Industries React to Trump Tariffs & Drake-Kendrick Beef Goes to Court

0:26Race the rudders! Good morning Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, Drake takes his rap beef with Kendrick Lamar into the courtroom. Then another trade war is brewing after Trump threatened tariffs against Mexico, Canada, and China. It's Wednesday, November 27th. Let's ride.

0:52Well, you all made it. It is the Wednesday before Thanksgiving. Soak it in because this is the Friday-est feeling Wednesday you'll get all year. Hope you're taking some time off this week to spend with family, and you finally get to try out that maple glazed turkey recipe you saw on TikTok. Toby and I are going to be off, but we did jump in the studio earlier this week to record a special Thanksgiving episode for you. So definitely tune in tomorrow morning. We covered everything from turkey trots to how much it would cost for MBD to get a balloon in the Macy's Thanksgiving Day Parade. Then on Friday, if you want an MBD fix as you recover from your food coma, we got another episode coming your way, an interview with the Shark Tank legend himself, Kevin O 'Leary, aka Mr.

1:34Wonderful. And if you're listening to today's episode while traveling home, may the traffic be light and your overhead bin space be empty. Enjoy the break. But first, a word from our sponsor, Yahoo Finance. One of the most frustrating parts about investing is having an inkling of an idea, but then not really having the tools necessary to act on it. Oh, I remember one of my friends started drinking all these energy drinks, and I knew there was an investment opportunity there, but I didn't know what stock to actually put money toward. Same. I hate when you know there is something brewing, but you're just not sure how to act on your hunch.

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2:43He's also eyeing a 10 % tariff on goods from China on top of an existing 15 % import duty that has been in place since 2018. Those three nations Trump mentioned traded with the U.S. more than the kid who showed up with fruit by the foot at the middle school lunch tables. The three North American countries alone exchanged about$1.8 trillion worth of goods. Meanwhile, annual U.S. trade with China is about$600 billion. But which goods and companies are set to be the most affected should these tariffs come down the pipeline? Well, the first big industry that is sweating is certainly energy. Canada is the top supplier of crude oil to the U.S.

3:21and accounted for 60 % of U.S. crude imports last year. Automobiles are another huge one. GM, Stellantis, and Ford are among Mexico's biggest exporters to the U.S. More than 255 ,000 cars were shipped into the U.S. from Mexico just in October alone this year. Eczema isn't always obvious, but it's real. And so is the relief from EPCLIS. After an initial dosing phase, about 4 in 10 people taking EPCLIS achieved its relief and clear or almost clear skin at 16 weeks. And most of those people maintain skin that's still more clear at one year with monthly dosing. EbGliss, LibriKizumab, LBKZ, a 250 milligram per two milliliter injection is a prescription medicine used to treat adults and children 12 years of age and older who weigh at least 88 pounds or 40 kilograms with moderate to severe eczema.

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4:38Canada also ships a lot of vehicles and car parts our way. And then on the Chinese front, we get so many things from our geopolitical rival from electronics to furniture. it's hard to choose just one category that would be affected. But Trump's approach likely doesn't bode well for those Chinese-linked marketplaces like Xi 'an and Taimou, which will see their import costs go up. Toby, dealer's choice on where to start here because there are so many industries that are going to be affected. I mean, let's start by just continuing down the list, Neil. Fruits and veggies are also going to be hugely affected as well.

5:10A ton of produce that you see in American supermarkets does come in from Mexico. So Mexico is the number one exporter of raspberries, tomatoes, strawberries, and obviously avocados into the United States. Then if you head north, the meat and dairy industry is also going to be affected. Canada sends tons, actually millions of cows for dairy and beef our way, as well as a bunch of hogs across their southern border. So it really doesn't matter which industry you want to look at. Since trade is so big between the North American countries as well as China, pretty much everything is going to be affected by these tariffs.

5:43It is. I mean, there was an interview with a leader in the auto industry in Canada, and he said something like this. He's like, we are beyond partners. We are almost inseparable as family. More than$1.5 trillion in goods is exchanged every single year between the United States, Canada, and Mexico. And that is in part because of a free trade agreement that Trump himself signed in his first term, USMCA, or the U.S.-Mexico-Canada agreement. And now the U.S. receives 83 percent of Mexico's imports and 75 percent of Canada's exports last year. So the bulk of what they make and ship abroad comes into the United States.

6:25Everything you buy, mostly everything you buy, either has in part or in full some part that was made in Canada or Mexico. So putting a tariff of 25 % on every single good that is shipped into the U.S. from those countries will have massive, massive ramifications for businesses and consumers. I think one industry that we do have to drill in on a little bit more is the auto making industry as well, because it is just a huge part of Mexico at this point. A lot of factories that we mentioned before are set up there. And if you look at the stock market yesterday, GM, Chrysler, Ford all plunged on the news that Trump was thinking about levying these tariffs because a lot of the auto parts are made in Mexico and become more expensive with these tariffs.

7:09Tesla stock weirdly rose yesterday, which is, I don't know, Tesla is a little bit divorced from the wider auto market sometimes, despite the fact that Tesla does have plans to build a gigafactory down there in Mexico. And then even if you go across to European indexes, they fell too because they are another potential prime tariff target. Trump has said in the past that he wants to kind of normalize trade relations between Europe and the United States, particularly when it comes to European automakers. So this is one industry that is going to be heavily affected by Trump's plan to lever these tariffs.

7:43Let's just talk about what happens when tariffs come down the pipeline. Basically, it's a tax on the companies that import these goods. So what they can do is either eat the 25 percent and harm their margins, or they can raise prices and pass those costs along to the consumer. And that's what Goldman Sachs expects. The bank issued a report yesterday saying that all of these tariffs, if they were implemented, would raise inflation by 1 percent. So that's what perhaps you can expect. The question here is whether the tariffs are actually going to come to pass. Historically, Trump has used tariffs as a negotiating tool to extract concessions from countries.

8:29Here he wants a crackdown on the border and fentanyl coming into the United States. So we'll see how leaders from other countries respond to that. This may just kickstart a negotiation. We saw Justin Trudeau, the prime minister of Canada, immediately stop what he was doing yesterday, get on the phone with Trump and said they had a constructive conversation. Mexico's president was a little less accommodating, Claudia Scheinbaum. She wrote a letter to Trump suggesting that she would retaliate with tariffs on of their own on the United States goods, which would harm American companies that would export abroad.

9:03So it set off a massive scramble by the companies that were targeted by the countries that were targeted yesterday to sort of start negotiations. So these will not come to pass. And at least investors broadly do not think that these tariffs will actually happen, because if you look at the broader stock market, it did go up yesterday. All three major indexes automakers did go down, but overall stocks did pretty well. The Biden administration announced an initiative yesterday that would massively expand access to weight loss drugs. The government proposed that Medicare and Medicaid cover obesity drugs like Wagovi from Novo Nordisk and ZepBound from Eli Lilly, which would extend access to the super popular but expensive medications for more than 7 million patients.

9:46As a refresher, Medicare is the federal health insurance program for people age 65 and older, while Medicaid covers poor and disabled Americans. Under existing rules, Medicare doesn't cover drugs that are explicitly for weight loss since it was considered a cosmetic treatment. But Biden's health officials are getting around those rules by claiming that the growing scientific consensus is that obesity is a chronic health condition. Whether this proposal becomes actual policy remains an open question. It would need to be approved by the incoming Trump administration. And the nominee to lead Health and Human Services, RFK Jr., is no fan of obesity drugs.

10:22Plus, covering the medication would be pricey and is estimated to cost the government$36 billion over the next decade. Toby, if it clears those hurdles, this plan would be a game changer. It would be a game changer, but let's drill into those two hurdles because they are rather large. This would run Medicare about$25 billion, Medicaid about$11 billion over 10 years. The government officials do say that they don't expect it to increase out-of-pocket premiums, but that is definitely at odds with the incoming administration's general plan to cut federal spending. So that is one big issue. And then the second issue you mentioned is RFK Jr.

10:59He is not a fan of these drugs at all. He instead wants to prioritize access to healthy nutrition rather than doing it through Big Pharma, which he has been a pretty anti-Big Pharma so far. So I do think that those are pretty decent-sized hurdles. One thing going in its favor, though, is the fact that this is going to be very popular with a lot of seniors, a lot of people who are covered by Medicare and Medicaid. So maybe Trump just looks at that and says, hey, a lot of people do want this, so maybe we can actually push this through despite the increased cost that it's going to run the government.

11:34Yeah, and generally public opinion is in favor of this. A recent survey by the Kaiser Family Foundation, which is a health policy group, found that over 60 percent of Americans support Medicare coverage for these drugs. And the guy who's going to be leading Medicare and Medicaid, who will serve under RFK Jr., Dr. Oz, is a big fan of these drugs. He said, we need all the tools in the toolkit in order to combat obesity, which affected 40 percent of all Americans last year. But I just want to drill down on the scope of this, how many more people it's going to cover, because a 2020 study by Brown researchers found that these two programs covered 40 percent of Americans with obesity and 46 percent with related health problems.

12:21So a lot of people are suffering under these conditions. But these these drugs are so expensive. I mean, they can top twelve hundred dollars a month for semaglutides like ZepBound and Wagovi. So it's just been out. It's hard to pay out of pocket if you don't have if you don't have insurance. So if Medicare and Medicaid were to cover this, it would expand access very, very much. And the pharma companies are totally behind this. Eli Lilly and Nova Nordisk, which make these are fully in support. They want more coverage to get their drugs and more people's drug cabinets. And honestly, they're going to be fine no matter what.

12:56Yes. Increased coverage means it will inevitably lead to wider adoption. But also, even if they don't get this coverage, like they are charging very high premiums for these drugs and a lot of people do use them. So they're kind of winning no matter what here. It's just a matter of how much they might win. Well, Drake is still big mad about losing his rap battle to Kendrick Lamar. So he's taking the second round of their beef to the courtroom. Drake made a court filing this week alleging that Universal Music Group conspired to artificially inflate Kendrick Lamar's summer banger Not Like Us on music streaming services using bots and other tactics.

13:30Now, the ironic part about this allegation is that UMG is the parent of both Kendrick and Drake's record labels. Given their affiliations, people have dubbed this spat rap's civil war. on top of the inflated streaming suit. Drake's legal team also filed another action against UMG, alleging defamation for releasing Not Like Us, knowing it was falsely accusing him of being a sex offender, according to the suit. The suit says that UMG's plan was to turn Not Like Us into this viral mega hit and drive consumer hysteria and, of course, massive revenues. So now you have two suits rekindling this mega beef with UMG at the center of all.

14:08Neil, Drake brought a lawyer to a rap battle. He did. And there's no question that Not Like Us was a massive hit. I mean, that is understood by everyone across this legal battle. It currently has more than 900 million streams on Spotify. It was nominated for five Grammys, including Record of the Year and Song of the Year. The question that Drake is raising, and there is not a lot of evidence so far that he's put forward is whether Universal conspired with people to create bots and inflate these streaming numbers. He also is alleging that Universal charged Spotify a 30 percent lower licensing rate for Not Like Us in order to get that in order to get that song in front of more people.

14:55There wasn't a lot of evidence that was that was named in this petition. We should say this was a petition. It is maybe the precursor to a lawsuit. It is something you file with the court in order to gather evidence and prepare yourself for a lawsuit. So that hasn't happened completely yet, but it does cite an unnamed whistleblower who said he was paid by Lamar's label to use bots to help not like us get 30 million streams on Spotify in his first days of release. Some other specifics of the suit is that UMG had this financial agreement with Apple to have Siri when users said play Certified Loverboy, which was the name of Drake's album.

15:35It would play Not Like Us instead because there is a lyric within Not Like Us that does say Certified Loverboy. So Drake was probably, I want to imagine he was sitting at home and he goes, Siri, play Certified Loverboy. And it plays Not Like Us. He goes, calls his lawyer up and goes, we need to sue umg right now because they are playing kendrick song instead of my album um but you are right a lot of it is a little bit uh no no smoking gun has emerged as of yet but you you might expect that if drake did feel the need to file this initial suit then he has something that he's sitting on because if not it's just a pretty bad look in the court of public opinion because again i said he's bringing a lawyer to a rap battle that is not something that gives you a on a street cred when you are trying to battle someone.

16:21So maybe he's got something, maybe he doesn't, but it's clear that he's still not over, not like us. Up next, I know it's Wednesday, but we have a special early edition of Neil's Numbers coming up next.

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17:09When did making plans get this complicated? It's time to streamline with WhatsApp, The secure messaging app that brings the whole group together. Use polls to settle dinner plans. Send event invites and pin messages so no one forgets mom's 60th. And never miss a meme or milestone. All protected with end-to-end encryption. It's time for WhatsApp. Message privately with everyone. Learn more at whatsapp.com. Welcome to Neil's Numbers, the segment where I share three stats from the week's news that will make you the most interesting person at your Thanksgiving meal tomorrow. My first number is how much your last minute splurge for a couple of inches of extra legroom is making airlines.

17:52It's a lot. A Senate investigative panel found that U.S. Airlines, American, Delta, United, Spirit, and Frontier made$12.4 billion alone from customers choosing seats on planes from 2018 to 2023. According to the report, United charged as much as$319 for an extra legroom seat, Spirit as much as$299, and Delta up to$264. The subcommittee chair, Senator Richard Blumenthal, was highly critical of those algorithmic seating fees, saying these confusing dynamic pricing tactics burden travelers and boost airline revenue. The airline industry didn't appreciate getting smacked around like a pinata by lawmakers.

18:33Spirit Airlines shot back, We are transparent about our products and pricing our airport policies ensure guests are treated fairly and equally. The lobbying group Airlines for America argued the increased choice has democratized air travel to the point where 90 percent of Americans have flown on a plane. Senators and airlines will have the opportunity to duke it out on December 4th when execs from the companies called out in the report will testify at a hearing on Capitol Hill. I want to drill into some other parts of this report, though, because this report said that some airlines have these bounty programs that they pay gate agents to cash incentives to identify customers who are trying to avoid fees for carry-on bags.

19:13We've all been there before, where you probably didn't pay for a carry-on bag, but you're trying to sneak it by, and then a gate agent calls you out. frontier had a big one where they're charging they're giving gate personnel up to ten dollars for each bag of passenger is forced to check at the gate because they want to reap these extra bag fees i have been there before too i've had a horrible experience where i got nabbed for trying to carry on a tuxedo and they consider that an extra bag and i was like i'm just gonna hang it up and so i'm still a little bitter about this but seeing just how much money these airlines are making off of all these extra fees that they that they just get you for is definitely something that I think a lot of people can relate to.

19:50For my second number, a new survey revealed how many highly motivated Gen Z knowledge workers use generative AI tools like ChatGPT, Dali, or other products. Think you have a guess? The answer is basically all of them. Or if you want to get specific about it, 93%. That finding came from a Google survey of more than 1 ,000 full-time knowledge workers who are either in leadership positions or aspire to be in one. And while virtually all Gen Z workers use generative AI, millennials are not that far behind, with 79 % of respondents aged 28 to 39 saying they use at least two AI tools a week. So what do they use it for?

20:30Revising emails and documents, taking notes during meetings, and generating ideas when you have writer's block and need that light bulb moment, Google said. Toby, there's reason to be a little skeptical of this data since it's coming from Google, which has invested tens of billions of dollars into making generative AI a thing that people use and spend money on. Still, it does mesh with my experience of talking to friends about whether they use AI at work. And the answer is almost always yes. Yes, I do think that is good. Consider the source here because there was another survey earlier this year commissioned by Slack that talked to a more broad group of people, 17 ,000 workers across multiple different countries and continents.

21:08And they actually found that overall AI adoption was stalling out. Nearly half of workers says they weren't even comfortable admitting they used the technology. But then you contrast it with this survey from Google where 93 % of Gen Z said that they were using these tools. And it could just be a generational divide that we're looking at here. It does seem like younger people are much more transparent about the tools they are using. I think that has tracked a little bit. Some of the older people I've talked to, it's like a secret that they want to keep hidden away that they're using this thing, whereas young people are like, yeah, I either use it or I don't use it.

21:40So maybe it's generational. Maybe it's something that is just specific to this group of people that Google specifically surveyed. Which are like leaders and aspiring leaders, so pretty highly motivated people, quote-unquote overachievers. But it's clear that they're using AI, and they think AI will help them get ahead. Right. 52 % of that group did say of Gen Z said that they frequently discussed their AI tools with colleagues. So again, that is what I'm saying, that they are more transparent about their AI usage. For my final number, if you're thinking about traveling to New York City to see the Rockefeller Center Christmas tree, let me know if you want to crash on my couch because hotel prices are getting absurd.

22:17The average price of a hotel room in New York in September was$417, the city's highest monthly rate ever, according to real estate company CoStar. In fact, the only place with more expensive hotels that month was Maui. We've come a long way since peak COVID when an empty Times Square looks straight out of I Am Legend. Tourism has bounced back to pre-pandemic levels and hotels have increased their prices due to strong demand. A night at a mid-scale hotel in Manhattan has risen more than 50 % since fall 2020, according to CoStar. But that hasn't dissuaded people from booking rooms. In September, when the average was$417 to stay the night, 91 % of rooms were occupied right about where they were before COVID.

23:01Toby, I bet a lot of people who are coming into New York this holiday season are going to take one look at hotel prices and then immediately open up their phones to call their friends and ask to stay with them. Yeah, you definitely got to have a couch to crash on if you want to come. But people are still coming to the city. One organization that promotes tourism in New York City said that they had not seen any indications that rising room prices were actually dissuading people from coming to visit. They estimated that about 65 million people will visit the city here. They're down a little bit from 66 million people that have visited in 2019, but still a very healthy number.

23:33You look at occupancy rates, too. Across the city, 91 % of rooms were occupied in September. So I don't know who these people are coming, but they clearly have some deep pockets because clearly these ultra-high prices, the highest they've ever been, is not dissuading travelers from actually coming to visit the city. I think eventually they're going to get expensive where people are just going to say, I can't do this. or they're going to go to stay in Jersey City, Hoboken, Fort Lee, and come into the city or Long Island or parts of the outer boroughs. You're probably going to see that a little bit more near train stations to come in.

24:06But it's kind of insane that getting a hotel in Manhattan, which luckily I haven't had to do in a while, is so ridiculous, especially if you have a family. I mean, there's one person versus four people, which hikes up the cost the most. And then plus, you probably have to pay extra to get your seats together from the airline. So all the Neal's numbers are numbering right now. Let's sprint to the finish with some final headlines. Walmart became the latest and biggest U.S. corporation to dial back policies related to diversity, equity, and inclusion, or DEI, following conservative pressure. Facing a consumer boycott led by anti-DEI activist Robbie Starbuck, the world's largest retailer confirmed a number of reversals, including barring third-party merchants on its website from selling some LGBTQ-themed products marketed to children and stopping the use of the terms DEI and Latinx in official communications.

24:59The company said some of those changes were already in the works, but it's clear that external pressure accelerated those moves. Toby, significant that Walmart is walking back DEI? Yeah, I mean, Starbucks, as well as some decisions handed by the Supreme Court this year blocking affirmative action in higher education, have pushed a lot of American corporations, companies like John Deere, Harley-Davidson, Lowe's, Ford's, among others, to move away from, quote, wokeness, as Robbie Starbuck puts it. So Walmart is the latest and the biggest company to do so. So yeah, I do think it is pretty significant.