brian Fairbanks is with us. He's
president and CEO of Trecks. He joins US in the
Bloomberg Interactive Brokers studio. Brian, welcome, How are you?
Speaker 9 (29:35):
Thanks? Great to be here this afternoon.
Speaker 2 (29:37):
Well, welcome, Welcome. Trek sales in more than forty countries,
so that's kind of where I want to start. How
is the environment in the US for your customers, for
your potential customers versus other parts of the world that
you sell in.
Speaker 9 (29:50):
The US environment is still relatively strong. Most of our
consumers are going to be family income of one hundred
twenty thousand dollars plus, and we've all talked for a
long time about the bifurcation of the premium customer versus
the entry level customer, because most of our customers are
that one hundred plus. We've continued to do well in
(30:11):
the marketplace. This year we gide to five to seven
percent growth. We reiterated that guy just a couple of
weeks ago. Our contractors generally have six to eight week
type backlogs at this point, and overall, we're pleased with
what we're seeing in the market.
Speaker 5 (30:25):
Where are most of the sales coming from. Is it
people homeowners who are putting in a deck for the
first time, or are they remodeling or are they just
completely kind of I guess yeah, remodeling their backyard, all.
Speaker 9 (30:38):
The above, But more often than not, it's going to
be a consumer that's already experienced a wood deck. It's
failed between twelve to fifteen years, maybe eighteen years on
the long end of it. Quality of pressure treated lumber
is not what it used to be, so that decision
and the payback period of putting in a treks deck
versus a wood deck is very different today. But we
(30:59):
also put on a lot new decks on new homes
as well as homes that are just looking for existing
square footage. More difficult to move up to that larger home. Now,
how do I add more space to entertain with your
friend's family and put a deck on the back of
the house.
Speaker 2 (31:14):
But isn't a deck built with treks framed by pressure
treated wood under it anyway? That's crest So is that
is that an issue?
Speaker 9 (31:22):
Ever?
Speaker 2 (31:22):
Where the wood that provides the framing the structure that
doesn't last as long as the trecks.
Speaker 9 (31:30):
That structure is going to be protected by the trek,
so it doesn't get nearly the same beating from a
weather perspective or for chemicals, UV rays, things like that,
so that structure tends to last quite a bit longer,
whereas the decking itself is what's subject to the majority
of the environmental conditions.
Speaker 2 (31:47):
So what exactly is it made of? On the website
it says that it is made of mostly recycled materials,
reclaimed wood, polyethylene film, what's the secret sauce.
Speaker 9 (31:56):
And ninety five percent recycled and reclaimed material. The recycled
piece of it is going to be the polyethylene films
that we buy from all over the country and up
into Canada. It's about one thousand pounds bail of film.
We'll bring that in, we'll reprocess it, and then we
also purchase wood furniture flooring manufacturers from some other sources
(32:16):
as well to mix that together with the plastic. We
extrude it into a deck board. We apply our proprietary
shell on the board to give it its fade, stain
and scratch characteristics. And that's pretty much the way it's done.
Buying recycled materials does give us a healthy cost advantage.
We can be buying plastic anywhere between five cents and
(32:37):
up thirty cents for cleaner plastic. We still have to
process it, so there's some additional cost added, whereas virgin
materials are going to be sixty to seventy cents per pound.
Speaker 2 (32:46):
You mentioned buying some product at least from Canada, the
polyethylene film. The tariff situation, we've spent the whole day
talking about clarity or lack thereof that We are getting
that CEOs and business owners are getting right now from Washington.
How have tariffs affected you.
Speaker 9 (33:01):
Well, there's a lack of clarity, that's for sure. For CEOs,
we are primarily a US manufacturing company. We've got three
manufacturing sites, one in Virginia, one in Nevada, and then
we're building a greenfield site in Little Rock, Arkansas that
we're excited about today. We are recycling plastic in Little
Rock and then we're moving that to our other two
plants to use there as we continue to build out
(33:23):
that facility. Less than five percent of our cost of
goods sold is going to be impacted by tariffs, and
in looking at those tariffs, we look at how can
we potentially source out of other countries, negotiating with those vendors,
and then eventually taking pricing. We've taken a very conservative
view of pricing of let's try to let tariffs settle
out of where their endpoint is going to be, rather
(33:45):
than immediately reacting the day the announcements we're made.
Speaker 5 (33:49):
So we're tim asked about the tariffs, I'm going to
ask about the big beautiful bill. We're going to hit
you with the two main current events of the news
cycle right now. Have you heard anything from the consumer
about how this bill is going to impact their spending behavior?
Speaker 9 (34:04):
It is too early. I think everybody is just beginning
to digest everything that's actually in that bill, and so
I've not really had any feedback from it as of yet.
We haven't had a chance to pull our contractors or
work further with our consumers as well as all of
those dealers as well as retail channel locations.
Speaker 2 (34:24):
I know you're ninety five percent repair remodel based, so
the housing market weakness that we've seen when it comes
to new housing isn't necessarily Can we do a through
line from housing data to you or is this all about, Hey,
somebody's been in a house, they want to put in
a new deck. They're going to use tracks? Is there
(34:45):
any is there any anything that comes you know, when
you're talking about new housing demand and like people buying
new homes that that accompanies demanding tracks.
Speaker 9 (34:53):
The only impact with the new home buying side of
things is it does generate existing home sales. We've all
seen a existing home sales have been lower the past
couple of years. That has driven repair and remodel spending
negative numbers. The past couple of years, we've been able
to well out grow that mid single digit growth for
US small single negative growth in repair and remodel. So
(35:17):
we've been able to well out perform that, but it
would be great to see the existing homesale side of
things really pick up and drive that remodeling engine.
Speaker 2 (35:25):
Do you work at all with the large developers of
property or the large homebuilders like the Lenar's or the
KB Homes for example, to use your materials.
Speaker 9 (35:35):
We do. We've had agreements with the majority of the
large home builders that are in the marketplace, so it
is an important part of our business. But generally we're
about ninety five ninety to ninety five percent repair and
remodel the remainder of that on new home You.
Speaker 4 (35:49):
Guys have a pretty large part of the market share.
Speaker 5 (35:52):
But that's not for lack of competition. James Hardy just
closed on its acquisition of Azek, which is your largest competitor.
How are you thinking about keeping that market share now
that there's been a pretty big deal in the space.
Speaker 9 (36:05):
It's a highly concentrated market. As you mentioned, we're about
fifty percent. Is that TimberTech roughly thirty percent of the marketplace,
and they've always been a good competitor, and I think
it makes both of us better having good competitors that
are out there. We're not going to be seating market share.
Speaker 2 (36:21):
Back to tariffs in terms of how the product is
purchased outside of the US retaliatory tariffs from other countries.
Has that been an issue yet? For you?
Speaker 9 (36:34):
It has not been an issue, And that goes back
to the fact that we're ninety five percent US source,
US manure.
Speaker 2 (36:40):
US source in US manufactured. Let's say you want to
export the US product.
Speaker 9 (36:45):
Right, I see on the flip side, Yeah, the flip.
Speaker 2 (36:47):
Side of that would be another country saying, wait a second,
we don't want you to buy this product from the
US because we're entering this period of global trade that
is more insular, where we're seeing sort of like the
world is not flat anymore. You know, it's kind of
a weird twenty five years. Is that on your radar
(37:07):
at all?
Speaker 9 (37:08):
Our international sales are a small part of the overall company.
Now we do ship to forty countries around the world.
We've not heard any of that feedback as of yet.
As we get further in the year and the tariff
structure settles out to where it's going to end up being,
I expect there'll be some additional discussions around that and
we'll hear more feedback from some of those countries.
Speaker 5 (37:30):
How do you guys kind of deal with the rising
rising commodities prices. I remember writing an article a couple
of years ago when lumber was just absolutely soaring, and
I wrote about like wood alternative companies doing really well
in the face of that. But I imagine that you
do have to source some materials and if inflation does persist,
(37:50):
is that an issue.
Speaker 9 (37:51):
Sure, inflation absolutely hits our business. During the pandemic, we
raise prices like many other building product makers. We also
have a strong internal improvement program where we look at
all of the costs that we can control and understand
how can we take cost out of the business so
that we can fund some of those cost increases Internally,
we know every year the cost of labor is going
(38:12):
to go up, certain commodity costs are going to go
up along the way. How much of that can we
fund by our own internal engineering R and D efforts
and our own efficiency efforts. But sometimes we do have
to take pricing to be able to cover those additional costs.
Speaker 2 (38:28):
One of the big selling points of trecks is just
how long it lasts. This idea of not having to
replace a deck for twenty five years, for example, that
also means that when somebody purchases the product from you,
they're probably not going to buy anything else from you.
How do you build a part of the business that's
like not necessarily services, but more ancillary products that are
(38:50):
add ons, or how do you get that existing customer
who knows about tracks to spend more money with you?
Speaker 9 (38:55):
Right, that's an important point. Our warranties are anywhere from
twenty five up to fifty years. This product will last
a long time, but the market size is such that
there's fifty to sixty million decks in North America. Half
of those decks are at or beyond their serviceable life. Today,
composites account for about twenty five percent of the volume
of decking that's sold. So there is a large opportunity
(39:18):
out there to go convert more of that wood business
into Trek's composite business.
Speaker 2 (39:23):
Is new business still wood business? Like are people still
building wood decks?
Speaker 9 (39:27):
People are still building wood decks?
Speaker 2 (39:28):
Yet, why why are they doing that when this like
when they're in that moment of truth where they're choosing
their material, Why are they still going with wood?
Speaker 9 (39:35):
A lot of it is because that's what they know,
that's what they've done in the past. So the challenge
for us is making sure that we're in front of
that consumer while they're making that decision, showing them that
we have products. In the case of the decking product
are enhanced basics is roughly two times the price of lumber.
So for an extra eight hundred dollars, you can have
a Trek surface on your deck and prices go up
(39:58):
from there. For an extra five h undred dollars. On
top of that, move up to our next line, our
Treks Enhanced Naturals product line. So it's really important that
our marketing engine gets in front of those consumers before
they're making that final decision social media.
Speaker 5 (40:13):
I've seen some of your social media content.
Speaker 2 (40:15):
Ah, Trek's TikTok?
Speaker 6 (40:16):
Is that what it is?
Speaker 4 (40:17):
It's other people on social media think.
Speaker 7 (40:20):
About their debt.
Speaker 2 (40:20):
Oh interesting, I haven't seen that. Hey, Brian, thanks for
stopping by. It's been a couple of years. Do appreciate
you taking the time. Brian Fairbanks, President and CEO of Tracks,
joining us here in the Bloomberg Interactive Brokers Studio.
Speaker 1 (40:32):
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(40:53):
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(00:23):
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Carol Masser and Tim Steneveek on Bloomberg Radio.
Speaker 2 (00:32):
We're continuing to get headlines updates on everything related to
trade as the US does get toward that July ninth
deadline that is set to be extended to August first.
For tariffs. Some headlines that we're just getting in the
last few minutes. The US will impose twenty five percent
tariff on imports from Kazakhstan, forty percent tariffs on Laos imports.
Malaysia will see twenty five percent tariffs on Malaysian products.
(00:56):
South Africa thirty percent tariffs on their products come after.
Earlier this afternoon, we heard from the President who said
that the US will impose the twenty five percent tariff
on goods from Japan and a twenty five percent tariff
on South Korean goods effective August first. I want to
bring in Representative Kathy Caster. She's a Democrat who represents
the fourteenth District of Florida. It includes Tampa and parts
(01:18):
of Hillsboro County. Representative, it's good to have you with us.
Thanks so much for joining us. While we have you on,
we had you booked to talk about what Democrats have
as their path forward after the passage of what President
Trump refers to as the one big, Beautiful Bill. We'll
get to that in a few minutes. But because of
your work with commerce and because of your work on manufacturing,
(01:40):
we got to start with tariffs. And what we're hearing
from the White House right now are tariffs the right
way in your view to bring manufacturing back to the
United States.
Speaker 3 (01:47):
Tariffs can play a very important role when they're targeted
and strategic. The problem is that the president is all
over the map. This is chaotic. Businesses do not know
how to rapple with them and respond.
Speaker 4 (02:01):
And these recent.
Speaker 3 (02:03):
Tariffs announced today against our allies Japan and South Korea
and other Asian nations. You know, we were trying to
build a wall to counter China and everything all of
their malign activities when it comes to trade.
Speaker 4 (02:18):
So I really this is a head scratcher.
Speaker 3 (02:21):
Why you build up these tensions with our best trading
partners and allies, and business owners here across the state
of Florida are wondering that as well.
Speaker 4 (02:34):
Why are they facing higher.
Speaker 3 (02:36):
Costs at a time when now with the big ugly bill,
you're adding almost four trillion dollars to the national debt.
Speaker 4 (02:45):
That's also sure to fuel inflation.
Speaker 2 (02:47):
We'll talk about the bill in just a minute. One
more on tariffs, though, I want to also say the
S and BF i've been down about one point one percent.
It did fall a little more than that just after
we heard from the President via truth Social and the
announcement of those additional tariffs or those tariffs, the clarification
of those tariffs on those countries that I just mentioned.
You did say that if tariffs are targeted, they can
(03:09):
play a role in bringing manufacturing back to the United States.
Of the tariffs that the President has implemented or that
are implemented right now, which ones do you agree with?
Which ones are the right way to bring manufacturing back
to the US.
Speaker 4 (03:21):
I can't really point to some.
Speaker 3 (03:23):
I mean, a few years ago, we had targeted solar
modules because we know that the Chinese has been dumping
solar panels and all of those kind of and that
was one strategic way to at a time when we're
trying to reshore all of the clean energy elements to
build up our own supply chains that we used to
(03:44):
own in America. By the way, a targeted effort like
that could be very smart as part of a broad
based strategy, and I just don't see a broad based
strategic strategy right now when it comes to manufacturing. As
a matter of fact, the Big ol Bill just throws
a wrench into the manufacturing boom we had underway in
(04:05):
the US.
Speaker 5 (04:06):
Well, let's talk about that bill, Trump's big beautiful Bill
that you have publicly called the Big Ugly Bill. You've
also said that it's fiscally irresponsible and morally wrong and
an abdominal transfer of wealth from the working class to
the wealthy. What specific provisions in the bill that has
now become law do you find most troubling.
Speaker 3 (04:27):
Well, never before have we adopted a piece of legislation
that gives tex cuts to the wealthiest Americans while at
the same time you are cutting healthcare for seventeen million Americans,
you're taking away food assistance from seniors and veterans and children.
(04:48):
You're cutting pelgrants and student loans. So this is completely
out of whack and it's going to be very costly
ultimately for many American businesses and polly American consumers and families.
Speaker 2 (05:02):
You know, the bill, though at this point, has become law.
So it's essentially what we're talking about is water under
the bridge. And we'll get to the idea of whether
or not Democratic leadership did enough to stop this from
becoming law. But where do you go now? What are
you going to do about this?
Speaker 3 (05:20):
It will be very important for American businesses and families.
Speaker 4 (05:24):
To understand the impact.
Speaker 3 (05:26):
The one piece of it that has not gotten a
lot of attention are the energy provisions. You remember, the
President ran on a promise that he's going to lower
electricity bills, But all of the analysis now say that
when you yank back all of the clean energy tax credits,
it's a recipe for higher electric cost All of the
(05:49):
analysis coming in say higher electric bills for businesses and
consumers alike. They're throwing a wrench in this manufacturing boom
with that we had underway due to our climate and
Clean energy law, we had seen over one thousand factories
open across the country, over four hundred thousand jobs created.
Now what we're hearing our business cancelations all across the
(06:14):
evy battery supply chain. And again, this is not smart
because it's a gift to China. China wants to own,
they want the competitive edge on all clean tech manufacturing.
And we were just starting to build up our supply chains,
our manufacturing so that we can work with allies to
dominate the clean energy sector. And Republicans and the President
(06:38):
now have thrown that all away at a time when
we're also grappling with the higher costs and impacts of
the climate crisis. What a tragic situation. In Texas, My
community is still rebuilding from Hurricanes Helena and Milton that
was supercharged by hotter Gulf waters. And that, you know,
(06:59):
climate isn't just about the weather, it's about your wallet.
And now they have pretty much said we're not going
to be a leader. We're going to see that to China,
and our Americans are going to have to grapple with
rising costs over time. It's it's really a sabotaging, a
self sabotage of this big, ugly bill.
Speaker 4 (07:22):
Continuing on the subject of climate here.
Speaker 5 (07:24):
Do you think that the last minute changes that remove
the excise tax on wind and solar by that industry,
those industries any breathing room.
Speaker 4 (07:33):
It helped, but it just wasn't as harmful.
Speaker 3 (07:38):
So you would have seen just a complete death knell
for clean tech right now if that if that excise
tax has had passed. But right now we're going to
be grappling with rising cost and closure of factories. And
when you're comparing the impacts of tariffs, if tariffs are
intended to boost the stick manufacturing in the US, then
(08:02):
why in the world would you throw a wrench into
our manufacturing boom that we had underway in this country.
Hopefully many of those businesses will hang on, but still
China will continue to try to eat away at a
competitive advantage. And while we are imposing tariffs on our
allies and friends and other countries around the world, China
(08:24):
is going to move in and try to develop those partnerships.
It's just it's a crazy way to do business, and
I'm afraid it's going to cost us a lot.
Speaker 2 (08:33):
The Congressman, I want to shift gears and talk a
little bit about medicaid and the health aspect of this.
Our producer Elizabeth Cedrin crunch some numbers here and found
some really interesting stuff. If you're watching on YouTuber, Bloomberg
Television or Bloomberg Originals, you can see here. The yellow
is Hillsboro County, Florida, a portion of that which falls
(08:55):
which falls into your district. Additionally, other counties as well
are in your district. But if you look at this,
a higher portion of folks in this county versus the
statewide total are actually on annual Medicaid and CHIP enrollment
in the year twenty twenty four more than twenty percent
versus the statewide of eighteen point seven percent. So clearly
(09:16):
a lot of people in your district are going to
be affected by this. How do you plan to counter
these rollbacks?
Speaker 4 (09:24):
This is going to be very difficult.
Speaker 3 (09:25):
Hospitals, doctors, nurses, the American Cancer Society, you name it.
They oppose these draconian cuts to people's healthcare because it's
going to cost lives. The other major impact besides Medicaid,
especially here in the state of Florida, that people will
feel by the end of the year, is the end
(09:46):
to the tax credits for policies offered through the exchange
through the healthcare dot gov marketplace. Under Obamacare, the Affordable
Care Act, there are four million Floridians that rely on
those tax credits that help make their premiums and copays affordable.
We have a lot of small business owners, we have
a lot of entrepreneurs, many in hospitality, and that has
(10:08):
been the go to place for affordable, high quality health insurance.
So while the Republicans sneakily said the Medicaid cuts will
happen maybe in a couple of years, what we're going
to see in Florida is a real roll back in
the ability of folks to afford health insurance for their families.
That mean small business owners will have to grapple with that,
(10:29):
and our health care providers too, who have been waving
red flags and saying danger, danger.
Speaker 4 (10:34):
This is going to cost lives and it's going to
cost money.
Speaker 5 (10:37):
We only have about thirty seconds left, but I want
to get your take on whether you think Democratic leadership
did enough to stop this bill from becoming a.
Speaker 3 (10:46):
Law because of the dire consequences, I would say we
have not done enough. But this has very unpopular. Everywhere
I go. People are very angry. They're saying we are
suffering through an affordability squeeze, and how dear the President
and the Congress try to pull one over on us
and make our lives more expensive at a time when
we really need help in our pocketbooks.
Speaker 2 (11:08):
Congress Women, really appreciate you taking the time and joining us.
Kathy Caster, Representative, a Democrat who represents the fourteenth District
of Florida. It includes Tampa parts of Hillsboro County. She
voted against the bill. Joining us once again from Tampa, Congresswoman,
thanks so much.
Speaker 1 (11:24):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five Easter and
listen on Apple, Karplay and Android autto with the Bloomberg
Business app, or watch us live on YouTube.
Speaker 2 (11:38):
As we've been covering throughout the day, we're hearing more
from the White House about different parts of the world
and different tariffs that will be imposed. South Africa thirty
percent rate, Japan twenty five percent rate, Kazakhstan twenty five percent,
Laos forty percent, Malaysia twenty five percent, me and mar
forty percent. In South Korea twenty five percent. That's just
(11:58):
a quick recap of some of the tariff rates that
the President has announced today. We will bring you more
if we do hear more from the White House and
from Washington, d C. Once again, the President is set
to sign executive order at four o'clock that would extend
that tariff deadline to August first. Well, speaking of some
(12:19):
of these countries, South Africa, for example, the President did
warn on Sunday night that tariffs on countries aligning themselves
with bricks policies. Just as the Group of nations that
includes Brazil, Russia, India, China and South Africa holds a
two day summit in Rio de Janio, the President posting
on True Social over the weekend that he would put
an additional ten percent tariff on any country aligning themselves
(12:41):
with the quote anti American policies of bricks. We welcome
Himana Suniga, Bloomberg Economics geoeconomic analyst for Latin America. She
joins us from the Bloomberg Buenos Aires Bureau. Himya, good
to have you with us. I just want to get
to understand from you about how the tariff news like
(13:02):
we heard over the weekend, but we also heard from
the President on South Africa just in the last couple
of hours. How is this all being absorbed at the
Brick summit.
Speaker 6 (13:10):
Well, according to the press conference that was hosted by
President Lula, who was the host of the summit, the
Bricks did not tried not to react to this message.
President Lula said he considered the imposition or the thread
of tariffs over social media irresponsible, and prompted by one
(13:31):
of the questions from the reporters on the room about
whether the threat had impacted the dynamics of the group
or its cohesiveness, Lula said no, we tried to stay
focused on our agenda and for now there's nothing certain
in terms of whether these tariffs will be implemented or not,
(13:53):
and we kept along.
Speaker 5 (13:56):
This summit held for two days in Brazil. War what
is its actual purpose here for the Bricks nations.
Speaker 7 (14:04):
A bigger problem.
Speaker 5 (14:04):
What is the exact what's the purpose of the Bricks
summit that's being held right now?
Speaker 6 (14:10):
I see, of course, Yeah, so the summit the Bricks
it ssued a lengthy declaration covering multiple policy issues. But yes,
the glass have full is that the Bricks, which is
a very diverse group, managed to achieve consensus on a
(14:31):
lot of the principles that are reflected in the declaration.
The class have empty is that they didn'tive a lot
in terms of very tangible outcomes, except perhaps we're having
unleashed this potential US response. So we are in a
situation in which the most tangible outcome of the summit,
ironically maybe that the it has increased the risk that
(14:53):
the US imposes sanctions on the group. Why because a
lot of the declarations of principles statements of principle in
the in the Leader's Declaration can be considered adults or
tacitly criticizing the US right. So for example, they talked
about their serious concern about unilateral tariffs. They talked about
(15:16):
they need to address health shared health challenges through the who,
which Trump, as you know, has criticized. They talked about
shared environmental challenges, and they need to uphold the Paris Agreement.
A lot of things that President Trumps seems to have
felt the US policies were being criticized for, and that
(15:37):
he seemed he had he thought he had to react to.
Speaker 2 (15:41):
I'm wondering how you're looking at the body right now?
And then like who encompasses bricks? For example, because Brazil
is a lot different than Russia, uh and India has
very different goals than China and South Africa, for example.
And given what we've seen from Russia over the last
three plus years with its invasion of Ukraine and also
(16:03):
with China, and the way that the US now sees
China as more of an adversary in the last eight
years or so, six to eight years than it has
in the past, I'm wondering if that threatens to sort
of splinter the Bricks groups, if you'd have countries not
necessarily want to be part of it, if those other
countries that are seen as hostile to the US are
(16:25):
part of it.
Speaker 6 (16:27):
Yeah, you underscore a key issue, right. The Bricks is
a very diverse group, and that is one of the
key issues that undermines its effectiveness, as you say it
under Unlike the G seven that was traditionally the driver
of the global order and its main enforcer, and that
was a very compact group and cohesive group, all democracies,
(16:51):
all advanced countries, all behind until recently at least behind
the global trade order that was put in place after
World War Two. Bricks span different geographies, different levels of development,
regional rivalries that those of India and China, and they
are held together primarily by a shared sense that emerging
(17:13):
markets should have a more clear and louder voice in
the in the in the in the global policy agenda.
And they want to build a multilateral world. But yeah,
their lack of cohesiveness is something undermining, uh their effectiveness
in terms of achieving tangible outcomes. And as you say,
(17:35):
the fact that now the group is being perceived as
the US perhaps incorrectly perceived as anti US. Some countries
maybe may have an anti Western or anti US bias,
but definitely not all, certainly not Brazil or India, for example.
But the fact that the US targets bricks may lead
some countries to think it over twice before joining the group,
(17:59):
which is one of the strategies that the group has
been pursuing to increment its geo political gravitus. One has
come naturally because the group members grow on average more
than the world does, and so the body is increasing
its share of the global economy. It's currently a twenty
(18:19):
seven percent, which is slightly above that of the US alone.
But the other thing it has been doing and considering
doing further is expanding its membership and now that other
avenue might be complicated or at least slow down by
the US threats.
Speaker 2 (18:37):
You alluded just now to something that I read in
the intro at the beginning of our conversation, and it
was what President Trump posted on his social media platform,
the anti American policies of bricks. Those are his words.
What do you construe as him meaning by the anti
American policies of bricks. Certainly we understand, you know, countries
(18:59):
such as as China and why the US use it
as an adversary in the country such as Russia, for example.
But is there anything else that we should understand about
how the US views this group in terms of what
could be construed as anti American.
Speaker 6 (19:14):
I think the most tangible thing that bricks could do
to undermine the US, even though they don't do it
too undermine the US is to pursue digitarization, but ironic,
and that would be something very concrete that would undermine
US interest. But ironically that does not seem to be
the main thing that President Trump responded to, because the
(19:35):
timing of his comments on Sunday night suggests that he
might have reacted to the content of the Leader's declaration,
which was issued a little before, and we've had very
little in terms of concrete progress towards cigularization. Actually, some
of the Big Bricks members, notably India, are opposed to
this goal, and so the Bricks stayed kind of clear
(19:59):
from but they did write things like, you know, we
condemned the attacks, the traction run, we support the parties agreement,
the WHO the WTO. And it appears that Trump read
criticism in those statesments even though they were not framed
as anti US and they avoided mentioning explicitly US policies.
Speaker 2 (20:22):
He may. I'm going to have to leave it there.
Thanks for joining us on this Monday afternoon. Jimena Zuniga,
Bloomberg Economics geoeconomic analyst for Latin America, joining us from
the Bloomberg Buenos Etis Bureau. For more on the Brick Summit,
check out everything that we have on the Bloomberg termin
and of course at Bloomberg dot com as well.
Speaker 1 (20:43):
This is the Bloomberg Business Week Daily Podcast. Listen live
each weekday starting at two pm Eastern on Applecarplay and
Android Otto with the Bloomberg Business app. You can also
listen live on Amazon Alexa from our Flagship New York station.
Just say Alexa play bloom to eleven thirty.
Speaker 2 (21:01):
Well, three days after cataclysmic floods tore through a stretch
of the Texas Hill Country, officials have confirmed the deaths
of twenty seven children and counselors who've been missing from
a girl's summer camp. Authorities counted more than ninety deaths statewide,
and so the number was almost certain to climb as
rescuers sorted through mounds of debris. Julie Fine is Bloomberg
(21:22):
News Texas Bureau chief. She joins us from our Dallas bureau. Julian,
absolutely tragic story that we just cannot begin to imagine,
the devastation, the loss here, we see images. All of
us are so heartbroken about what happened and what is
still happening. First the latest, is this at this point
(21:42):
still search and rescue or is this a recovery operation?
Speaker 8 (21:46):
Well, Governor Abbott was very very quick to say, and
this was in his news conference yesterday. He's not had
one today that he continues to look at this.
Speaker 7 (21:55):
Like a search and rescue.
Speaker 8 (21:56):
Obviously, as we know, as time goes on, that becomes
more difficult. But he wanted to assure the families that
they would do everything they can to try to find
these children. There are still ten campers and one counselor
missing tonight. There's many more still missing throughout the state
of Texas. Also, when you hear from the first responders,
(22:17):
it's just the debris they have to get through. We've
had more bad weather here since the initial flooding, so
they continue to search. That search is still twenty four
to seven and will go on for some time.
Speaker 5 (22:30):
Is there any more bad weather coming and how does
that fact impact this rescue mission now?
Speaker 7 (22:37):
Well, luckily the weather is getting better. There is still
some bad weather.
Speaker 8 (22:42):
But yesterday, for instance, while they were searching, they had
to stop at one point because the rain got so bad.
Speaker 7 (22:48):
However, the forecast.
Speaker 8 (22:49):
Does seem to be improving, which should make it a
little bit easier on the first responders who are here
from across the nation. They are here from the federal government,
from the state and local governments.
Speaker 2 (23:01):
Julie, how does flooding like this happen so suddenly and
ostensibly without warning?
Speaker 7 (23:10):
Well, there were there were warnings.
Speaker 8 (23:12):
The National Weather Service had warnings for three days, and
the warnings.
Speaker 7 (23:16):
Continue to go.
Speaker 8 (23:17):
Here's one thing that everybody has to also recognize the
warnings can be going all day long. They started two
days before they were warned. They were watches, then that
turned into warnings. You can have the warnings out. The
question is are they received. You're talking about a camp
where children, of course don't have cell phones in the
(23:38):
camp and in the area. A big question is was
their internet? Were people able to get them? Also, sirens
the city I believe did not have certain sirens in
certain areas. In terms of the weather, one thing to
understand about Texas weather is it is not predictable, even
for forecasters. At times, you can have a tornado coming,
(24:01):
but at the last minute, because of the weather, it
could veer seventy eighty miles. So there will be a
lot of questions about the warning systems why certain people
didn't know about that, And I'm sorry, go ahead.
Speaker 2 (24:12):
Well, I just want to clarify this a little bit.
When you say there were warnings three days ahead of time,
two days ahead of time, one day ahead of time,
how specific are we talking here? Are we talking like, okay, well,
there could be a storm surge here as a result
of rain that could climb this high and affect this camp.
Speaker 8 (24:31):
I don't know if they were specifically for that camp,
but they were for the area, and I believe there
was a pinpointing of the certain times that the warnings
came out. There were several the evening before and in
the morning. They had stronger storm surges as the.
Speaker 7 (24:46):
Day went on.
Speaker 8 (24:48):
But I think the big question that the local authorities
have to answer is was that soon enough?
Speaker 7 (24:53):
And did those warnings.
Speaker 8 (24:55):
Get to the people who needed to see them immediately?
Speaker 5 (24:59):
What do we understand right now about just the timing
of events and the timing of the worst of the flooding,
Because if it happened early in the morning, isn't it
possible that warnings were simply not heard by people who
were asleep.
Speaker 7 (25:15):
Well, yes, there was.
Speaker 8 (25:16):
The worst of the flooding really began at one o'clock
in the morning, so it's pitch black. So when you're
hearing the stories from survivors, they have flashlights where they're
trying to get out of their cabin. There is one
story of a night watch that had to hold the
kids up on mattresses get them out the window because
the water was coming in so quickly. Again, it was
(25:36):
extremely early in the morning.
Speaker 7 (25:38):
And there was darkness. Clearly that did not help.
Speaker 8 (25:41):
And if you have warnings coming at one o'clock in
the morning, people aren't necessarily going to see them. Here's
another thing to know about Texas. Some people say.
Speaker 7 (25:49):
There is warning fatigue here.
Speaker 8 (25:51):
You get warning so often here because of the weather,
because of the rain and tornadoes. Not everybody always has
their alerts on.
Speaker 2 (26:00):
Listen as you're saying that I've turned my alerts off here,
I turned my alerts off on my phone years ago
here because we are getting warnings. And I get it.
I get it. This is an absolute tragedy, and I
know that everybody's going to try to put pieces together
to try to understand how something like this can be
prevented in the future. And that's where I want to go. Now,
(26:21):
how can a community I can't say rebuild, but how
can an area such as this move forward from something
so tragic.
Speaker 8 (26:31):
They will definitely have a look at what happened in
terms of warning systems. There was a news conference this
morning and that.
Speaker 7 (26:38):
Was specifically discussed.
Speaker 8 (26:40):
Obviously, they'll go back and look at it. Currently you're
still in the middle of search and rescue or search
and recover, so I think they're trying to keep the
focus on that. I mean, clearly, this is something that
has to be dealt with. I think a question about
that as well, is the Texas legislature is finished for
the year after I don't know if if you remember
(27:00):
the storm Yury when there were so much freezing in
the state. State basically stopped for days. Because of that,
they had to make a lot of legislative new laws,
take a lot of action to address that. I'm curious
to see at the end of the month there's a
legislative special session for a few items, if this gets
added to it, or what happens in the next few years,
(27:23):
to see how this can be addressed so that it
never happens again. Texas again is a place of wild weather.
You have a power grid that has been dealt with
for some point. There's a question about infrastructure and water.
This will just add to it. And then there's the
question of who will pay for it. Is it up
to the locals to deal with the warnings in certain cities,
Is the state going to have to kick in? Will
(27:45):
they ask for federal dollars? All of this is going
to have to be addressed.
Speaker 2 (27:49):
You know, because this is America. In twenty twenty five,
it's already become polarized, even though this is still a
search and rescue operation. Democrats in some areas have pointed
to cuts in the federal government, specifically at the National
Weather Service, having an effect on this. Is there anything there.
Speaker 8 (28:06):
Well at this point, you know, the National Weather Service
has said the National Weather Service had the alerts out
that were correct. There were a few vacancies in some
of the offices, but so far what they've been saying
is not enough to affect this. There were certainly enough
people there that evening and the morning to get the
alerts out. Now, will that be looked into more? Sure,
(28:28):
will they look at cuts over the year, Sure, But
at this point, you know, I think really what the
focus still is on is the search and recovery, and
then they're going to have to figure out and that
is certainly a question that we'll be asked.
Speaker 2 (28:42):
Julie, thank you so much for joining us. Do appreciate it.
Julie Fine is Bloomberg News Texas Bureau chief, joining us
from our Dallas bureau.
Speaker 1 (28:52):
You're listening to the Bloomberg Business Week Daily podcast. Catch
us live weekday afternoons from two to five yeas during
Listen on ALP CarPlay and Android Auto with the Bloomberg
Business app, or watch us live on YouTube.
Speaker 2 (29:06):
Well, if you've built a deck in the last few years,
you probably know about Treks. The company makes composite decking
for mostly recycled materials, including reclaimed wood and polyethylene film.
Trex is publicly traded. It's got a market cap of
about six point one billion dollars. The stocks down around
seventeen percent so far this year. Like many companies in
housing and home improvement, it has been a challenging first
(29:27):
half of the year. Brian Fairbanks is with us. He's
president and CEO of Trecks. He joins US in the
Bloomberg Interactive Brokers studio. Brian, welcome, How are you?
Speaker 9 (29:35):
Thanks? Great to be here this afternoon.
Speaker 2 (29:37):
Well, welcome, Welcome. Trek sales in more than forty countries,
so that's kind of where I want to start. How
is the environment in the US for your customers, for
your potential customers versus other parts of the world that
you sell in.
Speaker 9 (29:50):
The US environment is still relatively strong. Most of our
consumers are going to be family income of one hundred
twenty thousand dollars plus, and we've all talked for a
long time about the bifurcation of the premium customer versus
the entry level customer, because most of our customers are
that one hundred plus. We've continued to do well in
(30:11):
the marketplace. This year we gide to five to seven
percent growth. We reiterated that guy just a couple of
weeks ago. Our contractors generally have six to eight week
type backlogs at this point, and overall, we're pleased with
what we're seeing in the market.
Speaker 5 (30:25):
Where are most of the sales coming from. Is it
people homeowners who are putting in a deck for the
first time, or are they remodeling or are they just
completely kind of I guess yeah, remodeling their backyard, all.
Speaker 9 (30:38):
The above, But more often than not, it's going to
be a consumer that's already experienced a wood deck. It's
failed between twelve to fifteen years, maybe eighteen years on
the long end of it. Quality of pressure treated lumber
is not what it used to be, so that decision
and the payback period of putting in a treks deck
versus a wood deck is very different today. But we
(30:59):
also put on a lot new decks on new homes
as well as homes that are just looking for existing
square footage. More difficult to move up to that larger home. Now,
how do I add more space to entertain with your
friend's family and put a deck on the back of
the house.
Speaker 2 (31:14):
But isn't a deck built with treks framed by pressure
treated wood under it anyway? That's crest So is that
is that an issue?
Speaker 9 (31:22):
Ever?
Speaker 2 (31:22):
Where the wood that provides the framing the structure that
doesn't last as long as the trecks.
Speaker 9 (31:30):
That structure is going to be protected by the trek,
so it doesn't get nearly the same beating from a
weather perspective or for chemicals, UV rays, things like that,
so that structure tends to last quite a bit longer,
whereas the decking itself is what's subject to the majority
of the environmental conditions.
Speaker 2 (31:47):
So what exactly is it made of? On the website
it says that it is made of mostly recycled materials,
reclaimed wood, polyethylene film, what's the secret sauce.
Speaker 9 (31:56):
And ninety five percent recycled and reclaimed material. The recycled
piece of it is going to be the polyethylene films
that we buy from all over the country and up
into Canada. It's about one thousand pounds bail of film.
We'll bring that in, we'll reprocess it, and then we
also purchase wood furniture flooring manufacturers from some other sources
(32:16):
as well to mix that together with the plastic. We
extrude it into a deck board. We apply our proprietary
shell on the board to give it its fade, stain
and scratch characteristics. And that's pretty much the way it's done.
Buying recycled materials does give us a healthy cost advantage.
We can be buying plastic anywhere between five cents and
(32:37):
up thirty cents for cleaner plastic. We still have to
process it, so there's some additional cost added, whereas virgin
materials are going to be sixty to seventy cents per pound.
Speaker 2 (32:46):
You mentioned buying some product at least from Canada, the
polyethylene film. The tariff situation, we've spent the whole day
talking about clarity or lack thereof that We are getting
that CEOs and business owners are getting right now from Washington.
How have tariffs affected you.
Speaker 9 (33:01):
Well, there's a lack of clarity, that's for sure. For CEOs,
we are primarily a US manufacturing company. We've got three
manufacturing sites, one in Virginia, one in Nevada, and then
we're building a greenfield site in Little Rock, Arkansas that
we're excited about today. We are recycling plastic in Little
Rock and then we're moving that to our other two
plants to use there as we continue to build out
(33:23):
that facility. Less than five percent of our cost of
goods sold is going to be impacted by tariffs, and
in looking at those tariffs, we look at how can
we potentially source out of other countries, negotiating with those vendors,
and then eventually taking pricing. We've taken a very conservative
view of pricing of let's try to let tariffs settle
out of where their endpoint is going to be, rather
(33:45):
than immediately reacting the day the announcements we're made.
Speaker 5 (33:49):
So we're tim asked about the tariffs, I'm going to
ask about the big beautiful bill. We're going to hit
you with the two main current events of the news
cycle right now. Have you heard anything from the consumer
about how this bill is going to impact their spending behavior?
Speaker 9 (34:04):
It is too early. I think everybody is just beginning
to digest everything that's actually in that bill, and so
I've not really had any feedback from it as of yet.
We haven't had a chance to pull our contractors or
work further with our consumers as well as all of
those dealers as well as retail channel locations.
Speaker 2 (34:24):
I know you're ninety five percent repair remodel based, so
the housing market weakness that we've seen when it comes
to new housing isn't necessarily Can we do a through
line from housing data to you or is this all about, Hey,
somebody's been in a house, they want to put in
a new deck. They're going to use tracks? Is there
(34:45):
any is there any anything that comes you know, when
you're talking about new housing demand and like people buying
new homes that that accompanies demanding tracks.
Speaker 9 (34:53):
The only impact with the new home buying side of
things is it does generate existing home sales. We've all
seen a existing home sales have been lower the past
couple of years. That has driven repair and remodel spending
negative numbers. The past couple of years, we've been able
to well out grow that mid single digit growth for
US small single negative growth in repair and remodel. So
(35:17):
we've been able to well out perform that, but it
would be great to see the existing homesale side of
things really pick up and drive that remodeling engine.
Speaker 2 (35:25):
Do you work at all with the large developers of
property or the large homebuilders like the Lenar's or the
KB Homes for example, to use your materials.
Speaker 9 (35:35):
We do. We've had agreements with the majority of the
large home builders that are in the marketplace, so it
is an important part of our business. But generally we're
about ninety five ninety to ninety five percent repair and
remodel the remainder of that on new home You.
Speaker 4 (35:49):
Guys have a pretty large part of the market share.
Speaker 5 (35:52):
But that's not for lack of competition. James Hardy just
closed on its acquisition of Azek, which is your largest competitor.
How are you thinking about keeping that market share now
that there's been a pretty big deal in the space.
Speaker 9 (36:05):
It's a highly concentrated market. As you mentioned, we're about
fifty percent. Is that TimberTech roughly thirty percent of the marketplace,
and they've always been a good competitor, and I think
it makes both of us better having good competitors that
are out there. We're not going to be seating market share.
Speaker 2 (36:21):
Back to tariffs in terms of how the product is
purchased outside of the US retaliatory tariffs from other countries.
Has that been an issue yet? For you?
Speaker 9 (36:34):
It has not been an issue, And that goes back
to the fact that we're ninety five percent US source,
US manure.
Speaker 2 (36:40):
US source in US manufactured. Let's say you want to
export the US product.
Speaker 9 (36:45):
Right, I see on the flip side, Yeah, the flip.
Speaker 2 (36:47):
Side of that would be another country saying, wait a second,
we don't want you to buy this product from the
US because we're entering this period of global trade that
is more insular, where we're seeing sort of like the
world is not flat anymore. You know, it's kind of
a weird twenty five years. Is that on your radar
(37:07):
at all?
Speaker 9 (37:08):
Our international sales are a small part of the overall company.
Now we do ship to forty countries around the world.
We've not heard any of that feedback as of yet.
As we get further in the year and the tariff
structure settles out to where it's going to end up being,
I expect there'll be some additional discussions around that and
we'll hear more feedback from some of those countries.
Speaker 5 (37:30):
How do you guys kind of deal with the rising
rising commodities prices. I remember writing an article a couple
of years ago when lumber was just absolutely soaring, and
I wrote about like wood alternative companies doing really well
in the face of that. But I imagine that you
do have to source some materials and if inflation does persist,
(37:50):
is that an issue.
Speaker 9 (37:51):
Sure, inflation absolutely hits our business. During the pandemic, we
raise prices like many other building product makers. We also
have a strong internal improvement program where we look at
all of the costs that we can control and understand
how can we take cost out of the business so
that we can fund some of those cost increases Internally,
we know every year the cost of labor is going
(38:12):
to go up, certain commodity costs are going to go
up along the way. How much of that can we
fund by our own internal engineering R and D efforts
and our own efficiency efforts. But sometimes we do have
to take pricing to be able to cover those additional costs.
Speaker 2 (38:28):
One of the big selling points of trecks is just
how long it lasts. This idea of not having to
replace a deck for twenty five years, for example, that
also means that when somebody purchases the product from you,
they're probably not going to buy anything else from you.
How do you build a part of the business that's
like not necessarily services, but more ancillary products that are
(38:50):
add ons, or how do you get that existing customer
who knows about tracks to spend more money with you?
Speaker 9 (38:55):
Right, that's an important point. Our warranties are anywhere from
twenty five up to fifty years. This product will last
a long time, but the market size is such that
there's fifty to sixty million decks in North America. Half
of those decks are at or beyond their serviceable life. Today,
composites account for about twenty five percent of the volume
of decking that's sold. So there is a large opportunity
(39:18):
out there to go convert more of that wood business
into Trek's composite business.
Speaker 2 (39:23):
Is new business still wood business? Like are people still
building wood decks?
Speaker 9 (39:27):
People are still building wood decks?
Speaker 2 (39:28):
Yet, why why are they doing that when this like
when they're in that moment of truth where they're choosing
their material, Why are they still going with wood?
Speaker 9 (39:35):
A lot of it is because that's what they know,
that's what they've done in the past. So the challenge
for us is making sure that we're in front of
that consumer while they're making that decision, showing them that
we have products. In the case of the decking product
are enhanced basics is roughly two times the price of lumber.
So for an extra eight hundred dollars, you can have
a Trek surface on your deck and prices go up
(39:58):
from there. For an extra five h undred dollars. On
top of that, move up to our next line, our
Treks Enhanced Naturals product line. So it's really important that
our marketing engine gets in front of those consumers before
they're making that final decision social media.
Speaker 5 (40:13):
I've seen some of your social media content.
Speaker 2 (40:15):
Ah, Trek's TikTok?
Speaker 6 (40:16):
Is that what it is?
Speaker 4 (40:17):
It's other people on social media think.
Speaker 7 (40:20):
About their debt.
Speaker 2 (40:20):
Oh interesting, I haven't seen that. Hey, Brian, thanks for
stopping by. It's been a couple of years. Do appreciate
you taking the time. Brian Fairbanks, President and CEO of Tracks,
joining us here in the Bloomberg Interactive Brokers Studio.
Speaker 1 (40:32):
This is the Bloomberg Business Weekdaily podcast, available on Apple, Spotify,
and anywhere else you get your podcasts. Listen live weekday
afternoons from two to five pm Eastern on Bloomberg dot com,
the iHeartRadio app tune In, and the Bloomberg Business app.
You can also watch us live every weekday on YouTube
(40:53):
and always on the Bloomberg terminal
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