April 8, 2025 • 19 mins
Tariffs just rewrote the rules — now what?
In this episode of Shelf Life, Joel Beal, CEO of Alloy.ai and “recovering economist,” and Logan Ensign, Alloy.ai's Chief Customer Officer dig into the chaos unleashed by the sudden announcement of new U.S. tariffs. The implications for the consumer goods industry are huge — and unfolding fast.
From conversations with leading brands and retailers, Joel shares what he's hearing in real-time and offers early guidance for decision-makers who need to act — but are frozen by uncertainty.
We cover:
- Why this latest round of tariffs caught most companies off guard — despite the warnings
- Who actually pays for tariffs, and the early-stage tug-of-war between brands, retailers, and consumers
- The ripple effect on manufacturing, freight, pricing, and demand
- Tactical ways companies are already scenario planning and tweaking terms to minimize impact
- Why now is not the time to make major shifts — and what you can do instead
- The surprising potential global shifts in product development and market focus
- What the Nintendo Switch 2 has to do with all this
If you’re trying to balance cost-cutting, pricing, and planning amid the noise — this is the clear-headed breakdown you need.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
From Alloy AI.
This is Shelf Life.
There's one topic oneverybody's mind right now the
new tariffs that have created aflurry of uncertainty in the
(00:25):
consumer goods industry.
Who will really end up payingthese significant increasing
costs Brands, retailers orconsumers?
How will this impact on-shelfavailability and consumer demand
?
I'm joined today by mycolleague, joel Beal, ceo of
Alloy AI and recoveringeconomist, to discuss what we're
hearing from our customers.
We'll be back with Joel rightafter this.
Speaker 2 (00:51):
As a consumer brand, you connect with dozens of
external partners and internalsystems to get a complete
picture of your business.
Each one is different.
Alloy AI makes it easy toconnect data from retailers,
e-commerce, supply chainpartners and even your own ERP,
then easily surface insights todrive sales growth.
Every day, brands use Alloyaito see POS trends, measure
(01:12):
promotion performance and makebetter replenishment decisions
with their retail partners.
That's why we're trusted by Bic, crayola, valvoline, melissa,
doug Bosch and many more.
Get a demo at Alloyai today.
Speaker 1 (01:27):
Melissa and Doug Bosch and many more Get a demo
at alloyai today.
Well, an exciting time in theworld generally, but especially
in the world of CPGs.
So had to have a conversationwith our resident economist,
Joel, here about all thingstariffs as we see, an evolving
story right and, I think, a lotto unpack, a lot of uncertainty,
but excited to kind of dig in alittle bit deeper.
Speaker 3 (01:50):
I think there was a Twitter or X.
Now flame war from Elon Muskabout how having a PhD in
economics makes you lessqualified to talk about this.
So good news for me I didn'tget my PhD.
I dropped out.
Speaker 1 (02:02):
That's right you can join the ranks, ranks.
There you're a true expert asthe dropout that's right.
Speaker 3 (02:06):
Building real businesses, none of this, this
fake academic stuff.
Uh, yes, and exciting, I think,is one term you can.
You can use for it logan, um,I'm not sure that's how our
customers feel about it rightnow.
When we talk to them, I thinkuh feels a little more like what
in the world is going on.
Speaker 1 (02:25):
Yes, I mean, it's all about uncertainty and what
should we do?
So I think we have a uniquevantage because we had a lot of
conversations late last week toget people's initial reads, but
I don't think that we've beenable to bring together this is
exactly what people should doand what to expect.
Bring together this is exactlywhat people should do and what
(02:47):
to expect.
So I guess for you, Joel whatare we hearing?
Speaker 3 (02:52):
What are we seeing, as we've kind of seen these
tariffs emerge.
Well, I think, first andforemost is nobody knows what is
going to happen, right?
I mean, it's currently Monday,april 7th.
These were announced lastThursday.
Obviously, the markets areroiling, but at least, as I've
talked to customers, as I'veheard what people internally are
hearing from customers,everyone kind of says we just
(03:13):
don't know and uncertainty justbreeds, I guess, a freezing.
I was reading something earliertoday and it was saying unlike
the financial crisis where therewas kind of a race to get
liquidity or you know, there aretimes where it's clear what
you're supposed to do.
It's not clear right now,really, that there's anything to
do.
(03:33):
Right, it's not like somebody'sgoing to be moving their
manufacturing today.
Maybe you're expediting somefreight I think we've heard that
anecdotally people trying topush things in to beat the
tariffs, but nobody knows howlong this is going to last.
Is it really going to bepermanent?
Is it all going to go away in acouple of weeks?
(03:53):
And so it kind of feels mostlylike business as usual, just
with this kind of loomingproblem that people are starting
to say, okay, let's at leastscenario plan for what do we do?
So that is what we've heard ispeople say, okay, what's going
on, and then you know mostpractically, at least in the
(04:15):
world of consumer goods andretail, that gets to all right,
if I'm going to have to eat some, if more costs are coming in,
who's paying for this?
Speaker 1 (04:39):
If more costs are coming in, who's paying for this
?
Is it me?
Is it the retailer, is it theconsumer?
Think about sort ofstrategically going after this.
I think what we found is mostfolks are pretty surprised by
the comprehensiveness and themagnitude, right, and so,
although we say there's a lot ofsort of scrambling, there've
been conversations really allyear about supply chain
(05:00):
diversification.
How do we think aboutpotentially doing more domestic
production diversification howdo we think about potentially
doing more domestic production?
But, to your point, I thinkwe've seen with customers quite
a bit of uncertainty and a lotof, to your point, wait and see,
right, whether it's supershort-term expediting freight,
but also adjusting how peopleare ordering over the next even
couple of days or weeks.
It'll be fascinating to see howthat impacts on-shelf
(05:22):
availability and inventorylevels and all other sort of
downstream impacts on that front.
Speaker 3 (05:29):
Yeah, everybody I've talked to is surprised at the
magnitude, and you know, I thinkif it had been more targeted.
You know, the writing's been onthe wall around China, right,
and you're seeing companiesdiversify away from China.
The problem is that they thenmoved manufacturing to Vietnam
and then Vietnam gets smacked.
So you know, I think that'swhat creates a lot of the not
(05:54):
knowing what to do.
Is you're like what does thiseven mean?
I mean short of well, I meaneven reshoring to the United
States, which I mean?
Anybody who knows this problemknows this is not something that
happens quickly, right, if it'spractical at all, does that
even help you?
All your supplies are tariffed.
So you know, and these areagain decisions that are made
(06:17):
over, you know, peopleprojecting out years, decades,
and then this kind of comes invery unexpectedly.
Now you know we've been toldthat there's going to be tariffs
for a while.
So, again, I don't think it wasshocking that something
happened.
But this magnitude definitelyjust requires everyone to say,
okay, let's try to pick up thepieces.
And then you know, see if thisis going to be a long-term thing
(06:39):
or a short-term thing.
Speaker 1 (06:40):
Yeah Well, you mentioned something interesting
about who bears the cost, and soI think it is an interesting
dynamic when you talk about rawmaterial suppliers, when you
talk about manufacturers,importers, retailers, consumers,
could you unpack that a littlebit more in terms of, okay, if
this lasts longer than a coupleof days, what that could mean,
(07:02):
or likely does mean, from a sortof who shoulders the cost of
all this?
Speaker 3 (07:07):
Yeah, so you know, practically speaking, whoever
imports the product is the onewho's on the hook for it.
Okay, so it's, it's prettyclear, whoever owns that.
There's lots of different termswhen things are being, you know
, kind of shipped as to whobears that.
But in reality, yes, there'skind of this complex, I think,
(07:28):
dance and negotiation that hasalready started.
So if I am a consumer brand youknow companies that you and I
mostly work with they have tonow decide OK, how much of this?
Let's assume that my costs goup 25 percent.
Well, how much of that can Ipush onto the retailer?
(07:50):
Obviously, my goal is that Ican push all of it onto the
retailer, but that is a delicatebalance because that retailer
doesn't want to pay more.
The retailer in the middle alsohas this side of saying well,
if I just pass it onto theconsumers, or the consumer
consumers going to keep buyingit.
This price elasticity of demandthing of, I think for most
(08:15):
Americans we had all theinflation over a couple of years
.
People are still annoyed aboutit, even though inflation's now
manageable.
We'll see if that lasts.
So the idea, idea of havinganother price, you know, shock
is, I think there's arecognition people are not going
to take it.
Well, right, you could passthings on.
(08:35):
We heard this from customers acouple of years ago.
They're like man, it's amazing,I can increase my prices twice
a year.
It's not impacting sales.
I don't think anybody believesthat's going to happen now.
So the retailer has to sitthere and say, well, maybe I'll
pay a little more for my inputs,but I can't pass it all on.
And of course, there's you andI and all the consumers who are
going to say like am I?
You know, what am I going to doif prices go up 25 percent?
(08:57):
Am I going to substitutesomething else?
Am I just not going to buy so?
So that's the dance.
Now there's, we've heard, insome cases this immediately goes
into a little bit bare knuckle.
We've heard examples ofretailers changing terms on
suppliers immediately andforcing them to pay the tariffs,
(09:19):
like changing how things areactually imported.
But again, in practice,everybody's got to figure out
how they make money in this.
Nobody wants to sell things ata loss.
Speaker 1 (09:28):
It's not like there's just an enormous margin.
There's not an enormous marginon this, yeah, so I feel like at
least the consumer brands I'vemostly spoken to.
Speaker 3 (09:36):
there's, I think, this feeling of we're going to
have to eat some of the costsand we're going to have to work
with the retailers and pass someof it on.
And what those ratios are, Ithink, is to be determined.
I'm sure it's going to vary onthe margins for the product, the
category, et cetera.
We've also heard that retailersthey always play, especially
(09:57):
the big ones, right, they'realways fighting for the consumer
.
Walmart's always very wellknown, for we are going to
provide the lowest you know costfor our customer.
But we've heard that they'rerecognizing prices are going to
go up, right, nobody can eat allthis.
There's not enough margin, asyou said.
So, yeah, it feels like for thebrands, we're going to pass
(10:22):
some of it on.
We don't know how much canultimately be passed on to
consumers.
So you know we've gotten quotesof like well, this will be an
interesting experiment, let'ssee how it goes.
And they're also cutting costsor freezing costs.
Speaker 1 (10:34):
So I think you know we're going to we're going to
see how much more efficiency youcan wring out of this system.
It's an interesting take, but Ithink that's fair that it's
going to put a lot of pressureon how do we maintain margin and
stay efficient at the same timewith increasing costs in some
(10:54):
instances, significantincreasing costs.
Speaker 3 (10:56):
So I guess we're going to see all of them.
We're going to see peoplecutting costs, we're going to
see margin compression and we'regoing to see prices going up.
Right, I mean, every side of itis going to take some chunk.
None of them are going to takeall of it, and you know that's
going to be a hard adjustment.
Speaker 1 (11:15):
Yeah, well, now we've talked about the uncertainty of
what happens with this.
Is this a several days, severalweeks, several months Maybe, to
prognosticate, as we look to,if significant tariffs sort of
persist, maybe, what longer termshifts may happen?
Do you have a perspective on OK, if these stay where they're at
(11:38):
, maybe in the position of aconsumer packaged goods company,
how they may adjust theirsupply chain distribution, how
consumer behavior might change?
Curious, if they do, you know,persist.
What might happen from yourvantage?
Speaker 3 (11:51):
Yeah, it's hard to know what is it that I hope will
happen versus what may actuallyhappen, because it's been so
unpredictable.
It's hard to believe, even withI mean things change by the
hour right now that we're notgoing to see some deals being
(12:12):
struck Right.
I would just expect that that'sthe way our government, the
American government, isoperating right now, or at least
has and so I imagine we willstart to see a set of countries
where agreements are reachedPerhaps tariffs aren't
eliminated, but at least they'rebrought down I don't know what
(12:34):
they'll be relative to what theywere before and then those
where there's really a trade war, which is kind of the direction
it seems like it's going morewith China.
So if that happens, I think thefirst thing that every company
is going to think about is isthis going to last?
They want that predictability.
That's the biggest challengeright now.
(12:54):
Everyone's saying it.
It's like you needpredictability to invest, but I
think if that plays out, thenyou probably will see an
acceleration in terms of howsupply chains are reorienting,
moving towards countries thathave friendlier trade relations
with the US and away from thosewhere it's not as good and where
it's more volatile.
I mean, again, I think, justlooking at the dynamic with
(13:18):
China and this is why peoplehave been moving away from there
it's just, even if things areokay, one day, it just always
feels like that could shift tooquickly.
But does that continue to shiftto Vietnam or to India, or does
it accelerate the move toMexico, right, or the Americas
get it closer?
I'm not sure.
Speaker 1 (13:36):
Yeah, no.
One of the things I was mullingon over the weekend is how
these companies may think aboutthe international consumer.
Differently, I think, in termsof product development and where
we kind of start with a smallCPG to kind of expand.
You start in the Americas, inthe US.
My expectation is globalconsumers may become more
(13:57):
relevant for products becausewe're going to have to make sure
that that demand can kind ofcarry the weight of maybe
increased costs and deflateddemand here domestically.
So you know, trying to expandto global markets may happen
sooner.
The emphasis in terms of whatwe're going to produce and how
we're going to kind ofdistribute it may go more global
.
So that I think will beinteresting to follow too.
Speaker 3 (14:20):
So I think that's certainly possible.
I just don't know how possiblethat is in the short term.
I mean, if you look at markets,it's just the Chinese and the
US market are so much biggerthan any others.
I mean, you know the EUmarket's obviously very big but
it's more fragmented.
You know it's a lot ofcountries.
There's a lot more complexityof selling there than there is
(14:44):
selling into the States and youknow, look from a traditional
economics viewpoint, tariff warsare just going to make
economics viewpoint.
tariff wars are just going tomake Americans poorer, right, I
mean, that's the long term.
If this were to continue, we,as in, americans, will become
less well off right, and so Icould see a shift over time as
(15:07):
other markets become relativelymore important and take more of
those products.
But in the short term, it's ahuge market, it's a market
nobody can ignore and again,that's a little bit.
I think the gamesmanship that'sgoing on is saying you can't
ignore this market.
So even if we make it very hardto do business here, you've got
(15:29):
to figure it out.
Speaker 1 (15:30):
Yeah, yeah.
Well, maybe one more question,joel, for you.
If, if, you could provide someadvice.
What should brands kind of doin the context right now, and
what should they be thinkingabout?
Speaker 3 (15:43):
Well, I think I have a lot of sympathy because you
know running our own business,right, there's there's a lot of
uncertainty right now and Idon't think I don't want to make
any big changes and I wouldn'trecommend any brand.
Does that right now?
Right, that just seemsill-advised to respond, you know
, to something like this.
But I do think they're thinkingabout the right things.
(16:04):
I mean, what we were talkingabout is you do need a plan for
higher costs Like it seems likethat's coming in one form or
another and start working withyour partners on how you're
going to deal with that, and Ithink it is starting to test.
What is that?
How are consumers going torespond?
And you know so I think itstarts with looking at anywhere
(16:29):
you can shave your own costs.
There's also Logan.
I guess we didn't get into this.
There are, I think, some tricksthat we've been hearing about
how you can change some of yourinvoicing with your
manufacturing to be very clearabout what constitutes cost of
goods sold, what constitutes allof my brokers, fees, logistics,
(16:51):
et cetera.
Sometimes those things getpackaged together in that
invoice.
You're only getting charged thetariff on the cog.
So you know, there there arethings you can do to make sure
you're minimizing your tariffliability If you want.
We're going to tax season,right, we minimize their tax
liability.
Here's another form of taxes.
What can I do on that front?
That's not going to solve theproblem, but it might make it a
(17:12):
little better for you.
Where can I cut my own costs,minimize what I have to pass on,
and then we're in a new worldand let's see how consumers
respond to that.
So I think people are doing theright things, but I wouldn't be
(17:32):
making massive shifts to mysupply chain.
That might be completelydifferent a couple of weeks from
now if we have a lot moreclarity where you need to make
some of those bigger strategicdecisions Makes sense Makes
sense.
Speaker 1 (17:44):
So a bit of wait and see.
Uh, explore cost cutting or atleast identify those.
Understand your consumer rightand how sensitive have they been
to price historically andmonitor that really closely as
we look over the next few daysand weeks.
Speaker 3 (17:57):
Yeah, and Logan, I'm laughing.
My family has a trip to Japanhere in two months and my twin
boys really want.
Nintendo announced the Switch 2.
And so they were excited aboutit.
For those who followed this,the had the unfortunate timing
of announcing it.
I can't remember if it was theday of yeah, I think it was the
(18:18):
day the tariffs were announcedlater in the afternoon well,
they put some pre-orders.
They put in pre-orders, um, andthen you know, subsequently of
course had to say, okay, we're,we're pausing pre-orders.
We're not even sure what thisprice is going to be.
But my sons were like, well,we're going to japan, let's just
go buy it and we'll pay in yen.
But then I was reading abouthow, apparently, that's actually
even a little bit tricky.
(18:39):
So you know, again, maybe thereare some workarounds here, but
at the end of the day they'renot as simple as they sometimes
seem Exactly.
Speaker 1 (18:49):
Exactly Well.
Excellent, joel.
Really appreciate your insightand the conversation.
Speaker 3 (18:55):
Hopefully we get more details and understanding over
the next few days that's right,because all this advice a week
from now will make probably nosense because it will be a
different world, that's right,that's all for this week.
Speaker 1 (19:07):
See you next time on Shelf Life.
From Alloy AI.
This is Shelf Life.
There's one topic oneverybody's mind right now the
new tariffs that have created aflurry of uncertainty in the
(00:25):
consumer goods industry.
Who will really end up payingthese significant increasing
costs Brands, retailers orconsumers?
How will this impact on-shelfavailability and consumer demand
?
I'm joined today by mycolleague, joel Beal, ceo of
Alloy AI and recoveringeconomist, to discuss what we're
hearing from our customers.
We'll be back with Joel rightafter this.
Speaker 2 (00:51):
As a consumer brand, you connect with dozens of
external partners and internalsystems to get a complete
picture of your business.
Each one is different.
Alloy AI makes it easy toconnect data from retailers,
e-commerce, supply chainpartners and even your own ERP,
then easily surface insights todrive sales growth.
Every day, brands use Alloyaito see POS trends, measure
(01:12):
promotion performance and makebetter replenishment decisions
with their retail partners.
That's why we're trusted by Bic, crayola, valvoline, melissa,
doug Bosch and many more.
Get a demo at Alloyai today.
Speaker 1 (01:27):
Melissa and Doug Bosch and many more Get a demo
at alloyai today.
Well, an exciting time in theworld generally, but especially
in the world of CPGs.
So had to have a conversationwith our resident economist,
Joel, here about all thingstariffs as we see, an evolving
story right and, I think, a lotto unpack, a lot of uncertainty,
but excited to kind of dig in alittle bit deeper.
Speaker 3 (01:50):
I think there was a Twitter or X.
Now flame war from Elon Muskabout how having a PhD in
economics makes you lessqualified to talk about this.
So good news for me I didn'tget my PhD.
I dropped out.
Speaker 1 (02:02):
That's right you can join the ranks, ranks.
There you're a true expert asthe dropout that's right.
Speaker 3 (02:06):
Building real businesses, none of this, this
fake academic stuff.
Uh, yes, and exciting, I think,is one term you can.
You can use for it logan, um,I'm not sure that's how our
customers feel about it rightnow.
When we talk to them, I thinkuh feels a little more like what
in the world is going on.
Speaker 1 (02:25):
Yes, I mean, it's all about uncertainty and what
should we do?
So I think we have a uniquevantage because we had a lot of
conversations late last week toget people's initial reads, but
I don't think that we've beenable to bring together this is
exactly what people should doand what to expect.
Bring together this is exactlywhat people should do and what
(02:47):
to expect.
So I guess for you, Joel whatare we hearing?
Speaker 3 (02:52):
What are we seeing, as we've kind of seen these
tariffs emerge.
Well, I think, first andforemost is nobody knows what is
going to happen, right?
I mean, it's currently Monday,april 7th.
These were announced lastThursday.
Obviously, the markets areroiling, but at least, as I've
talked to customers, as I'veheard what people internally are
hearing from customers,everyone kind of says we just
(03:13):
don't know and uncertainty justbreeds, I guess, a freezing.
I was reading something earliertoday and it was saying unlike
the financial crisis where therewas kind of a race to get
liquidity or you know, there aretimes where it's clear what
you're supposed to do.
It's not clear right now,really, that there's anything to
do.
(03:33):
Right, it's not like somebody'sgoing to be moving their
manufacturing today.
Maybe you're expediting somefreight I think we've heard that
anecdotally people trying topush things in to beat the
tariffs, but nobody knows howlong this is going to last.
Is it really going to bepermanent?
Is it all going to go away in acouple of weeks?
(03:53):
And so it kind of feels mostlylike business as usual, just
with this kind of loomingproblem that people are starting
to say, okay, let's at leastscenario plan for what do we do?
So that is what we've heard ispeople say, okay, what's going
on, and then you know mostpractically, at least in the
(04:15):
world of consumer goods andretail, that gets to all right,
if I'm going to have to eat some, if more costs are coming in,
who's paying for this?
Speaker 1 (04:39):
If more costs are coming in, who's paying for this
?
Is it me?
Is it the retailer, is it theconsumer?
Think about sort ofstrategically going after this.
I think what we found is mostfolks are pretty surprised by
the comprehensiveness and themagnitude, right, and so,
although we say there's a lot ofsort of scrambling, there've
been conversations really allyear about supply chain
(05:00):
diversification.
How do we think aboutpotentially doing more domestic
production diversification howdo we think about potentially
doing more domestic production?
But, to your point, I thinkwe've seen with customers quite
a bit of uncertainty and a lotof, to your point, wait and see,
right, whether it's supershort-term expediting freight,
but also adjusting how peopleare ordering over the next even
couple of days or weeks.
It'll be fascinating to see howthat impacts on-shelf
(05:22):
availability and inventorylevels and all other sort of
downstream impacts on that front.
Speaker 3 (05:29):
Yeah, everybody I've talked to is surprised at the
magnitude, and you know, I thinkif it had been more targeted.
You know, the writing's been onthe wall around China, right,
and you're seeing companiesdiversify away from China.
The problem is that they thenmoved manufacturing to Vietnam
and then Vietnam gets smacked.
So you know, I think that'swhat creates a lot of the not
(05:54):
knowing what to do.
Is you're like what does thiseven mean?
I mean short of well, I meaneven reshoring to the United
States, which I mean?
Anybody who knows this problemknows this is not something that
happens quickly, right, if it'spractical at all, does that
even help you?
All your supplies are tariffed.
So you know, and these areagain decisions that are made
(06:17):
over, you know, peopleprojecting out years, decades,
and then this kind of comes invery unexpectedly.
Now you know we've been toldthat there's going to be tariffs
for a while.
So, again, I don't think it wasshocking that something
happened.
But this magnitude definitelyjust requires everyone to say,
okay, let's try to pick up thepieces.
And then you know, see if thisis going to be a long-term thing
(06:39):
or a short-term thing.
Speaker 1 (06:40):
Yeah Well, you mentioned something interesting
about who bears the cost, and soI think it is an interesting
dynamic when you talk about rawmaterial suppliers, when you
talk about manufacturers,importers, retailers, consumers,
could you unpack that a littlebit more in terms of, okay, if
this lasts longer than a coupleof days, what that could mean,
(07:02):
or likely does mean, from a sortof who shoulders the cost of
all this?
Speaker 3 (07:07):
Yeah, so you know, practically speaking, whoever
imports the product is the onewho's on the hook for it.
Okay, so it's, it's prettyclear, whoever owns that.
There's lots of different termswhen things are being, you know
, kind of shipped as to whobears that.
But in reality, yes, there'skind of this complex, I think,
(07:28):
dance and negotiation that hasalready started.
So if I am a consumer brand youknow companies that you and I
mostly work with they have tonow decide OK, how much of this?
Let's assume that my costs goup 25 percent.
Well, how much of that can Ipush onto the retailer?
(07:50):
Obviously, my goal is that Ican push all of it onto the
retailer, but that is a delicatebalance because that retailer
doesn't want to pay more.
The retailer in the middle alsohas this side of saying well,
if I just pass it onto theconsumers, or the consumer
consumers going to keep buyingit.
This price elasticity of demandthing of, I think for most
(08:15):
Americans we had all theinflation over a couple of years
.
People are still annoyed aboutit, even though inflation's now
manageable.
We'll see if that lasts.
So the idea, idea of havinganother price, you know, shock
is, I think there's arecognition people are not going
to take it.
Well, right, you could passthings on.
(08:35):
We heard this from customers acouple of years ago.
They're like man, it's amazing,I can increase my prices twice
a year.
It's not impacting sales.
I don't think anybody believesthat's going to happen now.
So the retailer has to sitthere and say, well, maybe I'll
pay a little more for my inputs,but I can't pass it all on.
And of course, there's you andI and all the consumers who are
going to say like am I?
You know, what am I going to doif prices go up 25 percent?
(08:57):
Am I going to substitutesomething else?
Am I just not going to buy so?
So that's the dance.
Now there's, we've heard, insome cases this immediately goes
into a little bit bare knuckle.
We've heard examples ofretailers changing terms on
suppliers immediately andforcing them to pay the tariffs,
(09:19):
like changing how things areactually imported.
But again, in practice,everybody's got to figure out
how they make money in this.
Nobody wants to sell things ata loss.
Speaker 1 (09:28):
It's not like there's just an enormous margin.
There's not an enormous marginon this, yeah, so I feel like at
least the consumer brands I'vemostly spoken to.
Speaker 3 (09:36):
there's, I think, this feeling of we're going to
have to eat some of the costsand we're going to have to work
with the retailers and pass someof it on.
And what those ratios are, Ithink, is to be determined.
I'm sure it's going to vary onthe margins for the product, the
category, et cetera.
We've also heard that retailersthey always play, especially
(09:57):
the big ones, right, they'realways fighting for the consumer
.
Walmart's always very wellknown, for we are going to
provide the lowest you know costfor our customer.
But we've heard that they'rerecognizing prices are going to
go up, right, nobody can eat allthis.
There's not enough margin, asyou said.
So, yeah, it feels like for thebrands, we're going to pass
(10:22):
some of it on.
We don't know how much canultimately be passed on to
consumers.
So you know we've gotten quotesof like well, this will be an
interesting experiment, let'ssee how it goes.
And they're also cutting costsor freezing costs.
Speaker 1 (10:34):
So I think you know we're going to we're going to
see how much more efficiency youcan wring out of this system.
It's an interesting take, but Ithink that's fair that it's
going to put a lot of pressureon how do we maintain margin and
stay efficient at the same timewith increasing costs in some
(10:54):
instances, significantincreasing costs.
Speaker 3 (10:56):
So I guess we're going to see all of them.
We're going to see peoplecutting costs, we're going to
see margin compression and we'regoing to see prices going up.
Right, I mean, every side of itis going to take some chunk.
None of them are going to takeall of it, and you know that's
going to be a hard adjustment.
Speaker 1 (11:15):
Yeah, well, now we've talked about the uncertainty of
what happens with this.
Is this a several days, severalweeks, several months Maybe, to
prognosticate, as we look to,if significant tariffs sort of
persist, maybe, what longer termshifts may happen?
Do you have a perspective on OK, if these stay where they're at
(11:38):
, maybe in the position of aconsumer packaged goods company,
how they may adjust theirsupply chain distribution, how
consumer behavior might change?
Curious, if they do, you know,persist.
What might happen from yourvantage?
Speaker 3 (11:51):
Yeah, it's hard to know what is it that I hope will
happen versus what may actuallyhappen, because it's been so
unpredictable.
It's hard to believe, even withI mean things change by the
hour right now that we're notgoing to see some deals being
(12:12):
struck Right.
I would just expect that that'sthe way our government, the
American government, isoperating right now, or at least
has and so I imagine we willstart to see a set of countries
where agreements are reachedPerhaps tariffs aren't
eliminated, but at least they'rebrought down I don't know what
(12:34):
they'll be relative to what theywere before and then those
where there's really a trade war, which is kind of the direction
it seems like it's going morewith China.
So if that happens, I think thefirst thing that every company
is going to think about is isthis going to last?
They want that predictability.
That's the biggest challengeright now.
(12:54):
Everyone's saying it.
It's like you needpredictability to invest, but I
think if that plays out, thenyou probably will see an
acceleration in terms of howsupply chains are reorienting,
moving towards countries thathave friendlier trade relations
with the US and away from thosewhere it's not as good and where
it's more volatile.
I mean, again, I think, justlooking at the dynamic with
(13:18):
China and this is why peoplehave been moving away from there
it's just, even if things areokay, one day, it just always
feels like that could shift tooquickly.
But does that continue to shiftto Vietnam or to India, or does
it accelerate the move toMexico, right, or the Americas
get it closer?
I'm not sure.
Speaker 1 (13:36):
Yeah, no.
One of the things I was mullingon over the weekend is how
these companies may think aboutthe international consumer.
Differently, I think, in termsof product development and where
we kind of start with a smallCPG to kind of expand.
You start in the Americas, inthe US.
My expectation is globalconsumers may become more
(13:57):
relevant for products becausewe're going to have to make sure
that that demand can kind ofcarry the weight of maybe
increased costs and deflateddemand here domestically.
So you know, trying to expandto global markets may happen
sooner.
The emphasis in terms of whatwe're going to produce and how
we're going to kind ofdistribute it may go more global
.
So that I think will beinteresting to follow too.
Speaker 3 (14:20):
So I think that's certainly possible.
I just don't know how possiblethat is in the short term.
I mean, if you look at markets,it's just the Chinese and the
US market are so much biggerthan any others.
I mean, you know the EUmarket's obviously very big but
it's more fragmented.
You know it's a lot ofcountries.
There's a lot more complexityof selling there than there is
(14:44):
selling into the States and youknow, look from a traditional
economics viewpoint, tariff warsare just going to make
economics viewpoint.
tariff wars are just going tomake Americans poorer, right, I
mean, that's the long term.
If this were to continue, we,as in, americans, will become
less well off right, and so Icould see a shift over time as
(15:07):
other markets become relativelymore important and take more of
those products.
But in the short term, it's ahuge market, it's a market
nobody can ignore and again,that's a little bit.
I think the gamesmanship that'sgoing on is saying you can't
ignore this market.
So even if we make it very hardto do business here, you've got
(15:29):
to figure it out.
Speaker 1 (15:30):
Yeah, yeah.
Well, maybe one more question,joel, for you.
If, if, you could provide someadvice.
What should brands kind of doin the context right now, and
what should they be thinkingabout?
Speaker 3 (15:43):
Well, I think I have a lot of sympathy because you
know running our own business,right, there's there's a lot of
uncertainty right now and Idon't think I don't want to make
any big changes and I wouldn'trecommend any brand.
Does that right now?
Right, that just seemsill-advised to respond, you know
, to something like this.
But I do think they're thinkingabout the right things.
(16:04):
I mean, what we were talkingabout is you do need a plan for
higher costs Like it seems likethat's coming in one form or
another and start working withyour partners on how you're
going to deal with that, and Ithink it is starting to test.
What is that?
How are consumers going torespond?
And you know so I think itstarts with looking at anywhere
(16:29):
you can shave your own costs.
There's also Logan.
I guess we didn't get into this.
There are, I think, some tricksthat we've been hearing about
how you can change some of yourinvoicing with your
manufacturing to be very clearabout what constitutes cost of
goods sold, what constitutes allof my brokers, fees, logistics,
(16:51):
et cetera.
Sometimes those things getpackaged together in that
invoice.
You're only getting charged thetariff on the cog.
So you know, there there arethings you can do to make sure
you're minimizing your tariffliability If you want.
We're going to tax season,right, we minimize their tax
liability.
Here's another form of taxes.
What can I do on that front?
That's not going to solve theproblem, but it might make it a
(17:12):
little better for you.
Where can I cut my own costs,minimize what I have to pass on,
and then we're in a new worldand let's see how consumers
respond to that.
So I think people are doing theright things, but I wouldn't be
(17:32):
making massive shifts to mysupply chain.
That might be completelydifferent a couple of weeks from
now if we have a lot moreclarity where you need to make
some of those bigger strategicdecisions Makes sense Makes
sense.
Speaker 1 (17:44):
So a bit of wait and see.
Uh, explore cost cutting or atleast identify those.
Understand your consumer rightand how sensitive have they been
to price historically andmonitor that really closely as
we look over the next few daysand weeks.
Speaker 3 (17:57):
Yeah, and Logan, I'm laughing.
My family has a trip to Japanhere in two months and my twin
boys really want.
Nintendo announced the Switch 2.
And so they were excited aboutit.
For those who followed this,the had the unfortunate timing
of announcing it.
I can't remember if it was theday of yeah, I think it was the
(18:18):
day the tariffs were announcedlater in the afternoon well,
they put some pre-orders.
They put in pre-orders, um, andthen you know, subsequently of
course had to say, okay, we're,we're pausing pre-orders.
We're not even sure what thisprice is going to be.
But my sons were like, well,we're going to japan, let's just
go buy it and we'll pay in yen.
But then I was reading abouthow, apparently, that's actually
even a little bit tricky.
(18:39):
So you know, again, maybe thereare some workarounds here, but
at the end of the day they'renot as simple as they sometimes
seem Exactly.
Speaker 1 (18:49):
Exactly Well.
Excellent, joel.
Really appreciate your insightand the conversation.
Speaker 3 (18:55):
Hopefully we get more details and understanding over
the next few days that's right,because all this advice a week
from now will make probably nosense because it will be a
different world, that's right,that's all for this week.
Speaker 1 (19:07):
See you next time on Shelf Life.
Popular Podcasts
Are You A Charlotte?
In 1997, actress Kristin Davis’ life was forever changed when she took on the role of Charlotte York in Sex and the City. As we watched Carrie, Samantha, Miranda and Charlotte navigate relationships in NYC, the show helped push once unacceptable conversation topics out of the shadows and altered the narrative around women and sex. We all saw ourselves in them as they searched for fulfillment in life, sex and friendships. Now, Kristin Davis wants to connect with you, the fans, and share untold stories and all the behind the scenes. Together, with Kristin and special guests, what will begin with Sex and the City will evolve into talks about themes that are still so relevant today. "Are you a Charlotte?" is much more than just rewatching this beloved show, it brings the past and the present together as we talk with heart, humor and of course some optimism.
On Purpose with Jay Shetty
I’m Jay Shetty host of On Purpose the worlds #1 Mental Health podcast and I’m so grateful you found us. I started this podcast 5 years ago to invite you into conversations and workshops that are designed to help make you happier, healthier and more healed. I believe that when you (yes you) feel seen, heard and understood you’re able to deal with relationship struggles, work challenges and life’s ups and downs with more ease and grace. I interview experts, celebrities, thought leaders and athletes so that we can grow our mindset, build better habits and uncover a side of them we’ve never seen before. New episodes every Monday and Friday. Your support means the world to me and I don’t take it for granted — click the follow button and leave a review to help us spread the love with On Purpose. I can’t wait for you to listen to your first or 500th episode!
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com