Meta Trims its Workforce for AI? & Trump Stamps 25% Tariffs on Steel

0:00Tuesday on NBC, Jimmy Fallon and Bozma St John host the highly anticipated new competition show. I hired 10 creatives from all walks of life. They will be battling it out to see who can impress the world's biggest brands. This is a huge opportunity. This is the battle for the next big idea. This is not play play. We're spending millions of dollars. I'm so excited to embark on this adventure with all of you. Make the best idea win! On Brand with Jimmy Fallon. Series premiere Tuesday on NBC. Good Morning Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, hold on to your piggy banks because the penny could be going extinct.

0:40Then bust out the cardboard boxes in Menlo Park. Meta's layoffs have begun. It's Tuesday, February 11th. Let's ride.

0:53If you live in the U.S., open up Google Maps and scroll to the big body of water west of Florida, you'll notice a big change. The Gulf of Mexico has been officially renamed Gulf of America. The company said that it made the update in accordance with the new executive order from President Trump, citing longstanding practice of changing labels based on guidance from countries. So at least for the next four years, people in the U.S. will see Gulf of America. People in Mexico will see Gulf of Mexico and people everywhere else will see both names. Toby, what did you think when you saw this change? I didn't think anything, Neil, because I didn't even notice it.

1:30I use something called Apple Maps, which still has it as Gulf of Mexico. Yes, I will use this as an opportunity to advance. My Apple Maps is superior to Google Maps agenda. People still remember Apple Maps' original launch and how glitchy it was. But I'm telling you, give it another chance. It is far superior. But yes, back to the news. Apple hasn't made any changes in Apple Maps yet. But it does redirect searches for Gulf of Mexico or Gulf of America to Gulf of Mexico. Mexico. So clearly they are thinking about it. I wonder how long they will hold out. And I also wonder if a new administration comes in, if they'll change it back and it's just like a snip, snap, snip, snap, go for America, go for Mexico, back and forth.

2:12Apple behind Google. I mean, Apple Maps behind Google Maps. It's what it's been like for the past decade. Oh my gosh, you are a Google Maps user. This episode is brought to you by State Farm. Checking off the boxes on your to-do list is a great feeling. And when it comes to checking off coverage, a State Farm agent can help you choose an option that's right for you. Whether you prefer talking in person, on the phone, or using the award-winning app, it's nice knowing you have help finding coverage that best fits your needs. Like a good neighbor, State Farm is there. Okay, but let's hear a word from our sponsor, Wise Business.

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3:27So wise. If you want easy international payments, visit wise.com slash business. That's wise.com slash business. If you're seeing a lot more open to work banners on LinkedIn this week, you're not alone. Meta began mass layoffs on employees across the world yesterday. According to reports, the company is cutting nearly 4 ,000 rolls, equal to about 5 % of its workforce. These aren't your normal layoffs, though. Meta just reported record profits, a 48 % operating margin, and the stock has gained 15 straight trading days, its longest streak ever. By every metric, this is a very healthy company, but Mark Zuckerberg thinks it can be healthier.

4:06These layoffs are performance-based, targeting underperforming employees as determined by internal talent evaluations. It's a continuation of principles laid out in Meta's vaunted year of efficiency, which started in 2023, and aims to streamline operations and redirect resources towards AI initiatives. Case in point, Meta plans to start hiring machine learning engineers and other AI-related roles over the next month, even as it trims its overall headcount. Neil, the performance termination, as Meta calls them, are upon us. There is a big HR strategy shift underway in Silicon Valley. It's happened over the past few years, And that is more cuts consistently.

4:48I mean, if we talked about this in 2017 or 2018, it would have been almost unheard of. These companies were growing very fast. They grew even faster during the pandemic. They grew their workforces substantially. And now they're doing more periodic cuts. And it's not just Meta. It's Amazon, too. It's Microsoft. It's Salesforce. There have been a lot of layoff announcements recently. And it has to do with, yeah, it's these performance based cuts. It's not to reduce head count. They're going to rehire the same amount of people just in other areas. And let's hear from Zuck to explain why he why this massive strategy change.

5:26And at a town hall meeting, he says, I think this makes the company better. I'm not going to be apologetic for it. And I think most people here want to work with people who are going to be better fits. It seems like Silicon Valley CEOs want to shed their reputation of employing people like Big Head, who I don't know if anyone's seen Silicon Valley. But Big Head is this character who is a part of this massive tech company who consistently gets promoted despite not doing much work. And he's just this small cog in a larger system. And I think that we've seen over the past few years, tech companies are trying to shed that reputation.

6:03And there has been almost a vibe shift, a lack of trust now between Silicon Valley companies and their employees because there used to be this model where employees had immense power. It's kind of what led to the nap pod in the office, the food every day, the perk-heavy culture. But now that vibe has shifted. And a lot of people who are affected by this most recent round of layoffs say it's actually a huge black mark on your employment record because calling them performance-based layoffs, now you have to enter the workforce having being laid off from meta under this label of saying you were an underperformer.

6:36So it really is. I mean, we're talking we're saying all these words vibe shift, but it is distinctly a different era that we are entering into right now. And you're right that Zuck isn't shying away from it. He does say, if I think it can make the company better, why wouldn't I do it? I'm making your the people you work with higher performers. So this should be a good thing overall for the company. And this is part of the broader what we'll call a white collar recession where high wage professional services workers are facing a much tougher job market than pretty much anyone else right now. If you go to the jobs report for January, we just had last Friday, professional business services information sectors, which had been booming, shrunk by around nine thousand positions in January.

7:21many job cuts have been announced in this area in particular. Once you're laid off from these types of positions, finding people that are willing to hire you is much tougher. And we haven't even mentioned the two letters that are hanging over all of this, which is AI. And a lot of the positions that Meta and Salesforce and Amazon and Microsoft, all these companies that have done these cuts are going to be hiring for is machine learning engineers and AI. So it's not necessarily a one-to-one match of AI is doing your job, but someone who is working with AI is going to be doing your job. Right. There is this interesting subtext to all these layoffs is the fact that these companies are technically developing employee-replacing technology.

8:04AI agents are getting to the level where they can replace mid-level coders. And don't take my word from it. That is Mark Zuckerberg's opinion. He said that AI agents will match good mid-level engineers this year. That is a quote from 2025. So that is the subtext to it all that you're cutting roles so you can hire up an AI so you can technically cut more roles in the future. Now, just for some big picture numbers, it sounds like there's been or it feels like there's been a lot of job cuts this January. But if you go back to last January, there was a lot more. The figure for this January is down 40 percent from last January.

8:41Last January, there were tons of cuts, especially in the video game industry, which was the most job cuts in January for 15 years. The trade war entered a new theater yesterday, one with a steel curtain. President Trump announced 25 percent tariffs on all steel and aluminum imports to the U.S. beginning March 4th, in a move that intends to protect and grow American production, but at the same time could disrupt trade with close allies. When it comes to making steel and sending it around the world, China is the world leader and no one else is close. Chinese mills crank out more steel and aluminum each year than the rest of the world combined.

9:17But the U.S. gets its steel from a group of closer friends. Canada is the number one supplier, followed by Brazil, Mexico, South Korea, and Vietnam. And those are the countries most likely to be affected by 25 percent tariffs. But as Trump's tariff plans go, that he's targeting metals isn't surprising. Steel, which is a relatively small industry in the U.S., but a politically sensitive one because of its home base in Pennsylvania, has been a pawn in trade wars for years. Trump imposed tariffs on steel and aluminum his first go-round in office, and Biden mostly maintained those trade barriers when he was in the White House.

9:51Anyway, this caused a major market reaction. Stocks of American steel and aluminum producers like U.S. Steel, Cleveland Cliffs, and Alcoa surged, while European producers fell. Toby, another big shakeup to trade weeks into the new administration. Yeah, let's actually go back to that 2018 year that you mentioned when Trump first instituted those 25 % tariffs on steel. At the time, he cited national security as the big reason for it, but said another reason why he wanted to do it was to strengthen domestic production. And what were the results from that? They were a little complicated. Technically, steel imports to the U.S.

10:25did fall. They fell 35 % from 2014 to 2024. But domestic steel makers were still not producing enough to satiate U.S. steel demand. And they were still complaining that imports were continuing to harm them. They're still complaining that to this day. So technically, yes, it did bolster the domestic industry. But it's just we don't quite have enough production here to fully replace the demand that you would get from importing from countries like Canada, countries like China. And just to take a step back, the goal of tariffs is to make the steel and aluminum coming in from abroad much more expensive so that it makes the American production, American steel, more competitive.

11:06But there does appear to be just broad sectoral challenges and headwinds facing the steel industry of things like higher labor costs, higher energy costs. And the reason we import so much aluminum from Canada specifically is they have really cheap hydropower that power these mills and they send it to the United States. The United States is the largest consumer market. We consume the aluminum and then we send the scrap metal abroad. We are the largest exporter of scrap metal. So that's kind of how the trade system has worked in a lower tariff environment. Now that tariffs are going up 25 percent, it could shake things up.

11:41But the U.S. steel industry is still facing an uphill battle for various broader for broader challenges. And unlike other tariffs that Trump has announced, these are not easily negotiated away. Right. So Trump Trump announced tariffs, 25 percent tariffs on Canada and Mexico, all imports. And then he went back on that because Canada and Mexico made concessions. But it's not clear whether there are any concessions that these countries can make to have these tariffs go away. This is more economic based. It's not based on immigration or drugs coming across the border. It's very clearly that Chinese steel is very cheap and depressing prices all around the world, which is making American steel less competitive.

12:25Yeah, you're right. There is a distinction between tariff threats that are aimed at getting countries to the negotiating table, dealing with things like fentanyl, dealing with things like migration, and those that address U.S. trade deficits, trade irritants. It looks like we're seeing this bifurcation of Trump's tariff strategy. One, let's go to the negotiating table. One, we're actually trying to bolster U.S. domestic manufacturing. And we'll probably see some retaliation because whenever you put a trade war, it takes two to trade war. If you put tariffs on other countries, they are going to slap tariffs on you.

12:57And Europe has said that they're going to come out with tariffs on high profile American goods like Tennessee, Kentucky bourbon and Harley Davidson motorcycles and Levi's jeans. Guess the coin flip was on President Trump's mind because right before the Super Bowl, he dropped a copper plated bombshell. Trump said that he had ordered the Treasury Secretary, Scott Bessent, to stop producing new pennies. Why no new pennies? Government efficiency, according to Trump. He said, let's rip the waste out of our great nation's budget, even if it's a penny at a time, adding that pennies literally cost us more than two cents.

13:31He is absolutely right about that. The U.S. Mint said last year that it cost 3.69 cents to produce and distribute a single penny, far more than the coin's face value of one cent. All told, the Mint lost$85 million last year, producing 3 billion pennies, which made up more than half of all the coins the Mint made last year. Why are we making so many pennies is an excellent question that no one has a good answer to. And Trump would seem to have broad support in his attack against the penny, which has no clear role in today's economy. The only problem is it's not clear whether he has the authority to unilaterally stop penny production.

14:07Congress, not the Treasury nor Fed for that matter, oversees the production of coins and operations at the Mint. I thought you were going to ask a penny for my thoughts on this one, Neil, but I will give you my thoughts anyway. Elon Musk has come out and said this is not going to be a huge savings for the government, but anytime we're spending more money on something that people don't actually use, that's an example of something we should probably change. But what if I told you Elon Musk didn't actually say that at all? And in fact, Barack Obama said it all the way back in a speech in 2013. So it really shows that this has been a decades-long debate about keeping the penny around.

14:44It is this very emblematic thing of government waste. It's not huge amounts of government waste. It's$85 million in the grand scheme of things. But it's certainly one of those things where you look at it and say, It's just brutal to produce something that literally is worth one cent for over three cents. So you can just look at around the world, though, to see that other countries have successfully done this. Many would probably be surprised to learn that Canada got rid of its one cent coin more than a decade ago. They just round up or round down at this point. So it might be tough psychologically for American consumers to go to a convenience store and see their 99 cent Arizona iced tea rounded up to a dollar.

15:23There is a legitimate psychological tax that happens when when that occurs. So maybe it's been tough to get Americans on board with it. But this could be finally the death knell for the penny that is just probably overstayed its welcome. Can I play devil's advocate? Sure. So here's the here's the argument for keeping the penny. And you can tell me if you if you are convinced. Well, the advocates for the penny are few, but they say that it would increase demand for nickels. And guess what? Nickels cost almost 14 cents to produce, which is way more than their face value of five cents. They're way more expensive to produce than nickels.

16:03And then, as you just mentioned, we're going to be paying more for things. So Arizona iced tea is priced at 99 cents. Well, we're all going to be playing a dollar for that now. is that not going to spark inflation? So are you convinced? I mean, I'm not convinced really, because if you look at the cash transactions that happen in the U.S., 86.9 percent of all transactions in the U.S. were cashless in 2024. So there really isn't going to be, you're not going to even know if you're using Apple Pay or a credit card and you're tapping. Like, I don't think there's going to be this moment where you're like, oh, shoot, I just got rounded up or rounded down.

16:39So I do think that we're just moving into a cashless society. Well, even if you're paying by credit card, they won't round up or round down. Right. See, no, exactly. That's the difference here is that, I mean, I guess some people still do use cash. Like, again, 86.9 % isn't 100%, but it does look like this is something that just has enough momentum behind it. I really do wonder, though, because part of the thing that keeps it around is just nostalgia for people. Like, people don't want to get rid of this keepsake. They don't want to get rid of Abraham Lincoln, which, by the way, my fun penny fact is that Abraham Lincoln is technically the most reproduced piece of art in the world.

17:15The portrait of Abraham Lincoln on the penny because there have just been so many of them. There's been half a trillion produced over its entire run. So if you want a fun fact or a fun trivia fact, the most reproduced piece of art on Earth is Abraham Lincoln's portrait. I completely zagged there at the end for a fun. Yeah, I guess my final point here is we're not really sure what the future holds for the penny because, as I said, Trump can't probably unilaterally do this. So he's going to have to get Speaker Mike Johnson on board and have have someone pass a bill that'll go through both chambers of Congress to end the penny.

17:49So we'll see what happens. There clearly is more momentum than there has been in recent memory to get rid of the penny. Up next, it's time for Toby's Trends.

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19:32All right, everyone. I have a bit of a bizarre trend for you today. Ankle watches. No, people aren't rocking Rolexes above their cankles. Instead, it's Apple watches that have migrated down from the metacarpals to the metatarsals. The New York Times reported that a growing number of people are relocating their Apple watches down south in pursuit of better fitness tracking or a workaround to everyday inconveniences. Say you have tattoos on your wrists or a skin condition that interrupts the watch's sensors, put it on your ankle. Maybe you're a healthcare worker who is barred from wearing things on your wrists, put it on your ankle.

20:08Or maybe your under-the-desk treadmill steps aren't getting counted while you work. Ankle watch could solve all your problems. The New York Times calls the small but growing group of believers, ankle watch acolytes, and describes how their fashion choice sometimes elicit some second or third glances. While working out at a gym, one fitness influencer told the outlet that she often has to explain that, no, she's not on house arrest wearing an ankle monitor. She just likes wearing it down there. But Neil, my big issue with this trend is that the sensors aren't designed for ankle use, even if some people swear it tracks their steps more accurately when it is on their ankle.

20:44No. So the folks at Apple Insider did a test. They tried this one morning where they put an Apple Watch Ultra on their wrist and another Apple Watch on their ankle and took measurements and saw whether these were consistent. And no, they were not consistent. Blood oxygenation readings varied by 5%. It read 98 % on the wrist, 93 % on the ankle. Heart rate varied as well. The wrist sensor showed 75 beats per minute. The ankle watch read 63 and warned twice about a low heart rate. So there were some certain inconsistencies. They didn't make the Apple Watch for the ankle. And there are good and interesting reasons that I've never thought about why an Apple watch would not work on someone's wrist.

21:28but maybe putting it on your ankle is not going to work for anything except maybe tracking steps. Well, don't bury the lead here. What are those good and valuable reasons why you put an Apple Watch on your wrist? You are, you're the Toby's trance. Okay, fine. Well, I will tell you, one of them is if you have tattoos. It doesn't work if you have tattoos. Another person was a mom walking her kids in a stroller. She would put her hand on the stroller and it would not count the steps that she was doing because apparently your arm has to swing and that is how Apple tracks your steps. So there are a number of use cases where people might not have the ability to wear an Apple Watch.

22:08Another person just had a very small wrist and the band didn't work. So she put it just on her ankle. So there are reasons. And maybe there is a market here for wearables that don't go on your wrist. That's what this kind of sparked for me. That really is the final point that I will add here is that wrist watch heart rate monitors are actually not very reliable at all. There is just something about the skin contact that gets interrupted every once in a while. It is firing this green colored light and seeing how many red blood cells reflect it back. So it's just not quite as accurate as something like a chest rate monitor, a chest heart rate monitor, or an arm heart rate monitor.

22:46So I will use my platform right now to say, if you are seriously into fitness tracking, go get a reliable heart rate monitor. The Apple Watch is, whether it's on your wrist or your ankle isn't probably going to give you the most accurate data overall. Now let's sprint to the finish with some more headlines you may have missed. Up first, Elon Musk still hasn't closed the book on his beef with OpenAI. A consortium of investors led by the Doge chief has submitted an offer of$97.4 billion to buy out the nonprofit that controls OpenAI. It throws a multi-billion dollar wrench into Sam Altman's carefully laid plans to convert the company into a for-profit entity, something Elon has long railed against.

23:29Altman quickly rejected the offer, writing on X, No thank you, but we will buy Twitter for$9.74 billion if you want for some decimal-related smack talk. Neil, is this Musk bid fully serious? Who knows? But what the offer does do is stir up some questions as to how the nonprofit should be valued. Elon Musk replied to that Sam Altman ex post saying, Swindler. And really, this is like Kendrick Lamar versus Drake, but for people whose favorite book is Sapiens. And the reason that this throws a wrench into Sam Altman's plans to make turn AI and open AI into a for profit private enterprise is that this they need to when they break off from the nonprofit, which is what they want to do, they need to compensate the nonprofit arm of open AI.