Federal Court Rules Against Tariffs & Aldi Wants to Take Over the Grocery Market

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0:30Good Morning Brew Daily Show. I'm Neil Freiman. And I'm Kyle Heggie. Today, a stodgy car brand is having a renaissance by taking customers from Tesla. And how a small Caribbean territory is benefiting from the AI boom in an unexpected way. Today is Tuesday, September 2nd. Let's ride.

0:51With Toby over in the UK, Kyle is joining us for the next few days to burnish his six man of the year resume. Kyle, very excited to usher in sweater weather with you this first week of September. I want to know what you think about this stunt. To promote its upcoming movie, a Stephen King adaptation called The Long Walk, Lionsgate held a screening this weekend that required audience members to walk on treadmills for the entire duration of the movie, 108 minutes. And it wasn't a leisurely stroll either. The treadmills in L.A.'s Culver Theater were set to three miles per hour. If you had to stop at any point, you were kicked out of the theater.

1:27I think you could last the entire movie. Yeah, I mean, 108 minutes of walking, that's a classic New York weekend. I got that down, Pat. I like this play, though, of kind of integrating the movie into the movie-watching experience. I'm thinking escape room for the Shawshank Redemption. You have until the whole length of the movie to find your way out of the theater. We could have some fun with this. We could have. Some other movies I was thinking of, you could dribble a basketball during Space Jam, and then during Jaws, you had to tread water. I don't know how long Jaws is, but I don't think that many people would make it out of that movie.

1:57I'm definitely not making it out of Jaws. Now, a word from our sponsor, Roku Ads Manager. Neil, are you a man of action? No, I'm quite sedentary. Well, what if I told you you could have action ads with Roku Ads Manager? Well, I know Roku Ads Manager combines the simplicity of digital ads with the impact of TV. Advertisers can use it to manage, optimize, and measure CTV campaigns in a few easy steps. But what are action ads? Well, I'll tell you. Action ads bring interactivity to your streaming video ads, letting customers learn more about your brand, product, or service. While your ad plays, action ads include a clickable overlay with a call to action, buy now, learn more, sign up, etc.

2:36That prompts users to grab their iconic Roku remote and press OK. Then they'll receive a text message with more info from your brand. It's a direct path for customers to engage with your brand. And Black Friday is coming up, which is when Roku usage soars. You're darn right it is. Right now, our listeners can get$500 match on their first$500 spent with the code BREW500 at ads.roku.com. That's code B-R-E-W 500 at ads.roku.com. Terms apply. Just as everyone was closing their laptops and heading out for the long weekend, a court delivered a bombshell ruling that could change the economic landscape.

3:13In a 7-4 opinion, the U.S. Court of Appeals declared that most of President Trump's tariffs are illegal, upholding a lower court decision that concluded the same thing. The judges said that the law Trump invoked to slap tariffs on countries around the world, the International Emergency Economic Powers Act of 1977, did not grant him the authority to do so. Nowhere in the statute does the term tariff, tax, or duty appear, the judges wrote, saying that, quote, when Congress intends to delegate tariff power, it does so explicitly. No other president has used this law to enact tariffs. But here's the catch.

3:48The court allowed the tariffs to stay in effect until October 14th to give the Trump administration time to appeal the case to the Supreme Court, which it absolutely intends to do. Not all of the tariffs Trump has imposed were deemed illegal. the ones relating to a specific sector, such as steel or cars, were justified under a different law. The tariffs in the crosshairs are those so-called reciprocal tariffs, which Trump first unveiled on Liberation Day in April, paused for a few months over the summer, and announced a revised version in August. And while it's not all the tariffs deemed illegal, it is a good chunk.

4:2270 % of projected tariff revenue from 2026 comes from those reciprocal tariffs the court struck down. So, Kyle, a big blow to Trump's signature economic policy. But because of the October deadline, it's kind of like a cliffhanger season finale until the next one starts a bit later. Either way, it injects even more uncertainty into businesses that thought the tariff question marks had been resolved. That's right. And we've been talking about tariffs probably every week on this show. And as you mentioned, this is pushed till October. So we're probably still going to be talking about it every week.

4:52The Supreme Court is unlikely to even take this up until later in the year, early next year. So we probably won't have a final decision on this until 2026. Now, if it does make its way to the Supreme Court, which people think it will, what are they going to be looking at? And it's really going to come down to this major questions doctrine, which is effectively where the Supreme Court is saying, did Congress, when they passed these laws, intend for the president to use these powers in the way that he or she is using them? They've used this major questions doctrine to actually shoot down a few other presidential overreaches in the past.

5:27A 2022 decision voided the Clean Power Plan and Obama-era initiative to reduce greenhouse gases. They also used this framing to stop a moratorium on evictions, stop some workplace measures to counter COVID-19, the student loan stuff that Biden was trying to pass through. So there's some reasons in the past that the SCOTUS has used this to push back on presidential overreach, they're going to be looking at that. Now, if you're like, okay, great, then tariffs will go away. As you mentioned, they're not going to, because there's other ways in which the Trump administration can put tariffs in place that are quote unquote, maybe a little more legal.

6:04There's the Trade Act of 1974. There's some sections and provisions in that Trade Act. But for that, it has to be much more tailored to a specific time, a specific sector, and it has to have been a little more thought out than a blanket tariff that they did on Liberation Day. And you can imagine if the Supreme Court does uphold the lower court's ruling that they will try to find other ways to implement these tariffs, other laws where they can invoke, because there is so much money at stake here. As I mentioned, 70 % of projected tariff revenue for 2026 comes from reciprocal tariffs. In August,$31 billion was collected through these tariffs.

6:41That represented 8 % of all Treasury cash inflows. They are projecting$2 trillion in government revenue through 2034 through these tariffs. And the GOP just passed this massive tax cut bill that is going to add trillions of dollars to the deficit. They say they're going to pay for that by all these tariff revenues. Well, if the tariff revenues don't come in, then you have a huge hole in your budget. So So there is a ton of government revenue at stake that the Trump administration will be looking at to fill should the Supreme Court strike this down. But we just don't know what will happen. It's going to be a very busy session for the Supreme Court because not only are they dealing with this tariff question, they're going to be assessing whether Trump can fire Fed Governor Lisa Cook.

7:24So there's just a huge collision course between presidential authority and the Supreme Court that is that is about to hit the pipeline. That's right. And it's a great point about the SCOTUS tariffs for the revenue that they're generating. The other element that the executive branch is going to argue is that basically we're using these to get other countries to the negotiating table. And if we take them away, it said, quote, disrupt the executive branch's ongoing sensitive diplomatic negotiations with virtually every major trading partner. What will be interesting is when it goes to the Supreme Court, the normal allies of the GOP might actually be against tariffs.

7:59tariffs. There's small businesses, trade associations and right-leaning advocacy groups have all filed briefs complaining about the tariffs, saying that they are illegal. So it will be a very interesting Supreme Court season to watch in 2026. Move over Trader Joe's and Whole Foods. Americans might just have a new favorite grocery store. That's right. The German-owned grocery retailer Aldi is set to add more than 200 stores in the U.S. in 2025, bringing its total locations to over 2 ,500 and making it the third largest grocery chain by store count in the U.S. Now, this growth is driven by a relentless focus on simplicity.

8:36Stores have no extras like a pharmacy, bakery, or deli that a typical larger grocery store might. Store footprints are about half or a third of a Kroger or a Walmart. And over 90 % of the products that Aldi sells are its own private label brands. And to save time and costs, products are often displayed in crates that are pulled off the trucks and placed directly on shelves. Now, consumers are responding positively to this simplicity. According to Placer AI, visits to grocery stores were up 1.8 % from last year across the U.S., but up more than 7 % to Aldi. And despite a consistent upward pressure on food prices, Aldi was able to recently cut prices on 400 of the roughly 2 ,000 items it sells in its stores.

9:17Now, Aldi is currently in 39 states. If you're in one One of the 11 states that doesn't have one, a road trip might be in order or hope your state is selected by 2028, which is when Aldi expects to add an additional 800 stores across the U.S. Neil, do you have Aldi fever like the rest of America? Aldi is growing like an absolute weed. It's the fastest growing retailer besides the two dollar store giants. This expansion that they're plotting in the U.S. is their largest U.S. expansion ever. I think they are really doing a great job at sitting at the intersection of a ton of changing consumer trends.

9:50Number one is value. People are looking for value at a time of higher inflation. Because of their lower cost structure, because they just take the boxes from the trucks and put them on the shelves, and their stores are so much smaller than the average grocery store, they just have to pay fewer workers. They don't have to spruce up the store in any way, and therefore they can lower the cost. So if in one New Jersey location there was this 12.2-ounce box of fruit rounds priced at$1.68, The cereal it's, quote, inspired by, which is Kellogg's Fruit Loops, costs$4.50 for a 16-pound box right next to it.

10:25Which one are you going to get? The smaller format store is also huge. People are simply overwhelmed by going to the grocery store and seeing 50 different options for any single product. Aldi strips all that down and just has maybe four different olive oils, which is a lot more manageable. And then the third thing that I think they're hitting on is the social media fan club aspect, which Trader Joe's has really channeled very well. There's a Facebook group called Aldi Isle of Shame Community that has 3.6 million members. And they all talk about what new surprises that Aldi is going to whip up in this store and in this particular aisle where they change up the various goods each week.

11:04So it's checking a lot of the boxes for the American consumer right now. Yeah, it's interesting you mentioned Trader Joe's. it's like Trader Joe's ran so or Trader Joe's walked so Aldi could run. They're actually share some DNA. The two chain share DNA. They're owned by the companies founded by German brothers Carl and Theo Albrecht way back in the day. And so they're running a very similar blueprint and it's working for both stores. We mentioned the name brands that Aldi just is selling. 90 % of their products are name brands or brands from their own label. They're facing some pressure from lawsuits as well.

11:37Mondelez International, the owner of brands like Oreos and Chips Ahoy, It's actually sued Aldi in May of 2025, saying that they're basically copying the look and the feel of their products like Oreo, Nutter Brutter, et cetera. And that is how they're kind of getting away with this private label backend strategy. So we'll see where that lawsuit ends up as well. And there's another challenge facing Aldi besides all these legal challenges. And it's quite understandable that Montalice thinks that they're blatantly copying because there is a product called Thin Wheat right next to Wheat Thins. The other challenge is just expansion, right?

12:10When you expand, you go into new markets that have more competition. Aldi hasn't really cracked the Northeast yet. Half of these new store openings are going to be in Florida. It's going to open a bigger format store near Times Square in our neighborhood next year. And execs have acknowledged that the Northeast has been challenging for them. So we'll see how that goes. That'll be a major test of Aldi's appeal more broadly across the country. Okay, let's head to our winners of the weekend, the segment where Kyle and I picked two things that did absolutely no labor over Labor Day. I won the pre-show game of Flip Cup, so I'll go first while Kyle's still finishing his drink.

12:46My winner of the weekend is Cadillac, which you might be surprised to hear is cool again. Yep, the car brand that's become associated with the 4 p.m. dinner crowd is enjoying a renaissance, and it's all because of electric vehicles. According to the New York Times, Cadillac sells more EVs in the U.S. than luxury rivals BMW, Mercedes-Benz, Audi, and Porsche. which fueled its best first half of a year since 2008. The key to its success has been winning converts from other brands. Roughly 70 % of people who own electric Cadillac optics and lyrics have switched over from other automakers, in particular Tesla.

13:21One in 10 of these Cadillac buyers previously owned a Tesla, and that's one reason why GM, which owns Cadillac, more than doubled its EV sales so far this year, while Tesla's fell 11%. GM is now the number two EV seller in the U.S. behind Elon Musk's car maker. The question will be whether the Cadillac glow up can withstand a storm that's about to pummel the industry. The$7 ,500 tax credit for EV buyers ends this month due to a recent GOP tax law. And tariffs on cars and car parts are expected to force automakers to raise prices on their new models this fall. Kyle, experience this firsthand was hanging with a friend this weekend.

13:58He pulls up into the driveway with his new EV. It's a Cadillac. He knew what we were going to talk about on the show, so he's helping you out. Yeah, I mean, the real question here, like you said, is the$7 ,500 tax credit that goes away at the end of September. Will the market be able to continue this push into EVs if it's not subsidized through these tax credits? In Germany, they had a similar thing where subsidies went away in 2024. Electric vehicle sales dropped 27%. And so that could be a really major headwind facing this industry once the credits go away. However, I do think that this market is more mature.

14:34There's charging infrastructure is much more built out. I think people, when they can and it's price appropriate, will make the choice they feel like is better for the climate. Culturally, it's much more acceptable to have an EV. You see them more and more everywhere. The electrification of everything is going on. So I do think that the market is pretty solid, but the real question will come after September 30th. Now, back to Cadillac, I think GM has also done a great job of building much more of the supply chain out. They opened up two battery factories in Ohio and Tennessee. And I think the companies that win the electrification are not just going to have control of the car supply chain, but also the battery supply chain as well.

15:13Yeah, Cadillac's doing an interesting thing where they've done great in the U.S. market. But as these tariffs come into play, it's going to get more competitive. And they're looking further afield. They're also going upmarket. I did not know this, but next year they're going to join the Formula One field. They're going to become the first new car team in Formula One since 2016. They're paying$450 million fee to compensate the other 10 teams as they join the fray here. This, you know, F1 is one of the most global sports that exists. And any company that is a part of that league has this rarefied air around them.

15:48And then Cadillac is also has this new model called the Celestique. I think I'm pronouncing that right. Like Cadillac is doing a great job with its EVs, but naming is not one of them. Every single one has a queue at the end, which just gives you a headache. But it costs$340 ,000. It's hand-built by a team of skilled craftspeople. So they're also taking on those ultra, ultra luxury car makers. So we'll see how Cadillac is doing. But certainly, best first half of the year since 2008. It's really done a good job with its EV lineup. Okay, don't touch anything. We'll be right back with a wild story of dumb luck.

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18:16Yes, Anguilla, the small island territory in the Caribbean with a population of around 16 ,000, is benefiting from the AI boom not by building its own LLMs or training its population to be prompt engineers. It's cashing in on the use of its country's website domain,.ai, meaning that every company you see that ends in.ai is either directly or indirectly paying Anguilla a registration and renewal fee. Fortunately for Anguilla, the number of.ai websites has increased more than tenfold in the past five years and has doubled in the past 12 months alone, soaring past 800 ,000.ai domains in the world.

18:53The registration prices for these domains are between$150 to$200, coupled with renewal fees around the same amount every two years. and Anguilla's earnings from web domain registration fees quadrupled last year to$32 million. The income now accounts for 20 % of Anguilla's total government revenue. Now, the Caribbean territory really needed this W. In 2017, Hurricane Irma wiped out approximately 90 % of Anguilla's GDP. And shortly after the COVID-19 pandemic effectively crashed the travel sector. And by the time of the worst pandemic had passed in 2021, and Gwila faced a budget shortfall of$100 million.

19:31Now, a member of the government said that the territory intends to use the money to provide free health care for citizens age 70 or older and also allocating funds to bolster its airport so they can bolster its tourism sector. Neil, and Gwila must be hoping the AI boom continues forever because this has been a huge windfall for the territory. It's absolutely wild. So back in the 1980s, the Internet was very young. countries were just being handed out their own unique website addresses to help people navigate this new web world. And so the US got.US, the UK got.UK, all these other countries got.whatever based on their name.

20:09And then just by sheer dumb luck, Anguilla got.AI because there's a lot of A's and I's in their name. And then that turned out to be the acronym for artificial intelligence. And now it gets nearly 25 % of its government revenues by selling domains of companies that want to be.ai. And you mentioned that these domains start at$150 and$200, but they can go for much, much more recently. Dharmesh Shah, who is this U.S. tech entrepreneur, he was the co-founder of HubSpot. He paid a reported$700 ,000 for the address u.ai, and there have been a number of other sales in the hundreds of thousands of dollars.

20:48So there's a few.ai whales that are really propping up Anguilla and giving it a huge cash infusion that it really intends to use wisely. That is the goal here, because you get this huge windfall for whatever reason. You have to deploy it sustainably so you can turn your 16 ,000 small island into, you know, have an economic future. That's right. And it's not the first time that a country or territory has leveraged its unique domain name to benefit the country. The Pacific Island nation of Tuvalu had.TV, and so you see that often for TV streaming services. .VC is the top-level domain for St. Vincent and the Grenadines, also used for venture capital.

21:29My sleeper pick is.AG. If we ever see a boom in agriculture, ag tech, Antigua and Barbuda are set to benefit. So prayers up for the agriculture sector and.AG. But a super interesting story, and Guilla might be the winner of the AI boom. Now, what's interesting about Tuvalu specifically is that in 1998, it licensed its.TV domain name to a company called VeriSign for$2 million a year, which later rose to$5 million a year. The prime minister later said that they sold it for peanuts and that they should have held on to that, except getting$5 million a year was just absolutely not the value. What Anguilla has done is they signed a five-year deal with a company called Identity Digital.

22:12Identity Digital runs all the back-end systems for these domain name registrations. They move the servers off of the island, which is hurricane-proved, onto its global server network. And this is exchanged for a 10 % cut of all sales revenue. So they're doing a rev share, because they looked at Tuvalu, and they said, wow, we do not want to do this flat fee. They're getting hosed there. We're going to do this rev share. So everyone benefits. But a very interesting predicament. In 2024, the prime minister said, some people call it a windfall. We just call it God smiling down on us. All right. It is Tuesday, but it's also kind of Monday.

22:46So here's what you need to know about the week ahead. Wall Street is counting down to Friday when the jobs report for August will be released. It's expected to show that U.S. employers added just 75 ,000 jobs last month, which would be the fourth straight month of sub 100 ,000 job growth that hasn't happened since the onset of COVID in 2020. It'll be a major test for a stock market that wants you to wake it up when September ends. September has historically been the weakest month of the year for stocks, with the S &P 500 losing 0.7 % on average in September over the past three decades. And then 20 years after the beloved sitcom The Office premiered on NBC, its spinoff The Paper hits Peacock, releasing all 10 episodes of its first season this Thursday.

23:30In the show, the same fictional documentary crew that profiled Dunder Mifflin in Scranton, Pennsylvania, takes on a new subject, a struggling newspaper in Toledo, Ohio. It'll be nearly impossible to recreate the magic of the original. But as Wayne Gretzky and Michael Scott say, you miss 100 % of the shots you don't take. Look, I didn't want to like this, but then I watched the trailer. It's about the Midwest. It's about local media. I'm the perfect target demo for this show. So I'm going to give it a watch on Thursday. All right. I'm suspicious. You know, it's so, as I said, it's so hard to recreate the magic of the original.