July 11, 2025 • 36 mins
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President Donald Trump threatened a 35% tariff on some Canadian goods and raised the prospect of increasing levies on most other countries, ramping up his trade rhetoric in comments that weighed on stocks and boosted the US dollar.
The tariff level on Canada would take effect from Aug. 1, the president said. The announced rate is an increase from the current 25% tariff that’s imposed on US imports from Canada that aren’t shipped under the terms of the US-Mexico-Canada Agreement.
“Fentanyl is hardly the only challenge we have with Canada, which has many Tariff, Non-Tariff, Policies and Trade Barriers, which cause unsustainable Trade Deficits against the United States,” Trump said in a letter to Canadian Prime Minister Mark Carney, posted on social media Thursday.
Trump’s announcement on Canada came as he told NBC News on Thursday that he’s also eyeing blanket tariffs of 15% to 20% on most trading partners. The current global baseline minimum tariff rate for nearly all US trading partners is 10%.
Today's show features:
- Bloomberg News Senior White House Correspondent Josh Wingrove on President Donald Trump's latest tariff announcements against Canada and his exclusive on Vietnam’s trade war response.
- Ann Miletti, Head of Equity Investments at Allspring Global Investments on the market outlook heading into earnings season
- Bloomberg News National Security Reporter Nick Wadhams on the latest developments from the War in Ukraine and the report that North Korea is supplying as much as 40% of Russia's ammunition
- CFO Briefing with Harmit Singh, Chief Financial and Growth Officer of Levi Strauss & Co. and Bloomberg News Senior Editor Nina Trentmann
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Transcript
Episode Transcript
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Speaker 1 (00:02):
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(00:23):
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Speaker 2 (00:32):
I mentioned trade certainly front and center, and it's front
and center for markets because President Trump threatened a thirty
five percent tariff on some Canadian goods. He also raised
the prospect of increasing tariffs on most other countries, ramping
up his trade rhetoric and comments that weigh on stocks
and boosted the dollar today. Separately, our Bloomberg News team
was the first report that Vietnam's leadership was caught off
(00:54):
guard by the President's announcement of a twenty percent tariff.
That's according to people familiar with the matter, and that
the kind is looking to negotiate down that rate. Josh
Wingrove is a part of the team that had the exclusive.
He's Bloomberg New Senior White House correspondent. He joins us
from Washington, d C. Josh, I want to start with
this Vietnam story, because the President announced last week that
(01:15):
Vietnam had agreed to a twenty percent tariff. Did this
come as a surprise to the leaders of Vietnam.
Speaker 3 (01:22):
It seems to have come as a surprise to them.
And it seems that this deal that the President announces
actually maybe a little bit closer to these tariff letters
in that there's a unilateral element to it. It looks
like the Vietnamese were hoping for a number, you know,
several points below that one, and the number twenty cot
them off guard. Our colleagues there saying that this deal,
(01:43):
or if we're calling it, that this announcement of the president,
the US president has not been amplified by Vietnamese state media,
particularly heavily, so it remains a little bit unclear. Now,
remember this is the only deal with one of the
countries that was facing a potential terrif hike this week.
About the nearly five dozen countries. He also has sort
of a framework deal with the UK itself had some questions,
(02:06):
and of course they've got that deal with China to
essentially keep talking. So you know, the deals just really
aren't materializing now. Trump himself has said he's not particularly
stressed about that because he simply wants to set unilateral
rates anyway. So whether he'll do that or not, we
will see. But there's been a lot of developments here
on trade this week, in the past forty eight hours
or so. But the Vietnam one is a reminder that
(02:27):
even the things that they do announce it as deals
come with all kinds of caveats on them.
Speaker 4 (02:33):
Definitely a lot of news that we're getting this week
as it pertains to tariffs. But Vietnam here, can you
just put into context here for our viewers, how big
of a trading partner are they or the United States.
Speaker 3 (02:46):
They're a major trading partner in the United States, and
they were sort of a bell weather because there have
been long standing and i mean pre Trump administration and
bipartisan concerns about what's called transhipment, essentially the Chinese routing
stuff through vi ANAM to get around whatever tariffs are
applied to China. So they were sort of a test kid, Hey,
how are you going to deal with this? And what
(03:06):
Trump announced was essentially a double tariff for trans ship
goods and this twenty percent rate for all other goods,
and that you know, there's still some questions swirling about that,
including whether you know it would include sort of roll
in previous tariffs or not, and that the Secretary of
Besson was asked about that earlier this week. But it
really does look like it's let's say, more fluid than not,
(03:29):
and so that of course hangs in the air as
we look forward to these China talks. Secretary Bessant Lutnik
USTR Jamison Greer. We're expecting a new round of China talks,
they said, early next month. But it also looks like
Bess and Lutnik are going to Japan, where they could
perhaps cross past with the Chinese or even pick up
(03:49):
the talks with the Japanese, which themselves are having problems
right now in those negotiations. So lots of moving parts
here right now. But remember that market shock in April
second when President Trump announced these Liberation Day tariffs, initially
rolled them back amid that market fallout, but a week later,
right now, we're sort of barreling towards another Liberation Day
in a few weeks.
Speaker 2 (04:09):
That's and you know we're gonna speak to an Meletti
exactly about that point, Josh, As some folks have said,
it doesn't seem like the markets are really taking that
August first deadline seriously. You said there are a lot
of moving parts here. Certainly, just in the last ten minutes,
we're getting another headline that the US is working toward
an interim trade deal with India that could reduce its
proposed tariffs to blow twenty percent. This according to people
(04:29):
familiar with the matter, and it puts the South Asian
nation in a favorable position against its peers in the region.
Our Bloomberg News team reporting that back to Vietnam, though,
because you and the team on this story reporting that
Vietnam is looking to negotiate that twenty percent lower to
maybe the ten or fifteen percent so level, how exactly
would they do this, Like, what do you think the
(04:49):
president wants to see and what concessions could Vietnam make?
Speaker 3 (04:55):
Your guess is as good as mine, because the way
President Trump has announced it, and again we don't know
that the he's agreed to this was that they agreed
to open their market to US goods full stop, and
therefore that's kind of what he's looking for. It's hard
to imagine offhand what kind of other carrots they can
put on the end of that stick. Now, of course
they want a lower rate. Trump has really not been
(05:16):
you know, horse trading. There's not really been an indication
of that. And you mentioned in the top about this
sort of musing about setting a higher floor. That is
one of the biggest questions I had this week. He
told the NBC yesterday, Hey, we're looking at maybe fifteen
percent or twenty percent. We don't know whether he meant
just for these countries, the about five dozen, the ones
where the US has a trades a goods trade deficit.
(05:40):
Is he talking about those, the ones that have been
paused at ten percent? Are they going to go up
fifteen or is he talking about everyone. He's talking about
every country, including ones with where the US runs a
trade surplus, and including ones that are like friends like Australia,
the UK, that kind of thing. And if those if
that's what he's talking about, he's talking about a very
widespread increase. And not to drawn on too much, but
(06:01):
last night we had the Canada Development that letter on
to Canada saying he'd raise their rate to thirty five percent.
Really important caveat here right now, it's a three tiered
system for US tariffs on Canada, twenty five percent for
a lot of products, ten percent for some energy products,
and zero percent for USMCA compliant goods. That's Trump's reworked
NAFTA from his first term. We are told that the
(06:21):
thirty five percent rate is poised to be applied only
to that twenty five percent rate. The ten would stay
where it is and the USMCA would remain with its
carve out. As of now, that's the expectation, but our
sources cautioning us that this is a fluid situation and
as we know, with Donald Trump, anything's possible. But the
Canada one also came a bit of the left field
last night. But it does look potentially like a more
(06:43):
targeted increase of that tariff than perhaps other scenarios where
it was sort of an across the board thirty five.
Speaker 4 (06:49):
Josh sticking with Canada here, I mean, of course, this
thirty five percent threat for tariffs here would be really
huge here for Canada, is Mark Harney doing enough? How
much stak do they have in the game, and how
much progress is President Trump making here?
Speaker 3 (07:04):
Carnee has been more private in his negotiation tactics and
his predecessor Trudeau, and we'll see the Canadians. When Carnian
Trump met at the G seven last month in Alberta,
Carnee said a public sort of thirty day deadline that
we're kind of coming up against in a week or two.
The Americans never said that deadline, they never published it.
It's not in writing like the July ninth and August
(07:25):
first deadlines are, and so it's unclear whether or not
they're still trying to reach something by then. Now, of
course Trump has put this August first date on there.
If all that's happening on August first with Canada is
that the rate goes from twenty five to thirty five,
but other things don't change, it's not clear how Prime
Minister Carney will react and whether he'll have much incentive
to give stuff in return to get to try to
(07:48):
haggle to a lower rate. I should note, of course,
Canadian public sentiment is very sour. People are upset there
about how the country is being treated a major trading
partner of the US, and so the political put push
for Carney is not so much to bend the knee
and make a deal, but arguably to do the opposite,
to dig in and play tough with Trump.
Speaker 2 (08:07):
Josh, we are bringing up live pictures of President Trump
right now. He's touring the devastation in Canada. He's there
with the First Lady. He's also there with Governor Greg
Abbott of Texas. I'm wondering about the unanswered questions that
you still have. You know, we've gotten quite a few
letters this week from the President about trade and about
(08:28):
different tariff rates on other countries. You and the team
have reported on Vietnam and on Canada going into the weekend.
What's the unanswered question that remains for investors who are
watching this and really for the global investing audience.
Speaker 3 (08:39):
I mean, if you squint, you can look at these
tea leaves into sort of two completely different directions. One,
we don't have details on the EU. The China talks
are coming potentially that August. Deed Lens extended this report
today from our great colleagues about India. Maybe they get
some kind of interim deal. Canada comes in smaller than
maybe it could have otherwise been if all those dominoes
(09:00):
fall that way. The tariff barrage coming on August first
will be more on the smaller end of the range
of outcomes. The flip side is if he just keeps
farming out letters and doesn't get deals that he likes
and starts announcing unilateral deals like with Vietnam that maybe
the other countries balk at, then we could just have
an August first filled with announcements, including potentially if things
go sideways with say the EU, which has been a
(09:22):
very silent ques silent issue here. You know, big block,
huge trading partner, had been facing a tariff increase. Trump
hasn't said a peep, although he eluded on Thursday in
an interview with NBC that there might be a letter
to the EU coming, So we'll see. I think there's
a few sort of bell Weathers, the EU chief among them,
but we just don't know the scale of the tariff
situation that we're walking into on August first. I should
(09:44):
also know that that copper deadline he also set for
August first, so it's not just the country by country
tariff's coming on that day.
Speaker 2 (09:49):
Yeah, fifty percent. That tiny economy, the EU's economy, certainly
one for us to hell focus on. Josh, always appreciate
your time, Josh Win Grove, Bloomberg News, a senior White
House correspondent in Washington, DC.
Speaker 1 (10:02):
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us live weekday afternoons from two to five East during
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Speaker 2 (10:16):
Se Well, the markets kind of seem to be taking
this tariff news in stride. You heard Josh mentioned April second,
and then the pivot a few just a little over
a week later, to that extension to July ninth, and
then another extension. And look, we're just off of all
time highs. And that's really what I want to talk
to Anne Maletti about the question of complacency in the market.
Is Jamie Diamond warned yesterday and Maletti is back with us.
(10:38):
She's head of Equity Investments in chief diversity officer of
an all Spring Global Investments. They've got about six hundred
billion dollars in assets under management. She joins us here
in the Bloomberg Business Week studio. Is there complacency in
the markets?
Speaker 5 (10:51):
I think there is.
Speaker 6 (10:52):
A little in certain places. I wouldn't call it broad complacency, though, Well.
Speaker 2 (10:58):
What is the difference between what's happened since mid April
and the twenty five percent increase to new records in
the S and P five hundred versus messaging that we've
gotten from the President about tariffs, because that threat is
still there.
Speaker 6 (11:13):
I totally agree the thread is still there. We know
tariffs are going higher. I do think investors are a
little bit more comfortable that there's a negotiation process going on.
So despite the deadlines and changing rhetoric that we get
on a daily basis, they know there's some flexibility going
on behind the scenes.
Speaker 2 (11:33):
So it sounds like you're saying the market is not
fully pricing in a hard and fast deadline of August first.
Speaker 6 (11:40):
Probably not a hard and fast deadline, and probably not
peak tariff rights either.
Speaker 4 (11:47):
And you know, when I'm looking at the VIX index
right now, we saw it surge up about the fifty
two handle back in April, and if you look at
it now, it's about sixteen right now. But I mean,
of course, people are really looking to see whether or
not it'll rise to twenty. At what point would you
raise an eyebrow and say, hey, the market is really
nervous about what's going on right now.
Speaker 6 (12:06):
Look, I think volatility can still exist, and I wouldn't
be surprised if we woke up next week and we
get a sharp rise in volatility because of some announcement
that we're not you know, thinking about today. I mean,
typically those those sharp rises and volatility happen because of
something unexpected. The one thing I do have to say
(12:29):
that I feel a little bit better about more recently
is the breath that we're seeing in the market. And
instead of that broad or that intense, deep concentration and
just a handful of names, you're kind of seeing positive
performance out of almost all industries in the SMP and
(12:49):
more broadly even downcap, and within those industries, you're starting
to see companies with good fundamentals starting to act more favorably.
And that's a healthy sign and it shows that there's
you know, to the point of complacency. I think there's
some real work that is being done to really look
(13:12):
at company fundamentals and try to position where you want
to be for the next you know event.
Speaker 4 (13:18):
So if you look at the market from New Year's
Day to now, it's almost like we're in the same place.
So much has happened in between, but we're still flirting
with all time nice here. But that being said, I
won't necessarily ask you where are the safe haven areas?
But where are the areas for opportunity? Right now? What
are you telling your clients?
Speaker 6 (13:34):
Yeah, it's a it's a great question, and it's a
question we get asked often, right, So I always think
about it as risk versus reward, And I would say
from a market cab standpoint, I really like the kind
of themid cab space, So not all the way down
to small cap, but that mid to small area there's
(13:54):
still a lot of names and companies that have continued
to perform well, especially ones with strong balance sheets, experience
management teams, and companies that can kind of control their
own destiny, have a lot of flexibility even given all
the changing kind of rules and things happening around them.
That's a sweet spot in the kind of size space.
(14:17):
In terms of industries like healthcare, I see a lot
of our investment teams taking interest there, but not out
of the typical healthcare services drug areas underneath. If you
think about where the next layer of innovation is going
to come from, how are we all going to get
(14:37):
healthcare a little bit more efficiently and in a new
probably way. There's a lot of companies that are exploring
and interesting in that area. And then lastly, from an
asset class standpoint, I think emerging markets in international space
is really interesting.
Speaker 2 (14:54):
Here just thirty seconds help us look ahead to the
banker innings next week. We heard from Delta yesterday, Levi's
yesterday today solid report, Stockhire as a result, good start.
Speaker 6 (15:03):
I think it's a good start, and I think you know,
we're going to see some volatility within earnings. Not all
things will be created equally, and this is where I
think active managers really do. This is where all the
work comes out to play right where you know, in
this environment some companies really can adjust quickly and others
(15:25):
just can't.
Speaker 2 (15:26):
And Meletti, good to see you, Thanks so much for
joining us. That's a Letti, head of Equity Investments, also
chief Diversity Officer over at all Spring Global Investments.
Speaker 1 (15:36):
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Speaker 2 (15:54):
But I want to get to the latest on Russia's
invasion of Ukraine. North Korea is now supplying as much
as forty percent of Russia's ammunition for the war in
Ukraine as the partnership between Pyongyang and Moscow deepens. This
is according to the head of the Ukrainian military intelligence. Severally,
President Trump said he plans to make a quote major
statement on Russia as the US prefars to send more
(16:14):
American weapons to Ukraine. Also, President Trump's Special envoy to Ukraine,
Keith Kellogg, will arrive in Kiev on Monday and spend
a week in Ukraine. This according to report from the
Ukrainian news site nob and I Live. Nick Wadams is
with us. He's a Bloomberg News national security team leader.
He's usually based in Washington, d C. But he is
here in New York. Nick, I want to start with
(16:35):
what we heard late yesterday, this quote major statement on
Russia from President Trump that's set to come on Monday.
Do we have any idea what this will be.
Speaker 7 (16:44):
We have some suspicions of what it'll be. What we
have seen in the last couple of weeks as the
President has dramatically shifted his tone toward Vladimir Putin. So
whereas he had previously been effusive in his praise the
president and really condemning President Volodimir's Lensky Ukraine, he's now
shifted and essentially said he's run out of patients with
Vladimir Putin over the fact that he has refused to
(17:07):
stop the bombardment of Ukraine. So it could be a
couple of things. One could be sanctions. He's talked favorably
about a bill working its way through the Senate right now, though, well,
the bill would go after sales of Russian oil. So
they imposed this price cap that allowed Russia to sell
some oil. Basically, they wanted restrict oil, but not tank
the oil market. So there is the possibility that they
(17:27):
would ratchet that up. Okay, that's the big one. The
other is the possibility that he'll really open the floodgates
on weapons. So he has not sought more money from
Congress in his second term to provide more weapons to Ukraine.
A possibility that he'll say, we know he's more favorable
toward the idea of sending weapons, so he may say
we're going to put some money where our mouth is
on them.
Speaker 2 (17:47):
But is that politically tenuous for the president given the
especially during the campaign, there was this idea that Okay,
if Democrats win, We're just going to keep sending money
in weapons to Ukraine. There's also this wing in the
republic Party that's like, hey, this is not our war
to be fighting.
Speaker 7 (18:03):
Well, I mean, it's it's the politics of it aren't
really clear. But you have this sanctions bill in the
Senate that has like eighty five senators on board, so
real bipartisan support. And there is a very strong wing
of the Republican Party that supports a lot more aid
to Ukraine. And then you have the fact that you
know President Trump, you know, he has said openly, you know,
I get to define what America first is, so get
(18:25):
on board, you know. And we've seen a lot of
evidence that his the lot of the MAGA supporters have
really been supportive of whatever he decides to do, including
bombing Iran. So that's a big question. There are several people, though,
including JD. Vance and Secretary of Defense Pete Hegseath, who
have been much more ambivalent about the idea of US
the US committing more weaponry to Ukraine. So you could
(18:46):
a lot will depend if he does do that on
the dollar figure, If it's you know, a sixty billion
dollars supplemental like Joe Biden signed towards the tail end
of his term, that's that would be a very big signal.
If it's if it's anything less than ten billion, I
think you'd see that as sort of a hedge by
the president.
Speaker 5 (19:04):
Nick.
Speaker 4 (19:04):
So with North Korea's applying as much as forty percent
of Russia's ammunition, we know that Russia is providing money
and technology to North Korea in exchange for these weapons.
What chapter are we in right now in the war?
How big of an asset is this for Russia.
Speaker 7 (19:20):
Well, it's a huge asset. What they really need is
a lifeline. They need continuous weapons. They're spending a lot
of their ammunitions. You've seen this uptick in attacks by
Russia against Ukraine drones things like that. So they are
running low and they need as much help as they
can get. Iran is no longer really part of the procedure,
(19:40):
part of the process because they you know, obviously everything
that's happened in the war with Israel and the strikes
by the US, they're really sort of scraping the bottom
of the barrel with North Korea. The challenge is that
there is no end in sight there. The US cannot
really put any pressure on North Korea. So it is
a fairly consistent and reliable a lifeline for Russia that
(20:02):
it just would not otherwise get, and it's becoming more
and more dependent on So of.
Speaker 4 (20:06):
Course, this has been going on for years, this conflict,
and as you mentioned, there's not much more of the
US can do. It seems as though there's nothing left here.
But really, where are we? How would you describe this
time period? Who's pushing ahead right now?
Speaker 7 (20:18):
Well, it's really a crucial moment because Russia has stepped
up these air attacks and the weapons that Russia that
Ukraine needs to defend against these drone and missile attacks
from Russia are precisely the things that the US has
been sort of waffling on.
Speaker 5 (20:33):
So the big.
Speaker 7 (20:33):
Question now is if you have this gap in supplies
to Ukraine, who fills it? Is President Trump on Monday
going to say, Okay, We're going to keep open up
the floodgates again and send all that stuff, or is
Europe going to fill in the gap. We do have
some indication that Trump is going to be willing to
sell weapons to NATO countries that the NATO countries specifically Germany, France,
(20:55):
the UK would then say, OK, we're going to send
those weapons to Ukraine. Rather than seeing the US do
it directly, NATO countries would do it. The question is
can they get there fast enough because this air war
we're seeing from Russia right now is just really punishing
for Ukraine.
Speaker 2 (21:11):
The Special Envoy to Ukraine, Keith Kellogg, set to arrive
in Kiev on Monday, is going to spend the week there.
Could this be finally the beginning of the end of
this war?
Speaker 7 (21:21):
That's the challenge there is that Vladimir Putin has shown
no sign that he's willing to give up his principal aims,
which are essentially he wants Vladimir Zelenski out and he
wants de facto control over Ukraine. So if Vladimir Putin
is undaunted and you have countries like North Korea, as
you guys are saying, continuing to supply more weapons to Russia,
(21:43):
what incentive do they have to stop, especially right now
when by all accounts they are actually in this very
slow and grinding war, continuing to make slow but steady
progress against Ukraine. So if Russia is not willing to
give up, I think that's what you're going to see
from the President on Monday, where he's really looking to
try to force Putin to essentially start to give up. Unfortunately, though,
(22:06):
we just haven't seen any sign that Putin's willing to
get there.
Speaker 2 (22:09):
But how would he force him to do that? I mean,
I know you said maybe there will be additional sanctions,
There could be the sanctioned bill that could actually get through,
But apart from that, I guess what I'm saying is
I'm skeptical of that working because none of this has
worked over the last three.
Speaker 5 (22:22):
Plus years, right.
Speaker 7 (22:23):
I mean, that's very true, and that's something that's on
everybody's minds. But I think what you're seeing here is
the president try to essentially do a sort of mental shift,
as difficult as this would be for Vladimir Putin. Where
for the last eight months since President Trump has been
in power, the idea has been, Okay, Trump is going
to be a pushover. He's going to not restrain me
(22:43):
in any way. If he does actually start to put
up some resistance and really put pressure on Russia, does
that change Vladimir Putin's calculus where he decides, Okay, now
I have to come to the negotiating team.
Speaker 4 (22:54):
So during the Biden administration, of course, we did see
a lot of fervent support for Ukraine, especially we think
about resources being distributed. Where are we now? How much
has Trump essentially poured in? Is he putting the full
force behind it as well?
Speaker 7 (23:08):
Well, this is really what we're waiting to see. I mean,
the big issue is that he seems to have overruled
his defense secretary who imposed this brief pause on sending
air defense missiles to Ukraine. So then that really sent
a shock through the system because it was like, well,
if it's not coming from the US, the Europeans are
not in a position to be able to do that
with any sort of reliable, long term, sustained supply. We
(23:31):
do now see that Trump has been willing to do that.
But the big question again for Monday, is you know,
they are running out of money. The amount of money
that Joe Biden had set aside to send these weapons
to Ukraine is not limitless. It's starting to run out.
Once that money really hits the bottom of the barrel,
does President Trump decide Okay, we're going to reap this
now because Europe is just not going to be able
(23:53):
to fill the gap with the kind of numbers that
Ukraine needs.
Speaker 2 (23:55):
Nick Wadhams always good to see you.
Speaker 7 (23:57):
Thank you.
Speaker 2 (23:58):
Don't be a stranger here in New York. Nick Wadams,
Bloomberg News National Security Team Leader.
Speaker 1 (24:03):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five eastering. Listen
on Applecarplay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 2 (24:17):
Let's talk about shares of Levi Strauss jumping as much
as twelve and a half percent earlier in the session,
up about eleven percent right now. The company raised its
revenue outlook. It said yesterday that it expects sales growth
that way. The effect of President Trump's tariff back with
US is Harmeat, saying, chief financial Officer and growth officer
at Levi Strauss. He joins us from our San Francisco bureau.
(24:37):
Also with us is Bloomberg News Senior editor Nina Trentman.
She writes the Bloomberg CFO Briefing newsletter. You should sign
up for it if you haven't already. Bloomberg dot com
slash CFO DASH Briefing Harmat's going to be featured in
an upcoming issue of the CFO Briefing newsletter. Nina's here
in our studio, hermeet back in San Francisco, Harmy, welcome back.
I do want to start with tariffs because your team
(24:59):
said yesterday that the impact of tariffs on profitability excluding
the mitigation efforts, is expected to be between twenty five
and thirty million dollars through the.
Speaker 5 (25:08):
End of this year.
Speaker 2 (25:10):
What happens though, if the high tariff level persists into
next year, what happens to that number?
Speaker 5 (25:17):
Hey, Tim, good morning, Nina, good morning. Is good to
be talking to.
Speaker 8 (25:22):
You guys from your Bay office here in San Francisco.
Speaker 5 (25:27):
As you saw and.
Speaker 8 (25:31):
You know heard, yesterday, we delivered a quarter to beat
and we raised our fullier guidance. A special shout out
to our teams around the world for what I call
delivering the power of the end, which is not only
growing a director consumer business, but our wholesale business, growing
(25:51):
our US business, and our international business, growing men's and
women's and I can keep going on, and that really
explains the momentum we have We delivered our third consecutive
quart of high signal digit growth and growing our profitability,
and that is why we believe that we are stepping
(26:12):
into the second half. We believe we can manage through
the uncertainty of tariffs.
Speaker 5 (26:17):
The tariff situation is fluid.
Speaker 8 (26:19):
We assumed an incremental ten percent on tariffs from the
rest of the world and thirty percent from China. Our
view is we are competitively in a better part to
manage through this. Sixty percent of our business is international.
We have a fairly diversified supply chain and we've been
(26:41):
agile over the years in managing through some of the uncertainties.
We've got some mitigation actions tim We are working.
Speaker 5 (26:50):
With our vendors.
Speaker 8 (26:51):
A large piece of our growth is driven by higher volumes,
and that makes a difference when you negotiating with them.
With our ten year relationships over the years, we are
driving higher full price sales because our product office are
working and we're targeting some pricing actions with minimal impact
to the consumer. You a question about twenty six. We
(27:13):
are working through that. Some of the medigation actions will continue.
We believe the brand momentum continues. The brand has never
been stronger you know, this year it's all about center
of culture driven through music. We've got a partnership with Beyonce,
We've got a partnership with different.
Speaker 5 (27:32):
Musicians around the world.
Speaker 8 (27:34):
Think dilgit Usan in India, think different influences in Europe, etc.
Speaker 9 (27:39):
Next year, maybe I can jump in there quickly. We'll
ask about the music partnerships in a second. Just wondering
in terms of earnings. Of course, an interesting thing is
happening right now. We were expecting tear of clarity by
July ninth. Now we're hearing from the White House it's
going to be August first, and that won't be moved.
But of course you are on the lucky side that
you have already reported Earnie. Still, at the same time,
(28:01):
you gave an outlook, you provided commentary about what you're
thinking about the future, and you're doing that in an
environment where we're hearing TERRFF announcements from the White House
basically on a quasi daily cadence. How confident and comfortable
can you be as CFO to provide forward guidance at
this point given that target, the tariffs are still such
(28:22):
a moving target.
Speaker 8 (28:23):
Yeah, you know, a couple of things give us confidence
Nina Number one, the momentum that we're entering the second half,
it's been sustained over the last three quarters. The second
is our product offers the consumer so far has been resilient.
Our customers, our wholesale retailers are still buying our product,
(28:44):
especially our new product.
Speaker 5 (28:46):
And because we are a global.
Speaker 8 (28:49):
Company, international for example, has been fairly strong. So as
we manage through the uncertainty, we are trying to do
it thoughtfully. You know, we don't take anything for granted.
You know, our view is you've got to continue to
earn the trust with our consumers every day. And you know,
especially in moments of crisis, consumers tend to gravitate to
(29:15):
brands that are relevant and also, you know, brands their trust.
And you know, because we've been around for one hundred
and seventy years navigated different crisis that's really been the
genesis of why we think we can manage through it.
You know, we talked about the impact, we talked about
actions that we're taking to mitigate that, and more importantly,
(29:37):
we're doing different scenarios. I mean, yesterday after earnings, when
we receive news about certain tariffs, we went back and
game plan that through another scenario. So we're working through
different scenarios. The other piece that gives me more confidence
is the agility of our supply chain and our teams
around the world. And you know, let me pause here.
(29:58):
I hope that address is your question.
Speaker 4 (30:01):
Yeah, Hermie, you mentioned a music partnership that we of
course all know, Beyonce, and this was a really major
deal for Levi Strauss. I mean you mentioned the brand
being relevant. I was just at the Cowboy Cotter concert
on Friday and I look around, there's Levi's everywhere. How
impluant you was this partnership to the company and how
much of an impact did it have on sales?
Speaker 5 (30:21):
Yeah, it's been really important.
Speaker 8 (30:24):
You know, we've had a relationship with Beyonce for decades.
Speaker 5 (30:28):
She's an icon.
Speaker 8 (30:29):
She's in the center of culture, and we are just
privileged and honors that she chose us for this partnership.
It's had an impact. Our women's business is on a roll.
You know, we have doubled the business over the last
many years. The partnership really accelerated there. We are nowhere
near done. We think we can double our women's business.
You know, our women's business is about a little less
(30:52):
than forty percent of our business. When I joined the
company twelve years ago, it was about twenty percent. We
think that our women's business can be are you know,
half our business And I would say the partnership is important.
Her styles and what she's wearing. You know, you see
the products right now on the screen they're selling really well.
Speaker 5 (31:12):
You know, take the Beyonce hat.
Speaker 8 (31:13):
You know, I was in Europe, you know, early June,
and you know I was hearing stories of consumers wanting
to wig and shop the hat and the product before
they went to the Beyonce concert.
Speaker 5 (31:27):
They come to our store.
Speaker 8 (31:28):
You know, we have store managers who helped customize the product. Emily,
you know, who runs our store in Regent Street, is
a great example. And so from my perspective, building and
coming up with these memorable moments for our consumers is
what connects us with our fans and makes a big difference.
Speaker 2 (31:47):
We should note Harmee saying who we're speaking to now
is chief financial and growth officer at Levi Strauss. If
you're listening on radio, he's dressed head to toe in Levi,
but he's not actually wearing the Beyonce hat right now.
So next time, he joins us he can shoot for
that name.
Speaker 4 (32:03):
Sure he looked great.
Speaker 9 (32:04):
Yeah, harmid you talked about the importance of your supply chain.
I'm curious to see what you're hearing from suppliers. We've
seen about a ten percent decrease in the dollar against
major currencies around the world since the beginning of the year.
Are you seeing any demands from suppliers to be paid
in local currencies to not carry some of that the
(32:25):
currency flatility that has come with a dollar.
Speaker 5 (32:29):
Yeah.
Speaker 8 (32:29):
No, you know, we have tenured relationships. We source from
about twenty eight countries in our relationships are deep, have
been there for a long long time.
Speaker 5 (32:40):
Currencies go up and down.
Speaker 8 (32:42):
There are times when the dollar is weaker the times
when the dollar is stronger, and you know, and I
think our supplies are, our vendors and our partners are
used to that. So we're not seeing any pressure to
change it into local currency because people have lived through,
(33:02):
you know, pieces. The more important thing is what goes
into the production and manufacture. Cotton is a big piece commodity,
and cotton has a commodity has actually traded down and
that also helps offset some.
Speaker 5 (33:17):
Of the currency pressures.
Speaker 8 (33:18):
And because volumes have been a big piece of us
driving our growth, you know, and we're thinking long and
you know as and we believe we can sustain the
growth ad mid single digit over a period of time.
Speaker 5 (33:31):
I think that's what helps us ensure there.
Speaker 8 (33:34):
It's a win win both for our manufacturers and vendors
as well as the brand.
Speaker 5 (33:39):
And so I think that's how we're dealing with it, Nina.
Speaker 4 (33:43):
So while Levi is focusing on direct to consumer, the
wholesale channel is also growing. Right. What kind of retail
is specifically doing well for the company? Department stores are
more so e commerce.
Speaker 5 (33:55):
Yeah, so it's the magic of the end.
Speaker 8 (33:58):
It's great to see our stores perform well, our comments
perform well, and wholesale and you know, I mentioned jokingly
within the company, it's a great trifector on DDC.
Speaker 5 (34:12):
We're growing comp sales.
Speaker 8 (34:13):
We just reported our thirteen consecutive cota of comp sales growth.
We're opening doors, so we're you know, increasing our market reach.
We have thirty eight thirty two hundred doors right now,
we're adding fifty sixty a year, and we're growing e
commerce in the mid single digit. Beside all this, wholesale
is also growing and where DDC first really helps Norah
(34:35):
to your question. You know, our wholesale customers see the
new product which is introduced in our direct to consumer stores,
see it, see how the performance is doing and in
a lot of cases is working, and that gives them
the confidence to buy into the product. So wholesale customers
are growing, are growing largely because DDC is growing.
Speaker 5 (34:59):
They're seeing the problem introduction.
Speaker 8 (35:02):
Excuse me, they see things working and that makes a
big difference. And also with our wholesale retailers, our relationships
have been here for a long long time.
Speaker 2 (35:14):
Harmy, We only have thirty seconds left. But given the
tariff uncertainty, are you having serious discussions about moving any
production or more production, or any production excuse me, to
the United States?
Speaker 8 (35:27):
No, tim You know, ninety eight percent of all apparel
soul in the US is actually imported, so you know
that's not a conversation that's happening. We believe long term
the tariff uncertainty will clarify and settle well where the
consumer in the US, you know, doesn't bay the cost
(35:50):
of the incremental tariffs, and companies like ours, different apparel
companies continue to grow their businesses in the US Harmy.
Speaker 2 (36:00):
Always good to see you. Thanks so much for taking
the time and joining us on Bloomberg Businessweekdaily this afternoon.
That's hermeat saying, Chief Financial and Growth Officer at Levi,
Strauss and Company. Also Bloomberg News Senior editor Nina Trenttman.
She's the author of the Bloomberg CFO Briefing newsletter. You
can sign up for it if you haven't already at
Bloomberg dot com slash CFO Briefing.
Speaker 1 (36:23):
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(36:44):
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(00:23):
as it happens. The Bloomberg Business Week Daily Podcast with
Carol Masser and Tim Steneveek On Bloomberg Radio.
Speaker 2 (00:32):
I mentioned trade certainly front and center, and it's front
and center for markets because President Trump threatened a thirty
five percent tariff on some Canadian goods. He also raised
the prospect of increasing tariffs on most other countries, ramping
up his trade rhetoric and comments that weigh on stocks
and boosted the dollar today. Separately, our Bloomberg News team
was the first report that Vietnam's leadership was caught off
(00:54):
guard by the President's announcement of a twenty percent tariff.
That's according to people familiar with the matter, and that
the kind is looking to negotiate down that rate. Josh
Wingrove is a part of the team that had the exclusive.
He's Bloomberg New Senior White House correspondent. He joins us
from Washington, d C. Josh, I want to start with
this Vietnam story, because the President announced last week that
(01:15):
Vietnam had agreed to a twenty percent tariff. Did this
come as a surprise to the leaders of Vietnam.
Speaker 3 (01:22):
It seems to have come as a surprise to them.
And it seems that this deal that the President announces
actually maybe a little bit closer to these tariff letters
in that there's a unilateral element to it. It looks
like the Vietnamese were hoping for a number, you know,
several points below that one, and the number twenty cot
them off guard. Our colleagues there saying that this deal,
(01:43):
or if we're calling it, that this announcement of the president,
the US president has not been amplified by Vietnamese state media,
particularly heavily, so it remains a little bit unclear. Now,
remember this is the only deal with one of the
countries that was facing a potential terrif hike this week.
About the nearly five dozen countries. He also has sort
of a framework deal with the UK itself had some questions,
(02:06):
and of course they've got that deal with China to
essentially keep talking. So you know, the deals just really
aren't materializing now. Trump himself has said he's not particularly
stressed about that because he simply wants to set unilateral
rates anyway. So whether he'll do that or not, we
will see. But there's been a lot of developments here
on trade this week, in the past forty eight hours
or so. But the Vietnam one is a reminder that
(02:27):
even the things that they do announce it as deals
come with all kinds of caveats on them.
Speaker 4 (02:33):
Definitely a lot of news that we're getting this week
as it pertains to tariffs. But Vietnam here, can you
just put into context here for our viewers, how big
of a trading partner are they or the United States.
Speaker 3 (02:46):
They're a major trading partner in the United States, and
they were sort of a bell weather because there have
been long standing and i mean pre Trump administration and
bipartisan concerns about what's called transhipment, essentially the Chinese routing
stuff through vi ANAM to get around whatever tariffs are
applied to China. So they were sort of a test kid, Hey,
how are you going to deal with this? And what
(03:06):
Trump announced was essentially a double tariff for trans ship
goods and this twenty percent rate for all other goods,
and that you know, there's still some questions swirling about that,
including whether you know it would include sort of roll
in previous tariffs or not, and that the Secretary of
Besson was asked about that earlier this week. But it
really does look like it's let's say, more fluid than not,
(03:29):
and so that of course hangs in the air as
we look forward to these China talks. Secretary Bessant Lutnik
USTR Jamison Greer. We're expecting a new round of China talks,
they said, early next month. But it also looks like
Bess and Lutnik are going to Japan, where they could
perhaps cross past with the Chinese or even pick up
(03:49):
the talks with the Japanese, which themselves are having problems
right now in those negotiations. So lots of moving parts
here right now. But remember that market shock in April
second when President Trump announced these Liberation Day tariffs, initially
rolled them back amid that market fallout, but a week later,
right now, we're sort of barreling towards another Liberation Day
in a few weeks.
Speaker 2 (04:09):
That's and you know we're gonna speak to an Meletti
exactly about that point, Josh, As some folks have said,
it doesn't seem like the markets are really taking that
August first deadline seriously. You said there are a lot
of moving parts here. Certainly, just in the last ten minutes,
we're getting another headline that the US is working toward
an interim trade deal with India that could reduce its
proposed tariffs to blow twenty percent. This according to people
(04:29):
familiar with the matter, and it puts the South Asian
nation in a favorable position against its peers in the region.
Our Bloomberg News team reporting that back to Vietnam, though,
because you and the team on this story reporting that
Vietnam is looking to negotiate that twenty percent lower to
maybe the ten or fifteen percent so level, how exactly
would they do this, Like, what do you think the
(04:49):
president wants to see and what concessions could Vietnam make?
Speaker 3 (04:55):
Your guess is as good as mine, because the way
President Trump has announced it, and again we don't know
that the he's agreed to this was that they agreed
to open their market to US goods full stop, and
therefore that's kind of what he's looking for. It's hard
to imagine offhand what kind of other carrots they can
put on the end of that stick. Now, of course
they want a lower rate. Trump has really not been
(05:16):
you know, horse trading. There's not really been an indication
of that. And you mentioned in the top about this
sort of musing about setting a higher floor. That is
one of the biggest questions I had this week. He
told the NBC yesterday, Hey, we're looking at maybe fifteen
percent or twenty percent. We don't know whether he meant
just for these countries, the about five dozen, the ones
where the US has a trades a goods trade deficit.
(05:40):
Is he talking about those, the ones that have been
paused at ten percent? Are they going to go up
fifteen or is he talking about everyone. He's talking about
every country, including ones with where the US runs a
trade surplus, and including ones that are like friends like Australia,
the UK, that kind of thing. And if those if
that's what he's talking about, he's talking about a very
widespread increase. And not to drawn on too much, but
(06:01):
last night we had the Canada Development that letter on
to Canada saying he'd raise their rate to thirty five percent.
Really important caveat here right now, it's a three tiered
system for US tariffs on Canada, twenty five percent for
a lot of products, ten percent for some energy products,
and zero percent for USMCA compliant goods. That's Trump's reworked
NAFTA from his first term. We are told that the
(06:21):
thirty five percent rate is poised to be applied only
to that twenty five percent rate. The ten would stay
where it is and the USMCA would remain with its
carve out. As of now, that's the expectation, but our
sources cautioning us that this is a fluid situation and
as we know, with Donald Trump, anything's possible. But the
Canada one also came a bit of the left field
last night. But it does look potentially like a more
(06:43):
targeted increase of that tariff than perhaps other scenarios where
it was sort of an across the board thirty five.
Speaker 4 (06:49):
Josh sticking with Canada here, I mean, of course, this
thirty five percent threat for tariffs here would be really
huge here for Canada, is Mark Harney doing enough? How
much stak do they have in the game, and how
much progress is President Trump making here?
Speaker 3 (07:04):
Carnee has been more private in his negotiation tactics and
his predecessor Trudeau, and we'll see the Canadians. When Carnian
Trump met at the G seven last month in Alberta,
Carnee said a public sort of thirty day deadline that
we're kind of coming up against in a week or two.
The Americans never said that deadline, they never published it.
It's not in writing like the July ninth and August
(07:25):
first deadlines are, and so it's unclear whether or not
they're still trying to reach something by then. Now, of
course Trump has put this August first date on there.
If all that's happening on August first with Canada is
that the rate goes from twenty five to thirty five,
but other things don't change, it's not clear how Prime
Minister Carney will react and whether he'll have much incentive
to give stuff in return to get to try to
(07:48):
haggle to a lower rate. I should note, of course,
Canadian public sentiment is very sour. People are upset there
about how the country is being treated a major trading
partner of the US, and so the political put push
for Carney is not so much to bend the knee
and make a deal, but arguably to do the opposite,
to dig in and play tough with Trump.
Speaker 2 (08:07):
Josh, we are bringing up live pictures of President Trump
right now. He's touring the devastation in Canada. He's there
with the First Lady. He's also there with Governor Greg
Abbott of Texas. I'm wondering about the unanswered questions that
you still have. You know, we've gotten quite a few
letters this week from the President about trade and about
(08:28):
different tariff rates on other countries. You and the team
have reported on Vietnam and on Canada going into the weekend.
What's the unanswered question that remains for investors who are
watching this and really for the global investing audience.
Speaker 3 (08:39):
I mean, if you squint, you can look at these
tea leaves into sort of two completely different directions. One,
we don't have details on the EU. The China talks
are coming potentially that August. Deed Lens extended this report
today from our great colleagues about India. Maybe they get
some kind of interim deal. Canada comes in smaller than
maybe it could have otherwise been if all those dominoes
(09:00):
fall that way. The tariff barrage coming on August first
will be more on the smaller end of the range
of outcomes. The flip side is if he just keeps
farming out letters and doesn't get deals that he likes
and starts announcing unilateral deals like with Vietnam that maybe
the other countries balk at, then we could just have
an August first filled with announcements, including potentially if things
go sideways with say the EU, which has been a
(09:22):
very silent ques silent issue here. You know, big block,
huge trading partner, had been facing a tariff increase. Trump
hasn't said a peep, although he eluded on Thursday in
an interview with NBC that there might be a letter
to the EU coming, So we'll see. I think there's
a few sort of bell Weathers, the EU chief among them,
but we just don't know the scale of the tariff
situation that we're walking into on August first. I should
(09:44):
also know that that copper deadline he also set for
August first, so it's not just the country by country
tariff's coming on that day.
Speaker 2 (09:49):
Yeah, fifty percent. That tiny economy, the EU's economy, certainly
one for us to hell focus on. Josh, always appreciate
your time, Josh Win Grove, Bloomberg News, a senior White
House correspondent in Washington, DC.
Speaker 1 (10:02):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five East during
Listen on Applecarplay and Android Auto with the Bloomberg Business app,
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Speaker 2 (10:16):
Se Well, the markets kind of seem to be taking
this tariff news in stride. You heard Josh mentioned April second,
and then the pivot a few just a little over
a week later, to that extension to July ninth, and
then another extension. And look, we're just off of all
time highs. And that's really what I want to talk
to Anne Maletti about the question of complacency in the market.
Is Jamie Diamond warned yesterday and Maletti is back with us.
(10:38):
She's head of Equity Investments in chief diversity officer of
an all Spring Global Investments. They've got about six hundred
billion dollars in assets under management. She joins us here
in the Bloomberg Business Week studio. Is there complacency in
the markets?
Speaker 5 (10:51):
I think there is.
Speaker 6 (10:52):
A little in certain places. I wouldn't call it broad complacency, though, Well.
Speaker 2 (10:58):
What is the difference between what's happened since mid April
and the twenty five percent increase to new records in
the S and P five hundred versus messaging that we've
gotten from the President about tariffs, because that threat is
still there.
Speaker 6 (11:13):
I totally agree the thread is still there. We know
tariffs are going higher. I do think investors are a
little bit more comfortable that there's a negotiation process going on.
So despite the deadlines and changing rhetoric that we get
on a daily basis, they know there's some flexibility going
on behind the scenes.
Speaker 2 (11:33):
So it sounds like you're saying the market is not
fully pricing in a hard and fast deadline of August first.
Speaker 6 (11:40):
Probably not a hard and fast deadline, and probably not
peak tariff rights either.
Speaker 4 (11:47):
And you know, when I'm looking at the VIX index
right now, we saw it surge up about the fifty
two handle back in April, and if you look at
it now, it's about sixteen right now. But I mean,
of course, people are really looking to see whether or
not it'll rise to twenty. At what point would you
raise an eyebrow and say, hey, the market is really
nervous about what's going on right now.
Speaker 6 (12:06):
Look, I think volatility can still exist, and I wouldn't
be surprised if we woke up next week and we
get a sharp rise in volatility because of some announcement
that we're not you know, thinking about today. I mean,
typically those those sharp rises and volatility happen because of
something unexpected. The one thing I do have to say
(12:29):
that I feel a little bit better about more recently
is the breath that we're seeing in the market. And
instead of that broad or that intense, deep concentration and
just a handful of names, you're kind of seeing positive
performance out of almost all industries in the SMP and
(12:49):
more broadly even downcap, and within those industries, you're starting
to see companies with good fundamentals starting to act more favorably.
And that's a healthy sign and it shows that there's
you know, to the point of complacency. I think there's
some real work that is being done to really look
(13:12):
at company fundamentals and try to position where you want
to be for the next you know event.
Speaker 4 (13:18):
So if you look at the market from New Year's
Day to now, it's almost like we're in the same place.
So much has happened in between, but we're still flirting
with all time nice here. But that being said, I
won't necessarily ask you where are the safe haven areas?
But where are the areas for opportunity? Right now? What
are you telling your clients?
Speaker 6 (13:34):
Yeah, it's a it's a great question, and it's a
question we get asked often, right, So I always think
about it as risk versus reward, And I would say
from a market cab standpoint, I really like the kind
of themid cab space, So not all the way down
to small cap, but that mid to small area there's
(13:54):
still a lot of names and companies that have continued
to perform well, especially ones with strong balance sheets, experience
management teams, and companies that can kind of control their
own destiny, have a lot of flexibility even given all
the changing kind of rules and things happening around them.
That's a sweet spot in the kind of size space.
(14:17):
In terms of industries like healthcare, I see a lot
of our investment teams taking interest there, but not out
of the typical healthcare services drug areas underneath. If you
think about where the next layer of innovation is going
to come from, how are we all going to get
(14:37):
healthcare a little bit more efficiently and in a new
probably way. There's a lot of companies that are exploring
and interesting in that area. And then lastly, from an
asset class standpoint, I think emerging markets in international space
is really interesting.
Speaker 2 (14:54):
Here just thirty seconds help us look ahead to the
banker innings next week. We heard from Delta yesterday, Levi's
yesterday today solid report, Stockhire as a result, good start.
Speaker 6 (15:03):
I think it's a good start, and I think you know,
we're going to see some volatility within earnings. Not all
things will be created equally, and this is where I
think active managers really do. This is where all the
work comes out to play right where you know, in
this environment some companies really can adjust quickly and others
(15:25):
just can't.
Speaker 2 (15:26):
And Meletti, good to see you, Thanks so much for
joining us. That's a Letti, head of Equity Investments, also
chief Diversity Officer over at all Spring Global Investments.
Speaker 1 (15:36):
This is the Bloomberg Business Week Daily Podcast. Listen live
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Speaker 2 (15:54):
But I want to get to the latest on Russia's
invasion of Ukraine. North Korea is now supplying as much
as forty percent of Russia's ammunition for the war in
Ukraine as the partnership between Pyongyang and Moscow deepens. This
is according to the head of the Ukrainian military intelligence. Severally,
President Trump said he plans to make a quote major
statement on Russia as the US prefars to send more
(16:14):
American weapons to Ukraine. Also, President Trump's Special envoy to Ukraine,
Keith Kellogg, will arrive in Kiev on Monday and spend
a week in Ukraine. This according to report from the
Ukrainian news site nob and I Live. Nick Wadams is
with us. He's a Bloomberg News national security team leader.
He's usually based in Washington, d C. But he is
here in New York. Nick, I want to start with
(16:35):
what we heard late yesterday, this quote major statement on
Russia from President Trump that's set to come on Monday.
Do we have any idea what this will be.
Speaker 7 (16:44):
We have some suspicions of what it'll be. What we
have seen in the last couple of weeks as the
President has dramatically shifted his tone toward Vladimir Putin. So
whereas he had previously been effusive in his praise the
president and really condemning President Volodimir's Lensky Ukraine, he's now
shifted and essentially said he's run out of patients with
Vladimir Putin over the fact that he has refused to
(17:07):
stop the bombardment of Ukraine. So it could be a
couple of things. One could be sanctions. He's talked favorably
about a bill working its way through the Senate right now, though, well,
the bill would go after sales of Russian oil. So
they imposed this price cap that allowed Russia to sell
some oil. Basically, they wanted restrict oil, but not tank
the oil market. So there is the possibility that they
(17:27):
would ratchet that up. Okay, that's the big one. The
other is the possibility that he'll really open the floodgates
on weapons. So he has not sought more money from
Congress in his second term to provide more weapons to Ukraine.
A possibility that he'll say, we know he's more favorable
toward the idea of sending weapons, so he may say
we're going to put some money where our mouth is
on them.
Speaker 2 (17:47):
But is that politically tenuous for the president given the
especially during the campaign, there was this idea that Okay,
if Democrats win, We're just going to keep sending money
in weapons to Ukraine. There's also this wing in the
republic Party that's like, hey, this is not our war
to be fighting.
Speaker 7 (18:03):
Well, I mean, it's it's the politics of it aren't
really clear. But you have this sanctions bill in the
Senate that has like eighty five senators on board, so
real bipartisan support. And there is a very strong wing
of the Republican Party that supports a lot more aid
to Ukraine. And then you have the fact that you
know President Trump, you know, he has said openly, you know,
I get to define what America first is, so get
(18:25):
on board, you know. And we've seen a lot of
evidence that his the lot of the MAGA supporters have
really been supportive of whatever he decides to do, including
bombing Iran. So that's a big question. There are several people, though,
including JD. Vance and Secretary of Defense Pete Hegseath, who
have been much more ambivalent about the idea of US
the US committing more weaponry to Ukraine. So you could
(18:46):
a lot will depend if he does do that on
the dollar figure, If it's you know, a sixty billion
dollars supplemental like Joe Biden signed towards the tail end
of his term, that's that would be a very big signal.
If it's if it's anything less than ten billion, I
think you'd see that as sort of a hedge by
the president.
Speaker 5 (19:04):
Nick.
Speaker 4 (19:04):
So with North Korea's applying as much as forty percent
of Russia's ammunition, we know that Russia is providing money
and technology to North Korea in exchange for these weapons.
What chapter are we in right now in the war?
How big of an asset is this for Russia.
Speaker 7 (19:20):
Well, it's a huge asset. What they really need is
a lifeline. They need continuous weapons. They're spending a lot
of their ammunitions. You've seen this uptick in attacks by
Russia against Ukraine drones things like that. So they are
running low and they need as much help as they
can get. Iran is no longer really part of the procedure,
(19:40):
part of the process because they you know, obviously everything
that's happened in the war with Israel and the strikes
by the US, they're really sort of scraping the bottom
of the barrel with North Korea. The challenge is that
there is no end in sight there. The US cannot
really put any pressure on North Korea. So it is
a fairly consistent and reliable a lifeline for Russia that
(20:02):
it just would not otherwise get, and it's becoming more
and more dependent on So of.
Speaker 4 (20:06):
Course, this has been going on for years, this conflict,
and as you mentioned, there's not much more of the
US can do. It seems as though there's nothing left here.
But really, where are we? How would you describe this
time period? Who's pushing ahead right now?
Speaker 7 (20:18):
Well, it's really a crucial moment because Russia has stepped
up these air attacks and the weapons that Russia that
Ukraine needs to defend against these drone and missile attacks
from Russia are precisely the things that the US has
been sort of waffling on.
Speaker 5 (20:33):
So the big.
Speaker 7 (20:33):
Question now is if you have this gap in supplies
to Ukraine, who fills it? Is President Trump on Monday
going to say, Okay, We're going to keep open up
the floodgates again and send all that stuff, or is
Europe going to fill in the gap. We do have
some indication that Trump is going to be willing to
sell weapons to NATO countries that the NATO countries specifically Germany, France,
(20:55):
the UK would then say, OK, we're going to send
those weapons to Ukraine. Rather than seeing the US do
it directly, NATO countries would do it. The question is
can they get there fast enough because this air war
we're seeing from Russia right now is just really punishing
for Ukraine.
Speaker 2 (21:11):
The Special Envoy to Ukraine, Keith Kellogg, set to arrive
in Kiev on Monday, is going to spend the week there.
Could this be finally the beginning of the end of
this war?
Speaker 7 (21:21):
That's the challenge there is that Vladimir Putin has shown
no sign that he's willing to give up his principal aims,
which are essentially he wants Vladimir Zelenski out and he
wants de facto control over Ukraine. So if Vladimir Putin
is undaunted and you have countries like North Korea, as
you guys are saying, continuing to supply more weapons to Russia,
(21:43):
what incentive do they have to stop, especially right now
when by all accounts they are actually in this very
slow and grinding war, continuing to make slow but steady
progress against Ukraine. So if Russia is not willing to
give up, I think that's what you're going to see
from the President on Monday, where he's really looking to
try to force Putin to essentially start to give up. Unfortunately, though,
(22:06):
we just haven't seen any sign that Putin's willing to
get there.
Speaker 2 (22:09):
But how would he force him to do that? I mean,
I know you said maybe there will be additional sanctions,
There could be the sanctioned bill that could actually get through,
But apart from that, I guess what I'm saying is
I'm skeptical of that working because none of this has
worked over the last three.
Speaker 5 (22:22):
Plus years, right.
Speaker 7 (22:23):
I mean, that's very true, and that's something that's on
everybody's minds. But I think what you're seeing here is
the president try to essentially do a sort of mental shift,
as difficult as this would be for Vladimir Putin. Where
for the last eight months since President Trump has been
in power, the idea has been, Okay, Trump is going
to be a pushover. He's going to not restrain me
(22:43):
in any way. If he does actually start to put
up some resistance and really put pressure on Russia, does
that change Vladimir Putin's calculus where he decides, Okay, now
I have to come to the negotiating team.
Speaker 4 (22:54):
So during the Biden administration, of course, we did see
a lot of fervent support for Ukraine, especially we think
about resources being distributed. Where are we now? How much
has Trump essentially poured in? Is he putting the full
force behind it as well?
Speaker 7 (23:08):
Well, this is really what we're waiting to see. I mean,
the big issue is that he seems to have overruled
his defense secretary who imposed this brief pause on sending
air defense missiles to Ukraine. So then that really sent
a shock through the system because it was like, well,
if it's not coming from the US, the Europeans are
not in a position to be able to do that
with any sort of reliable, long term, sustained supply. We
(23:31):
do now see that Trump has been willing to do that.
But the big question again for Monday, is you know,
they are running out of money. The amount of money
that Joe Biden had set aside to send these weapons
to Ukraine is not limitless. It's starting to run out.
Once that money really hits the bottom of the barrel,
does President Trump decide Okay, we're going to reap this
now because Europe is just not going to be able
(23:53):
to fill the gap with the kind of numbers that
Ukraine needs.
Speaker 2 (23:55):
Nick Wadhams always good to see you.
Speaker 7 (23:57):
Thank you.
Speaker 2 (23:58):
Don't be a stranger here in New York. Nick Wadams,
Bloomberg News National Security Team Leader.
Speaker 1 (24:03):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five eastering. Listen
on Applecarplay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 2 (24:17):
Let's talk about shares of Levi Strauss jumping as much
as twelve and a half percent earlier in the session,
up about eleven percent right now. The company raised its
revenue outlook. It said yesterday that it expects sales growth
that way. The effect of President Trump's tariff back with
US is Harmeat, saying, chief financial Officer and growth officer
at Levi Strauss. He joins us from our San Francisco bureau.
(24:37):
Also with us is Bloomberg News Senior editor Nina Trentman.
She writes the Bloomberg CFO Briefing newsletter. You should sign
up for it if you haven't already. Bloomberg dot com
slash CFO DASH Briefing Harmat's going to be featured in
an upcoming issue of the CFO Briefing newsletter. Nina's here
in our studio, hermeet back in San Francisco, Harmy, welcome back.
I do want to start with tariffs because your team
(24:59):
said yesterday that the impact of tariffs on profitability excluding
the mitigation efforts, is expected to be between twenty five
and thirty million dollars through the.
Speaker 5 (25:08):
End of this year.
Speaker 2 (25:10):
What happens though, if the high tariff level persists into
next year, what happens to that number?
Speaker 5 (25:17):
Hey, Tim, good morning, Nina, good morning. Is good to
be talking to.
Speaker 8 (25:22):
You guys from your Bay office here in San Francisco.
Speaker 5 (25:27):
As you saw and.
Speaker 8 (25:31):
You know heard, yesterday, we delivered a quarter to beat
and we raised our fullier guidance. A special shout out
to our teams around the world for what I call
delivering the power of the end, which is not only
growing a director consumer business, but our wholesale business, growing
(25:51):
our US business, and our international business, growing men's and
women's and I can keep going on, and that really
explains the momentum we have We delivered our third consecutive
quart of high signal digit growth and growing our profitability,
and that is why we believe that we are stepping
(26:12):
into the second half. We believe we can manage through
the uncertainty of tariffs.
Speaker 5 (26:17):
The tariff situation is fluid.
Speaker 8 (26:19):
We assumed an incremental ten percent on tariffs from the
rest of the world and thirty percent from China. Our
view is we are competitively in a better part to
manage through this. Sixty percent of our business is international.
We have a fairly diversified supply chain and we've been
(26:41):
agile over the years in managing through some of the uncertainties.
We've got some mitigation actions tim We are working.
Speaker 5 (26:50):
With our vendors.
Speaker 8 (26:51):
A large piece of our growth is driven by higher volumes,
and that makes a difference when you negotiating with them.
With our ten year relationships over the years, we are
driving higher full price sales because our product office are
working and we're targeting some pricing actions with minimal impact
to the consumer. You a question about twenty six. We
(27:13):
are working through that. Some of the medigation actions will continue.
We believe the brand momentum continues. The brand has never
been stronger you know, this year it's all about center
of culture driven through music. We've got a partnership with Beyonce,
We've got a partnership with different.
Speaker 5 (27:32):
Musicians around the world.
Speaker 8 (27:34):
Think dilgit Usan in India, think different influences in Europe, etc.
Speaker 9 (27:39):
Next year, maybe I can jump in there quickly. We'll
ask about the music partnerships in a second. Just wondering
in terms of earnings. Of course, an interesting thing is
happening right now. We were expecting tear of clarity by
July ninth. Now we're hearing from the White House it's
going to be August first, and that won't be moved.
But of course you are on the lucky side that
you have already reported Earnie. Still, at the same time,
(28:01):
you gave an outlook, you provided commentary about what you're
thinking about the future, and you're doing that in an
environment where we're hearing TERRFF announcements from the White House
basically on a quasi daily cadence. How confident and comfortable
can you be as CFO to provide forward guidance at
this point given that target, the tariffs are still such
(28:22):
a moving target.
Speaker 8 (28:23):
Yeah, you know, a couple of things give us confidence
Nina Number one, the momentum that we're entering the second half,
it's been sustained over the last three quarters. The second
is our product offers the consumer so far has been resilient.
Our customers, our wholesale retailers are still buying our product,
(28:44):
especially our new product.
Speaker 5 (28:46):
And because we are a global.
Speaker 8 (28:49):
Company, international for example, has been fairly strong. So as
we manage through the uncertainty, we are trying to do
it thoughtfully. You know, we don't take anything for granted.
You know, our view is you've got to continue to
earn the trust with our consumers every day. And you know,
especially in moments of crisis, consumers tend to gravitate to
(29:15):
brands that are relevant and also, you know, brands their trust.
And you know, because we've been around for one hundred
and seventy years navigated different crisis that's really been the
genesis of why we think we can manage through it.
You know, we talked about the impact, we talked about
actions that we're taking to mitigate that, and more importantly,
(29:37):
we're doing different scenarios. I mean, yesterday after earnings, when
we receive news about certain tariffs, we went back and
game plan that through another scenario. So we're working through
different scenarios. The other piece that gives me more confidence
is the agility of our supply chain and our teams
around the world. And you know, let me pause here.
(29:58):
I hope that address is your question.
Speaker 4 (30:01):
Yeah, Hermie, you mentioned a music partnership that we of
course all know, Beyonce, and this was a really major
deal for Levi Strauss. I mean you mentioned the brand
being relevant. I was just at the Cowboy Cotter concert
on Friday and I look around, there's Levi's everywhere. How
impluant you was this partnership to the company and how
much of an impact did it have on sales?
Speaker 5 (30:21):
Yeah, it's been really important.
Speaker 8 (30:24):
You know, we've had a relationship with Beyonce for decades.
Speaker 5 (30:28):
She's an icon.
Speaker 8 (30:29):
She's in the center of culture, and we are just
privileged and honors that she chose us for this partnership.
It's had an impact. Our women's business is on a roll.
You know, we have doubled the business over the last
many years. The partnership really accelerated there. We are nowhere
near done. We think we can double our women's business.
You know, our women's business is about a little less
(30:52):
than forty percent of our business. When I joined the
company twelve years ago, it was about twenty percent. We
think that our women's business can be are you know,
half our business And I would say the partnership is important.
Her styles and what she's wearing. You know, you see
the products right now on the screen they're selling really well.
Speaker 5 (31:12):
You know, take the Beyonce hat.
Speaker 8 (31:13):
You know, I was in Europe, you know, early June,
and you know I was hearing stories of consumers wanting
to wig and shop the hat and the product before
they went to the Beyonce concert.
Speaker 5 (31:27):
They come to our store.
Speaker 8 (31:28):
You know, we have store managers who helped customize the product. Emily,
you know, who runs our store in Regent Street, is
a great example. And so from my perspective, building and
coming up with these memorable moments for our consumers is
what connects us with our fans and makes a big difference.
Speaker 2 (31:47):
We should note Harmee saying who we're speaking to now
is chief financial and growth officer at Levi Strauss. If
you're listening on radio, he's dressed head to toe in Levi,
but he's not actually wearing the Beyonce hat right now.
So next time, he joins us he can shoot for
that name.
Speaker 4 (32:03):
Sure he looked great.
Speaker 9 (32:04):
Yeah, harmid you talked about the importance of your supply chain.
I'm curious to see what you're hearing from suppliers. We've
seen about a ten percent decrease in the dollar against
major currencies around the world since the beginning of the year.
Are you seeing any demands from suppliers to be paid
in local currencies to not carry some of that the
(32:25):
currency flatility that has come with a dollar.
Speaker 5 (32:29):
Yeah.
Speaker 8 (32:29):
No, you know, we have tenured relationships. We source from
about twenty eight countries in our relationships are deep, have
been there for a long long time.
Speaker 5 (32:40):
Currencies go up and down.
Speaker 8 (32:42):
There are times when the dollar is weaker the times
when the dollar is stronger, and you know, and I
think our supplies are, our vendors and our partners are
used to that. So we're not seeing any pressure to
change it into local currency because people have lived through,
(33:02):
you know, pieces. The more important thing is what goes
into the production and manufacture. Cotton is a big piece commodity,
and cotton has a commodity has actually traded down and
that also helps offset some.
Speaker 5 (33:17):
Of the currency pressures.
Speaker 8 (33:18):
And because volumes have been a big piece of us
driving our growth, you know, and we're thinking long and
you know as and we believe we can sustain the
growth ad mid single digit over a period of time.
Speaker 5 (33:31):
I think that's what helps us ensure there.
Speaker 8 (33:34):
It's a win win both for our manufacturers and vendors
as well as the brand.
Speaker 5 (33:39):
And so I think that's how we're dealing with it, Nina.
Speaker 4 (33:43):
So while Levi is focusing on direct to consumer, the
wholesale channel is also growing. Right. What kind of retail
is specifically doing well for the company? Department stores are
more so e commerce.
Speaker 5 (33:55):
Yeah, so it's the magic of the end.
Speaker 8 (33:58):
It's great to see our stores perform well, our comments
perform well, and wholesale and you know, I mentioned jokingly
within the company, it's a great trifector on DDC.
Speaker 5 (34:12):
We're growing comp sales.
Speaker 8 (34:13):
We just reported our thirteen consecutive cota of comp sales growth.
We're opening doors, so we're you know, increasing our market reach.
We have thirty eight thirty two hundred doors right now,
we're adding fifty sixty a year, and we're growing e
commerce in the mid single digit. Beside all this, wholesale
is also growing and where DDC first really helps Norah
(34:35):
to your question. You know, our wholesale customers see the
new product which is introduced in our direct to consumer stores,
see it, see how the performance is doing and in
a lot of cases is working, and that gives them
the confidence to buy into the product. So wholesale customers
are growing, are growing largely because DDC is growing.
Speaker 5 (34:59):
They're seeing the problem introduction.
Speaker 8 (35:02):
Excuse me, they see things working and that makes a
big difference. And also with our wholesale retailers, our relationships
have been here for a long long time.
Speaker 2 (35:14):
Harmy, We only have thirty seconds left. But given the
tariff uncertainty, are you having serious discussions about moving any
production or more production, or any production excuse me, to
the United States?
Speaker 8 (35:27):
No, tim You know, ninety eight percent of all apparel
soul in the US is actually imported, so you know
that's not a conversation that's happening. We believe long term
the tariff uncertainty will clarify and settle well where the
consumer in the US, you know, doesn't bay the cost
(35:50):
of the incremental tariffs, and companies like ours, different apparel
companies continue to grow their businesses in the US Harmy.
Speaker 2 (36:00):
Always good to see you. Thanks so much for taking
the time and joining us on Bloomberg Businessweekdaily this afternoon.
That's hermeat saying, Chief Financial and Growth Officer at Levi,
Strauss and Company. Also Bloomberg News Senior editor Nina Trenttman.
She's the author of the Bloomberg CFO Briefing newsletter. You
can sign up for it if you haven't already at
Bloomberg dot com slash CFO Briefing.
Speaker 1 (36:23):
This is the Bloomberg BusinessWeek Daily 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
(36:44):
and always on the Bloomberg terminal.
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