Bloomberg Businessweek Weekend - July 18th, 2025

27:03But do you feel like this is potentially a step towards you becoming a state owned enterprise? Oh, not at all. Not at all. In fact, you know, I think it's actually the opposite, which is for the first time we see an actual data point of how we in the West with free market capitalism can take on mercantilism, but doing so in a way that is is along with our value system. So let's be very clear about this. DOD is becoming economically our largest shareholder, but they will vote with our board and they expect us to be a thriving public company. They want us to continue to run the company for shareholders.

27:44And obviously their interest will be a benefit for taxpayers to the extent that we continue to compound, which we expect. And then they also have upside sharing. And so I want to really remind people that if you look at this deal, it was a win-win-win. Obviously, the market likes it. I think our economic platform has totally changed. But we're serving a key national security initiative, enabling trillions of dollars of downstream enterprise value to be more secure. But the taxpayer also has upside in this. And so I think that this is sort of, again, it's a new model. It's unprecedented in a sense, but it's, of course, because we're facing a challenge that we haven't faced before.

28:23Yeah, I guess on some level, Jim, the upside the taxpayer has is if your stock goes up, the investment that the DOD has in it goes up. I was talking to an investor today asking about this, and I said, well, what does it mean for the taxpayer? And they said, really, all it means is a better bet on national security issues. So I might push back. If I may, yeah, if I may push back, because if you look at the structure of the deal, it's not just the shareholding. There are three pillars. It's the shareholding. There's then upside participation in the commodity. And then there's also upside participation in our magnet business.

28:57So there's actually three different mechanisms of upside sharing for the taxpayer. And can you clarify one thing in the details? The agreement, it's$130 floor, right? Or is it$110, sorry? $110. It's$110 floor. That is just for the actual concentrate, refined, and metal. That is not batteries, right? Sorry, that is not permanent magnets. That's all NDPR products. So you're right. Concentrate oxide and metal. So it's commodity. And then when you do downstream, though, we also have 100 % offtake for the new facility that we're going to build called 10X. And as part of that offtake, we'll have a minimum EBITDA guarantee.

29:37And then there'll be a catch up for DoD. And then we'll share. We're 50-50 partners. And so, again, Joe, this is a transformational public-private partnership. Right. But there was really, really well represented in the structure. But Jim, one thing you probably will be getting a lot of pushback from investors, from media, whoever saying what we just brought up, which is your biggest stockholder will be the Defense Department. And doesn't that bring a concern that the federal government has so much say in what is supposed to be a publicly traded private company? Well, actually, interestingly, as part of our deal, DOD will be voting their shares with our board.

30:18And so I really think that this is, again, it's a new structure that contemplates the fact that we need to be a successful public company. So this is very different. I know that maybe there's historical examples of where the government needed to come in and rescue an industry. It's actually the opposite of what's happening here. The government wants to achieve an important national security objective. And we at MP are able to help them achieve that objective. And so they are going to help support us in accelerating investment in our space. And they're going to create the conditions that allow us to invest with a fair return on capital and not be attacked, so to speak, by mercantilism.

31:02And in exchange for that, they're going to expect some upside. And so, again, I think this is hopefully it's a new model that we can utilize across some of these verticals that are really challenging for us where we've been unable to fully reshore industries because we're facing competition. Right. It's thinking differently. Again, we're we. Yeah. Oh, go ahead. Sorry. We only have a minute left. And I just want to hear from you how this deal came together in the timeline here. Who did you speak to? Who first reached out? trips to Washington, trips to Chicago or Nevada? How did it all come together?

31:36And when did the discussions first start? Well, we've been having a great active dialogue with the Pentagon going back to the first Trump administration and through the Biden administration and now, obviously, the Trump administration. And obviously, this is a nonpartisan issue, getting this supply chain back. Suffice to say that what we have been, as you know, in our mission, we've been focused on this single point of failure since the inception of the company. post-Liberation Day, as we saw the Chinese utilize rare earth magnets in the trade disputes, that basically the cutoff of rare earth magnets had the threat of sending our economy into a deep tailspin.

32:14And so that really certainly accelerated some of this discussion. Got to ask you, though, did you actually talk with President Trump about this? Like who finally said, got to do it, signed it? Well, I think you can look at the transaction documents, which were signed to the top levels of the Pentagon. So this was a conversation from the very top levels of the Pentagon. Is that a yes on the president? Yeah. So this is, again, I don't want to specifically name names of who we spoke to and how the conversations went about. But again, how about this? I will tell you that the president has directly mandated that we fix this supply chain.

32:53And so that is that is public. You can see that. And so the president mandated the secretary on down to fix the supply chain. And I think that this is this is really bold and decisive action to make that happen. Well, investors certainly taking note, as we said, your stock up 50 percent. I'm going to say thank you. Thank you. Thank you. Because there's three of us and we really appreciated your time and getting having a conversation with you on this, because it does sound like it's pretty significant in terms of what happens with rare earths here in the United States. Jim, thank you. Thank you.

33:25Stay in touch. Jim Latinski, he's founder, chairman and CEO of MP Materials. And of course, our own Joe Doe, Bloomberg News Economic Statecraft reporter. Joe, thank you so much. You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app. Or watch us live on YouTube. Back in April, Levi's was one of the first big apparel companies to report earnings after President Trump announced sweeping tariffs. Since then, a number of its competitors, such as American Eagle and Gap, have flagged the tariffs impact along with general consumer caution.

34:04Wall Street expected a similar fate for Levi's. But instead, Levi's actually announced its revenue outlook to rise between 1 % and 2 % for the current fiscal year, above the average analyst estimate, and up from a previous view that sales would decline 1 % to 2%. So is the head-to-toe denim lifestyle paying off? Levi Strauss' chief financial and chief growth officer, Harmeet Singh, expects momentum and consumer resilience to overcome tariff uncertainty. He joined us alongside Bloomberg News Senior Editor Nina Trentman. We delivered a quarter to beat and we raised our full year 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 our direct-to-consumer business, but our wholesale business, growing our U.S.

34:55business 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 quarter of high-signal digit growth and growing our profitability. And that is why we believe that we are stepping into the second half. We believe we can manage through the uncertainty of tariffs. The tariff situation is fluid. We assumed an incremental 10 % on tariffs from the rest of the world and 30 % from China. Our view is we are competitively in a better spot to manage through this. 60 % of our business is international.

35:40We have a fairly diversified supply chain, and we've been agile over the years in managing through some of the uncertainties. We've got some mitigation actions, Tim. We are working with our vendors. A large piece of our growth is driven by higher volumes, And that makes a difference when you're negotiating with our tenured relationships over the years. We are driving higher full price sales because our product offers are working. And we are targeting some pricing actions with minimal impact to the consumer. To your question about 26, we are working through that. Some of the mitigation actions will continue.

36:21We 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 musicians around the world. Think Diljit Dussan in India, think different influences in Europe, etc. Harri, 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 tariff clarity by July 9th. Now we're hearing from the White House it's going to be August 1st and that won't be moved.

36:59But of course, you are on the lucky side that you have already reported earnings. Still, at the same time, 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 tariff 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 the tariffs are still such a moving target? Yeah, you know, a couple of things give us confidence, Nina. Number one, the momentum that we're entering the second half.

37:34It'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 products, especially our new product. And because we are a global 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 especially in moments of crisis, consumers tend to gravitate to brands that are relevant and also brands they trust.

38:22Because we have been around for 170 years, navigated different crises, that's really been the genesis of why we think we can manage through it. We talked about the impact, we talked about actions that we're taking to mitigate that, and more importantly, we are doing different scenarios. I mean, after earnings, when we received 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.

39:01I hope that addresses your question. Yeah, Harmeet, you mentioned a music partnership that we, of course, all know, Beyonce and this was a really major deal for Levi's Strauss. I mean you mentioned the brand being relevant. I was just at the Cowboy Cotter concert and I look around there's Levi's everywhere. How influential was this partnership to the company and how much of an impact did it have on sales? Yeah it's been really important. You know we have had a relationship with Beyonce for decades. She's an icon. She's in the center of culture and we are just privileged and honored that she chose us for this partnership.

39:37It'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 than 40 percent of our business. When I joined the company 12 years ago, it was about 20 percent. We think that our women's business can be about, you know, half our business. And I would say the partnership is important. Her styles and what she's wearing, they're selling really well. You know, take the Beyonce hat.

40:12You know, I was in Europe, you know, early June and, you know, I was hearing stories of consumers wanting to wear and shop the hat and the product before they went to the Beyonce concert. They come to our store, you know, we have store managers who have customized 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. We should note Harmeet Singh, who we're speaking to now, he's Chief Financial and Growth Officer at Levi Strauss.

40:51If 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. I'm sure he'd look great in it. Harmit, 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 10 % 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 currency volatility that has come with the dollar? Yeah, no, you know, we have tenured relationships.

41:31We source from about 28 countries. You know, relationships are deep, have been there for a long, long time. Currencies go up and down. There are times when the dollar is weaker, there are times when the dollar is stronger. And, you know, and I think our suppliers, 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 pieces. The more important thing is what goes into the production and manufacture. Cotton is a big piece. And cotton as a commodity has actually traded down. And that also helps offset some of the currency pressures.

42:16And because volumes have been a big piece of what's driving our growth, you know, and we're thinking long and, you know, as and we believe we can sustain the growth at mid single digit over a period of time. I think that's what helps us ensure that it's a win win, both for our manufacturers and vendors, as well as the brand. And so I think that's how we're dealing with it, Nina. 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 or more so e-commerce? Yeah, so it's the magic of the end.

42:56It's great to see our stores perform well, our e-commerce perform well and wholesale. And, you know, I mentioned jokingly within the company, it's a great trifecta on DDC. We are growing comp sales. We just reported our 13 consecutive quarter of comp sales growth. We're opening doors. So we're increasing our market reach. We have 3 ,200 doors right now. We're adding 50, 60 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, Nora, to your question, our wholesale customers see the new product, which is introduced in our direct-to-consumer stores, see how the performance is doing, and in a lot of cases, it's working.

43:47And that gives them the confidence to buy into the product. So wholesale customers are growing, largely because DTC is growing. They're seeing the product introduction. 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. 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? No, Tim, you know, 98 percent of all apparel sold in the U.S. is actually imported. So, you know, that's not a conversation that's happening.

44:30We believe long term the tariff uncertainty will clarify and settle well, where the consumer in the U.S. doesn't pay the cost of the incremental tariffs. And companies like ours, different apparel companies continue to grow their businesses in the U.S. Harmeet, always good to see you. Thanks so much for taking the time and joining us on Bloomberg Businessweek Daily this afternoon. That's Harmeet Singh, Chief Financial and Growth Officer at Levi Strauss and Company. Also, Bloomberg News Senior Editor Nina Tretman. She's the author of the Bloomberg CFO Briefing newsletter. You can sign up for it if you haven't already at Bloomberg.com slash CFO Briefing.

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48:00This is the Bloomberg Business Week Daily podcast. Listen live each weekday starting at 2 p.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa, play Bloomberg 1130. Plenty ahead in our second hour of the weekend edition of Bloomberg Businessweek, including the shark tank-like companies that are now feeling the bite of Trump's tariffs, and how stressed out overworked customs brokers are now left calculating the bill for those with tariffs. Plus, how Binance aided President Trump's crypto firm, then its founders sought a pardon.

48:41That's coming up later this hour. First, though, a pulse check of the state of U.S. manufacturing in the age of tariffs with one of the largest industrial supply companies in the U.S. Fastenal is a roughly$52 billion market cap wholesale distributor of construction and industrial supplies. Think nuts, bolts, screws, anchors, rivets, and other fasteners, as well as other industrial, janitorial, and safety supplies and cutting tools. The company sells to builders, manufacturers, governments, and more, so it's got a great read on the industrial and manufacturing economy in the U.S. For a look at how the company is navigating tariff disruptions, Bloomberg Equities reporter Nora Melinda and I caught up with Fastenal CEO Daniel Flornis.

49:23You know, we sell to a wide range of customers and industries, as you mentioned, across North America and in 26 countries in total, but mostly in North America. Our customer base has been relatively subdued for the last several years. In the fall of 2022, we saw some indicators saying it was going to slide. And we felt that as we moved into the second and third quarters of 2023. And it's been really weak since then. About 30 % of our business is very production-centered business within manufacturing. So are there any signs that that part of the business is improving, that those customers are seeing sentiment improve?

50:06Are you hearing anything from them? I think the biggest sign that we're seeing is the knife has stopped dropping. You know, we were trying to catch that falling knife for a two-year period. When I talk to our district and regional leadership throughout the world, the feedback I hear is, you know, they're not talking about this$200 ,000 a month customer whose business is off 60%, 70%. You have a much more stability. Now, it might be stable at a lower level than it would have been two years ago. But it's much more stable. And so it allows our inherent growth to shine through. So we've really been in this prolonged downturn, especially in the industrial economy.

50:47Are you seeing any particular green shoots or signs of inflection? And if so, which markets are you most optimistic about? Yeah, so we're seeing some green shoots. For us, we're seeing some we are seeing some impact in energy. However, I would say that's probably more us taking market share than it is a lift in the tide. About 25 % of our business is outside of the industrial. And within there, we're selling, we're doing quite well. I hear a lot of commentary from our folks with data center builds, with, you know, even warehousing customers. And we've made really good inroads over the last three years.

51:34into the government sector. And that primarily was an offshoot of COVID. During COVID, when supply chains blew apart, we stepped in to serve a lot of that market when they were not being served. And those folks have remembered that and we've grown our business there. So we need to, of course, talk about tariffs. How have tariffs really changed your thinking about product sourcing, particularly for fasteners, which we know, of course, are primarily sourced in China, Asia. What other options are you evaluating to mitigate the tariff impact here? You know, so back in 2018, we did some short-term moves of our supply chain, but it was fairly limited because you just can't change.

52:19There's so much QC involved with vetting out suppliers that you couldn't move it fast enough. What we had done quietly over the last five, six years is continue in that progress because the tariffs that were put in place in 2018 were sticking and we expected more of it to happen. And we wanted to better diversify the supply chain for our customer. We did look at a lot of options. There aren't a lot of options within North America. We looked at some options of doing some manufacturing ourself. The problem is the economics still didn't work. So it was really for us more about diversifying supplier base in general.

52:59Are the economics of that going to work now in this new tariff regime? I think during the first Trump administration, the goal was to move things out of China. But as many companies are learning right now, it doesn't matter if it's China, Vietnam or India. If it's not in the United States, there is going to be a tariff on it. At least that's what it seems like is going to be the case. Yeah, economics still do not work. And part of the challenge there isn't just the economics, it's the amount of time. When we were researching it very in-depth two and a half years ago, one of the challenges is it's easy to find a site.

53:37It's relatively easy to get a building up and get a supply chain set up. When I say relatively easy, I mean time frame of what it takes to do it. The most challenging aspect was the production equipment of how many months it would take to get that. And so that aspect really pushed us to look more at geographic dispersion of supply chain sourcing because the economics are still very challenging. So how much of what you sell right now is actually made in the US? If I look across what we're sourcing, what our branded suppliers are sourcing, we've always estimated less than 50 % is coming from the U.S.

54:24And is that going to stay stable in this new tariff regime? I suspect it will. Okay. So I know Fastenal raised prices back in April, especially as a result of tariffs. Historically, I mean, the company has been able to pass on pricing costs. What's really been the feedback here from customers? Has there been much pushback in terms of the ability and appetite for customers, frankly, to take on additional pricing, especially as we head into the second half of the year? First off, we sell into a very competitive market. There is always pushback. The real challenge in the equation is communication.

55:01And one thing that helps in our supply chain, we're directly sourcing from the manufacturer that's producing the product, more so than most of our competitors in the marketplace, just because of our scale. And so we have the ability to see into the future farther than a lot of our competitors. And it puts us in a position to communicate very well. It puts us in a position to take steps as the inventory is turning. The one unfortunate part of that, it also can create fatigue for your customer. And I would say our customer is at the fatigue point right now where it's become challenging, but it always is.

55:46And it's all about communication and trust. I want to talk a little bit about the one big, beautiful bill act that became law on the 4th of July this year. In the press release for your earnings, you did mention it. But big picture, what does it mean for your customers and for your business? You know, big picture what it means for our customers is if you look at some of the depreciation rules and the timing, it makes it very advantageous to make capital investment. And so that's the biggest piece that we see impacting our customers because our customers have, especially on the manufacturing side, an incredible amount of infrastructure that they're investing in.

56:24And so anything that allows them to depreciate faster and to improve their return profile is advantageous for our marketplace. And that's a that's a key element that we talked about in the release. I know that you talked a little bit about to us manufacturing your own products in the U.S. and your suppliers doing it. But I'm wondering about your customers and the way that these so-called America first policies might help them reshore manufacturing back to the U.S. Are you seeing any evidence or hearing discussion of your customers beginning to move manufacturing back to the U.S.? You know, I would say it's fairly limited.

57:02But again, that's not something that happens in six months that you set up. We've had some customers set up assembly operations, which you can do in a much shorter time frame as opposed to pure production where you're manufacturing components yourself. or you're changing your supply chain to more domestic type supply. But what we've seen is a lot more willingness of making investment even beyond the manufacturing capacity in the short term. Fastenal has refocused on growing with larger customers. What are the key drivers there and what additional investments do you need to make to enable growth with those customers?

57:43Yeah, so a position we've put ourselves in for a number of years is we very aggressively made investments, and this was starting back 15 plus years ago, of slowly building an infrastructure to move the supply chain closer and closer to the point of use. And what that involved for us is investing in a tremendous amount of vending infrastructure. And in more recent years, a lot more RFID type infrastructure to measure product movement within a facility so that you don't have to, with human capital, physically observe product being diminished, you can monitor it electronically and remotely. And so we've made extremely large investments over the last 10 plus years in vending technology.

58:34And I'm pleased to say that vending technology is all manufactured in the United States. Yeah, I was surprised when I went to your website earlier, as I was preparing for this to see those vending machines. It's not something that I've run into certainly in my life, but it's pretty cool to see that. Not just soda. It's a snack machine. Yeah, that's what I was thinking. It's like, it's a snack machine, but you can't eat what's in there. Exactly. Okay. Hey, we just got about a minute left and I just want to talk numbers real quick. Gross profit up 45.2, 45.3 % up from 45.1 % over the second quarter of last year.

59:09You said it was partially offset by higher import duty costs and higher fleet and transport costs. Are those costs, in your view, going to stabilize?

59:19They're going to continue to rise because of the way our supply chain works. We carry a fair amount of inventory because we have such dispersion in our locations. So we carry quite a few months of inventory. So that's going to keep ratcheting up as we're on a FIFO basis inventory. So as that inventory continues to turn, that will continue to ratchet up a little bit as we move into the third and fourth quarters and into 2026. what really helped us during the quarter and what drove the improvement in our gross margin set aside tariffs for a second. We put in place a faster expansion starting last summer to widen our inventory.

1:00:00And that's really what drove our margin this quarter. Dan Flournis, CEO of Fastenal. Really appreciate you joining us. Shares up today. New all-time highs, 3.8 % right now. You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business App. Or watch us live on YouTube. For years, it was a winning business model. A startup in the U.S. would have a clever idea for the kind of everyday product that everybody else wished they'd thought of first. The design and innovation were American, but the manufacturing was outsourced to a country with much cheaper production costs, such as China, Mexico, or Vietnam.

1:00:44That model was a feature of many of the businesses that appear on the hit TV series Shark Tank, in which entrepreneurs pitch their idea to a panel of potential investors. But now, as President Donald Trump plows ahead with promises to upend trade and force more manufacturing back to the U.S., the designed in America, made in China model is in doubt. Christina Lindblad is Bloomberg Businessweek global economic editor. She joined Nora Melinda and me to discuss how Shark Tank-like companies are feeling the bite of Trump's tariffs. Well, I was actually thinking about how I had watched a clip of Shark Tank in which these founders told the judges that they had set up a production line in the United States.

1:01:25And one of them said, that's crazy. You know, and then it is crazy. And then I thought, how are these companies, so many of them which follow, you know, this sort of Apple model, you know, designed in California, made in TK somewhere else, cheaper. usually china yeah increasingly sometimes or you know vietnam and and how are they faring through all of this because you know they don't have the like you know lobbying arm the deep pockets to to you know have their margins be eaten away like this so we decided to go out and we actually we um we went through a whole we we cast a whole bunch of companies and we decided to focus on four and we did basically as told to's so it's like directly from their mouths and we asked them a bunch of questions about what kind of tariffs they were paying right now and what they were looking to do about this and several of them said that well actually some of them said they had started out making their products in the US but pretty shortly realized that that wasn't going to work out that one of them said the product was so expensive nobody bought it and that they were contacted by a Chinese company that was already making something like what they made.

1:02:48And then the other thing we heard frequently is that by going to China or going to some other countries, you get like a full operation. Like, you know, you don't have to be, what people were saying is if you're a small company in the U.S., it's like you're having to watch out over all these parts, that there's different parts of production like you're importing this and that and you know making sure it's all going to the plant that in china like somebody was saying we'll take care of all of that for you and um and then also we talked to a person she makes this this little contraption um called a click and carry that like you like snap two bags over your shoulder it's kind of brilliant i bought one i'm immediately after do you like it do you like it do you buy it after seeing it on Shark Tank?

1:03:31No, after I wrote the story. Before we wrote the story, because I read the transcript and I thought, oh yeah, this is like your bags always sliding off your shoulders and you go to the green market. Anyway, and she said it would take a minimum of eight months to bring this back to the U.S. and it would involve something like getting a mold maker in China, because there are barely any left here in the U.S., to design the mold and bring it back and forth, you know, between, I'm sorry, the designers will be here, the mold maker in China, back and forth, sent it back and forth for adjustments, right?

1:04:05And finally, once you had the mold, you still have to import the resin, the plastic resin from China. And you'd probably, she said, I'd have to find a factory that had a high degree of automation, you know? So that kind of beats the whole idea of, like, job creation, you know, for the tariffs. So, yeah, it's it just seems like some of these that small businesses really have a hard time and right now trying to figure out what's next. So net net, would it be possible for any of these companies that you came across in the casting call to actually do this in the US? Right now, they said that at this at the level of tariffs they were facing.

1:04:46And let's be clear, two weeks ago when we were talking to them, no, it's not worth it for them. I mean, we could be talking to them if we were to go back to them. Who knows? After August 1st, perhaps. You're listening to the Bloomberg Business Week daily podcast. One thing that we've been talking about quite a bit over the last few months is, okay, who eats these tariffs? And the picture that we've gotten from talking to different CEOs is sort of like everybody in the supply chain. So our earnings will take a hit. We'll absorb some of them. Maybe we'll raise prices. Consumers might pay a little more.

1:05:17That's for big companies. What about for these tiny companies that are watching every cent? Well, I mean, there's one woman, the founder of Click and Carry. She was saying that, you know, she actually had taken it alone and sold out a bunch of stocks in the fall because she was she had been selling online and she was actually starting to sell through retailers. And she's saying, well, I approached all these companies with a certain price. This is what I told them, like, I can provide this to you for this price. but now like you know with tariffs i'm gonna have to go back to them you know and quote them another price and she's scared you know that some of them will drop her product because they've only started carrying it a few months ago and some of them she hasn't even gotten in i mean she has enough i think to supply everyone you know all the contracts that she has through like you know early summer but yeah a lot of companies were talking about how the uncertainty towards the back end of the year when like you know um they're having to restock yeah like we spoke to levi's cfo and they said this in earnings too that about what roughly half of their inventory for the remainder of the year is already in the u.s so that's kind of free and clear at this point oh most definitely but i know you mentioned earlier um you were talking about a company that you said they were wanting to pass on some of the tariff impact toward the customer, but customers are just unwilling to pay?

1:06:45Yeah, I mean, I think if you're a young business and you have your foot in the door with some of these retailers, you know, and you don't have a long relationship, you're going to be really scared to do that. So mostly we heard the story sounded like it was going to be the importers eating the tariffs. I mean, I think there's a misconception, largely because of the way the White House talks about this, that it's the exporters eating the tariffs. And, you know, we did hear stories at the beginning of Walmart pressuring Chinese suppliers to lower their prices in order to compensate for the tariffs.

1:07:19But even there, we heard that many of them were saying no. I mean, a small company just does not have that kind of leverage, really. So what are people I mean, you cover the economy more broadly. So just outside of this story, if we were to just bring in a broader context, What are people saying about the impact of tariffs on the U.S. economy? You know, we haven't seen it in inflation yet, although I think we have a print this week. Tomorrow. Yeah, which may throw some light on all of this. I think it could be a lot of people say because of this dynamic in which many people knew tariffs of some level were coming after right after Trump was elected.

1:07:59Right. And so and there was this big bump, you know, surge in imports. we haven't seen costs go up because of that, because people are selling down the inventory they already have. I do think there's still a lot of question marks. And also there's been, I mean, this kind of whack-a-mole effect where they're just sort of like, okay, it's going to be$145, but now we're going to suspend it, now we're going to throw it to August. I'm personally really interested in looking at investment figures at some point. I suspect that this year may be one of the lowest, may show a big fall off of corporate investment around the world.

1:08:37Which is the not exactly the opposite of what Trump, the president wants to see. He'd like to see more investment than you have. But I think the uncertainty is just leaving companies kind of probably saying, I'm going to sit it out. So that's what I wanted to talk about. You mentioned the whack-a-mole. Is it going to be 145 percent? Is it going to be what was on Liberation Day? Do you have to wait and see what the letter says on True Social to understand what the effect of tariffs is going to be on the country that you manufacture in? Does it mean that there's sort of a stasis here with these small companies that you talk to, or are they plowing ahead and moving forward?

1:09:08One of them is fortunate and has suppliers in many different countries. And they sound like, you know, and they were lucky. I think it was, you know, Turkey was their main supplier. And that wasn't one of the countries that had, you know. The thing is, we're going by Liberation Day, you know, like the charts, you know. and turkey wasn't you know very severely affected you know so but you never know you never know i mean because now we're seeing duties used for purposes other than just delivering trade deals you know in the case of brazil yeah um and bolson and you know trump's um friendship with bolsonaro like you know so that's been an issue where you know we're seeing yeah just to clarify that he basically said that this was not about the trade deficit because we have a trade surplus with brazil instead this is a punishment for the way that uh bolsonaro is being treated and prosecuted by the current president so the story talks about the fact that some founders are saying that they'd like to get some sort of notice uh even a 90-day notice talk to me about that what are they thinking that's interesting i hadn't heard that before um they yeah people were talking about getting an advance notice about when when tariffs one person said just like an advance notice and when tariffs are going to go up another one said can get enough an advance notice if like there's a group a of countries you know those tariffs will go up and these will go down um you can't really wage a trade war like that though i don't think you know um yeah so well we're certainly it's maybe you can but certainly not how it's being how it's being waged now um Yeah, I just think it's just like a difficult time for people to make decisions.

1:10:59And what came through is they wish they had more wherewithal, you know, to like adjust. And also, you know, you're talking about small businesses sometimes with like, I mean, some of the people we talked to had less than three people, full time staff, you know. Yeah, they're shipping one container of something at a time. Right, exactly. Which is a tiny portion of what you see on a cargo ship. Yeah, I mean, we had one person who we didn't end up, you know, choosing for the package who had to go back to her old job, you know? So, yeah. Well, it's a great piece, Christina. I encourage everybody to check it out.

1:11:35It is in Bloomberg Businessweek. Christina Lindblad is the editor of it. She's global economics editor for Bloomberg Businessweek. She's also the brains behind the idea for it. So everything Shark Tank, address those questions to Christina Lindblad. I got to tune in. You got to tune in or you just got to read everything in Bloomberg Business Week and then you can get the update. You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app or watch us live on YouTube.

1:12:11From navigating tariff uncertainty to navigating tariff costs at the ports. Being a customs broker used to be a pretty straightforward, low drama gig, at least according to Jonathan Lieberman, president of New York Customs Brokers. It specializes in seafood. Maybe there was the occasional emergency, such as the shipping container of crocodile meat that he had to send back to Australia because of insufficient paperwork. But most nights, he could make it home in time for dinner with his wife and two young children. After so-called Liberation Day, everything changed, so writes Stacey Vanek-Smith for Bloomberg Businessweek.

1:12:45Stacey is the co-host of Bloomberg podcast, Everybody's Business. Check it out. New episodes every Friday. Stacey joins us from New York. Stacey, I want to start with just what exactly a customs broker does. That is a great question. Before I started the story, I didn't know myself. A customs broker is kind of a facilitator. They kind of guide, help to guide products into the country from overseas. They take care of the paperwork. They know about regulations. In the case of New York customs brokers, like you were saying, they specialize in seafood. There are all kinds of sustainability laws, NOAA, FDA regulations to navigate as well as tariffs.

1:13:24So they kind of help facilitate all of that. So everything was kind of fine and normal until April 2nd. Then what happened? What did he start to hear from customers? Well, it was so interesting. So I guess normally, you know, we've had almost no tariffs, a lot of free trade mostly for decades and decades. And so it was a pretty straightforward job. But all of a sudden with Liberation Day, all these different tariffs for all these different countries. And, you know, seafood comes from all over the world. So he's been dealing with with dozens and dozens of countries and dozens of places all over the U.S.

1:13:59importing these fish. And, you know, he said all of a sudden everyone was calling wondering, you know, well, if I get the fish from here, but they're filleted here, what does that mean? I mean, people were just panicked because the margins are not huge for seafood. And so, you know, a lot of times like something like shrimp, there was a big box of shrimp in his office when I came that day, a big box of frozen shrimp in his office. Something like shrimp, a 10 percent tariff can completely wipe out the profit. So they were really panicked and just wondering what the rules even were. How has it changed his job itself?

1:14:34As Tim mentioned at the top of the show, you know, he used to be able to just make it home in time for dinner. But now he seems to be spending a lot more time at work. Really, how has this specific role just gotten so much more stressful and more difficult post-Liberation Day? Well, for a couple of different reasons. So initially, you know, it was just a lot of paperwork, kind of keeping track of shipping containers, occasionally going out to his offices right by JFK Airport, occasionally going out to the airport and sort of checking on a shipment. Now it's just much different because he's got people calling him at all hours asking about rules.

1:15:11Also, the Customs and Protection Bureau is just issuing all of these new directives and rules all the time, like multiple times a week now. Apparently that almost never used to happen. So he is trying to communicate the rules changes to customers. And also there's just a lot of confusion over what when the tariffs actually hit, how much they are. So he's getting calls. And these are very high stakes deals for a shipping container full of like lobster tails. That can be almost a million dollars worth of lobster tails, in which case a 10 percent tariffs, you know, like one hundred thousand dollars.

1:15:45This is just so much money for these companies. Oftentimes they don't know how to find it, how much time they have. I mean, they used to actually pay the customs brokers. They used to actually just cover the tariffs for their customers because they were so tiny. And now, you know, the tariffs can be upwards of$100 ,000. So he's helping them to calculate that. He's answering all of these calls. There's a lot of confusion over when the rules will change. So he's answering that. And then just the paperwork itself is a lot more complicated. He has to make sure that he's getting this right. There's not a lot of time to waste when you've got seafood sitting there waiting to be shipped.

1:16:19So he's just he's trying to keep his clients updated on the rules. He's trying to answer a bunch of questions like late, late into the night and also just keep the shipments moving as much as possible. We've heard from the president repeatedly that the countries themselves are paying these tariffs. Based on your reporting, did you find that to be true? That is not true. So the importer of record pays the tariff. Now, in some cases, the company, the overseas companies will also be the importers of record. Sometimes they will do that. So sometimes that is actually true, but but it is always the importer of record who pays the tariffs.

1:16:54So if you've got, you know, a seafood restaurant importing a lot of seafood, they are paying they are paying the tariffs. Did you get a sense at all in your reporting about just when the uncertainty is going to ease? Of course, we had the initial deadline. Now we have this August 1st deadline of when all these deals need to be completed. But from from your seat, does it does it seem like that initial like tariff Liberation Day induced shock that kind of spread across markets and economies? Has that cooled off? No, this this was, I think, the most striking part of my reporting is just there is so much uncertainty and uncertainty about the uncertainty, I would say.

1:17:36I mean, I spoke with one of the companies that that works with Jonathan Lieberman, who uses him as their customs broker. One of the biggest it's called Sensi is the company. It's one of the biggest seafood importers in the country. And the owner, one of the presidents of the company said to me, you know, he's like, I don't how do you run a business if you don't know what the costs are going to be? He's like, I don't know what they're going to change, when they're going to change. He was stopping shipments. He had stopped a lot of the shipments from China just because there was so much uncertainty around that situation.

1:18:06The costs were potentially so high. There's just there's so much uncertainty and there's not even certainty about when we will have certainty. And I think it's just making it so hard for businesses to plan anything. So enter the magic eight ball. This is not a joke. There's a magic eight ball in your story. There's this was one of my every once in a while when you're a reporter, something happens that feels a little magical. But I went into Jonathan Lieberman's office. Like I said, it's right by JFK. And he had all the stuff you'd expect. Huge customs book. It's a foot and a half thick of like every different possible product.

1:18:42Files, computer. And then there was a magic eight ball on his desk. And of course, I asked about that. I assumed it was from his children or something. But no, he bought it right after Liberation Day. He was taking calls after calls from clients he'd had for decades. Just they were all panicked, wondering what was going on. And he said he kept saying over and over, I wish I had a crystal ball. I wish I had a crystal ball. And he said while he was talking, he just impulse ordered a Magic 8 ball off of Amazon. And so now he says something. He just shakes it up to see, you know, to answer questions.

1:19:16And, you know, when I was there, he shook it and it said Outlook Hazy, which seemed appropriate. This Magic 8 ball likely was not made in the U.S. and probably would be subject to import. It was, in fact, made in China. It was. Yes, he looked it up. Well, there you go. Ever the amazing reporter, Stacey Vanek-Smith, writing for Bloomberg Businessweek. You can check out her story now on the Bloomberg Terminal. It's about customs brokers. It was a low-stress job, not so in the age of tariffs. Also, check out Stacey's podcast, co-hosted with Max Chafkin. Everybody's business. New episodes come out every Friday.

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1:22:43This is the Bloomberg Businessweek Daily Podcast. Listen live each weekday starting at 2 p.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa, play Bloomberg 1130. Bitcoin hit an all-time high this past week to start what crypto enthusiasts and the Republican majority in the House of Representatives have dubbed Crypto Week. After an initial roadblock from some conservative holdouts, ultimately the House passed a series of crypto-friendly bills, a huge win for an industry that poured millions into last year's elections to promote pro-crypto candidates.

1:23:23Now, one of the Trump family's crypto ventures has received key behind-the-scenes help from the world's largest digital asset exchange, whose founder is a convicted felon now seeking a presidential pardon. And critics say the relationship poses a conflict of interest for President Trump. So writes Bloomberg News investigative reporter Zeke Fox. Zeke is also the author of the book Number Go Up, Inside Crypto's Wild Rise and Staggering Fall. Yes, this is like, it's a pretty complicated story, but I think it's an important one. So the Trumps, while Donald Trump was running for president, started this new crypto company, which they called World Liberty Financial.

1:24:08And the way this company set up, at least at the beginning, three quarters of all the money that came into this company was paid to the Trumps as just a licensing fee. So they've made tons of money off it, something like three or$400 million. But as is so often the case in crypto, when they started this company, they didn't really know what it would do. There was some talk about it being like a buying and lending platform, borrowing and lending platform. But the company had really very few coders on staff. They didn't really have a team commensurate with all the money they raised. So they needed a product.

1:24:47And what we reported was that they decided to make a stable coin, like a cryptocurrency that's always worth a dollar because it's backed by real dollars in the bank. And when they went to go make this stablecoin, because they didn't have a lot of programming talent, they called on Binance, the biggest crypto exchange owned by CZ. And what we reported is that Binance actually wrote the basic code that powers the World Liberty stablecoin, USD1. And so also in a conveniently for for him, CZ, who was only just let out of halfway house last year after pleading guilty to these money laundering violations, is seeking a presidential pardon.

1:25:37So his company is helping out the Trump's venture while he also is looking for this favor for himself. so this is one of many crypto currency ventures that the trump family has right yes i have actually lost track of how many there are um there's you need a whiteboard yeah i know it's it's so confusing that they actually got kind of confused themselves the other day um now the trumps have a meme coin trump coin those guys announced that they were going to make a crypto wallet and the trump sons were like this is not an official trump project like these guys can't even keep straight how all their different uh crypto ventures is is is that unique though to this trump coin and just this is a little aside i you know whether we're talking about i think there's a cologne that i saw recently.

1:26:36There are the shoes. There are the Bibles. This is all licensing, right? Yeah. Is that any different than what the Trumps are doing with crypto? So at first, I think it's quite possible that when they got into crypto, I mean, they did even work with some of the same guys that they'd worked with on some of these more traditional licensing deals. Maybe they thought it was just another thing where they might make, you know, a million bucks here or there by licensing their name. But it's turned out to be like on a totally different scale. Just in since Trump has become president, I think Bloomberg billionaires estimates that he's made 600 million off these different crypto ventures.

1:27:18And it's become a way that anybody in the world, even people who are citizens of other countries who who couldn't donate to his campaign can just give him money. There's another crypto billionaire named Justin Sun. You might know him as the banana guy. Yes, best known for paying$6 million for a banana and then eating it. It's modern art. He bought$75 million of World Liberties tokens. and he had been facing a fraud lawsuit from the USSEC. And that was later put on hold. And I should say that all these people I've mentioned have all denied that anything untoward is happening. And they're saying like, hey, you know, I just want to invest in these coins.

1:28:06And it's not related to whatever business I might have with the government. So all these crypto ventures that we said may not even fit on a whiteboard. If we rewind back to 2021, Trump was anti-crypto, correct? I'm just trying to catch up here. Yeah, I mean, he said it was a scam. I think he said maybe it's all made up. A scam against the dollar. Yeah, and his first administration initiated some of the lawsuits that crypto guys have been so up in arms about. But it only really changed during this most recent campaign, and there was a very concerted effort, mostly by a small group of rich Bitcoiners to get Trump on board.

1:28:54They got together and donated something like$20 million to his campaign. It was a fundraiser at the Bitcoin convention, the annual Bitcoin convention. And they had the fundraiser. He raised the$20 million. Then he went out on stage in Nashville and gave this speech in which he totally changed his position and said, Bitcoin's going to the moon. I want to lead the way. Let's make this a crypto capital of the world. It's really an amazing triumph of lobbying. On the Binance story, we should note a Binance spokesperson didn't respond to questions about the coding help or investment deal, but said USD1 followed the exchange's quote standard listing process.

1:29:34A White House spokesperson declined to comment for the story. A spokesperson for World Liberty didn't respond to specific questions about the company's dealings with Binance, but said in an email, quote, your assertions are factually deficient and designed to further a political agenda. Yeah, I mean, this is like quite controversial, so I can see why they, why people aren't talking about it. You know, this work that people familiar with the matter told us that Binance did for world liberty was not, was not disclosed at the time on and we also reported that they've binance has done other things to help world liberty uh one of them was uh so the world liberty is a stable coin yeah people have to use it for the company to make money and the more people want the bigger this pile of stable coins get the way the company makes money is earning interest on that so right now of all All the stable, the USD1 coins that exist, most of them are actually held by Binance.

1:30:40So there's about, there's more than$2 billion of USD1 on Binance. The interest income that generates a lot of it goes to the Trumps. But does the USD1 that is from, is it World Liberty Financial? Is that right? Yeah, they're the issuer of the stable coin. Well, is the Trump, let's just call it this, is the Trump family stable coin a competitor to Circle Stable Coin and a competitor to Tether? Yes. Okay. And even right now, the House is going to take up the Genius Act, and they're calling it Crypto Week. They're going to debate the rules that are going to govern these stablecoins, and the rules they set might be more favorable to one or another of these companies.

1:31:24So, Zeke, in this story here, we have CZ, who pled guilty back in 2023 to failing to maintain an effective anti-money laundering program. Now he wants a pardon. and Trump's the only one that can give it to him. Is he the only one still caught in the crosshairs here? He has, Binance has paid his fine. He's done his time. Having this criminal record could make it difficult. Binance is the biggest exchange. It's huge worldwide, but they've never really been able to establish a foothold in the U.S. And the owner of the company having pleaded guilty to this serious felony could make it difficult for them to get the required licenses here.

1:32:06So if that were wiped away, they might be able to compete in this giant market. And like you said, the other big companies in crypto, like Coinbase, they were facing serious lawsuits under the Biden administration. Those have been dropped. Pretty much everybody in crypto has been given the go-ahead. under Trump. I got to ask because your book is called Number Go Up Inside Crypto's Wild Rise and Staggering Fall. You wrote, you published it at a time when crypto, it was crypto winter. How are you thinking about what you've learned over the last two years? And if that changes the narrative of your book at all?

1:32:49Yeah, I mean, I definitely should have picked a different subtitle for the book, given that like crypto is always on these boom and bust cycles. But what I've seen in this last like crypto recovery is actually nothing that's changed my mind. If anything, it's become easier to raise money for crypto projects that have have no point at all. Like this Trump meme coin. They're not even claiming there's going to revolutionize his finance. They're just like, hey, Trump's famous. Buy this coin. And then lots of people are piling in. It's like the GameStop mania or something. So, look, I'm not going to ask you to predict the future, but do you think we're still in a boom bust cycle and this is a boom?

1:33:30Oh, yeah. I mean, even people in crypto, I think, are mostly saying this can't go on forever like this. I mean, eventually, like with all things, I think that the value has to come from actual usage. It has to have real world applications. Now, these laws that are being debated might make it so favorable, might end up so favorable for the industry that people will be incentivized to use crypto who might not have otherwise wanted to. Zeke, always good to see you. Congratulations on this story. Everybody read the book. It is a great book. Zeke Fox is investigations reporter for Bloomberg News. He's also the author of Number Go Up, Inside Crypto's Wild Rise and Staggering Fall.

1:34:16This is the Bloomberg Business Week Daily podcast, available on Apple, Spotify, and anywhere else you get your podcasts. Listen live weekday afternoons from 2 to 5 p.m. Eastern on Bloomberg.com, the iHeartRadio app, TuneIn, and the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg Terminal.

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