The Scramble Is On for Businesses to Get Their Tariff Refund Checks

13:01Tracy Alloway:Can you explain what changed since Liberation Day such that it made sense for a lot of foreign companies is to establish themselves as importers in the U.S.

13:13Ryan Petersen:Yeah, so what changed was a massive incentive to commit fraud. And if you're a U.S. company that was buying goods from overseas, you have to pay the tariffs, right? And you declare your goods, you pay the tariff as a percent of the value of those goods. If instead you say, hey, I'm just going to buy the goods in the United States from my factory and they'll take care of the tariffs. and that foreign company can just undervalue the goods and say, hey, this thing that, you know, it's actually only$10 ,000, not a hundred thousand. And you just reduced your duties by 90%. Oh, and the U S companies are doing this in mass and washing their hands and say, Hey, I, you know, I didn't know any better.

13:55Ryan Petersen:I didn't know. I don't see any of that. I'm just buying the goods from this foreign company and it's not my problem. And so we've seen a huge explosion of that. And all those people are not those U.S. companies, by the way, they don't import anything. So they're not getting any refunds at all. And I don't feel bad for them.

14:12Joe Weisenthal:Yeah. You got to imagine when you have something like these tariffs come into play, you're going to see some creative work around. Creative, you know, with for listeners with air quotes around there.

14:22Ryan Petersen:Yeah. And where we started, Tracy, was you were talking about an individual case where you actually bought something from abroad. But of course, the massive things is, hey, you just buy it domestically from a company. They did raise their prices for the tariffs in a lot of cases. you're not going to get any refunds. But the really interesting shakedown that's happening is, okay, let's say you actually are a wholesaler and you sell to Walmart, Target, these types. Your tariffs went up, you raised prices. Walmart, I talked to a company last night who's a big seller on Walmart, wholesaler to Walmart.

14:53Ryan Petersen:And they said Monday morning, Walmart called and said, hey, we need to talk about this tariff refund and how we're

14:58Tracy Alloway:going to get.

14:59Ryan Petersen:Because they don't have a legal obligation to give money to Walmart, but Walmart also doesn't have a legal obligation to keep carrying their product in the stores.

15:06Joe Weisenthal:Right. So there's some influence they could exert. Actually, this reminds me. So one of the things I was wondering, and again, this comes from my personal capacity of bringing strange items into the US, but I bought like an antique box recently. And antiques, I'm pretty sure are supposed to be exempt from the tariffs. But I still got slapped with the tariff charge because the exporter, the person sending it to me, did not label it as an antique. They labeled it as box, which was very, it was a box within a box. It was very annoying. And so it got a big tariff. How much flexibility do importers in the U.S.

15:37Joe Weisenthal:have over like the actual labeling of the items that they're bringing into the U.S.? Is that one way that you could potentially, you know, try to lower your tariff burden?

15:48Tracy Alloway:Fraud advice from Ryan Peters.

15:50Ryan Petersen:It is illegal. So each product has one and only one harmonized classification, we call it, harmonized schedule code. It's a classification. That said, it is not always obvious what the right one should be. And there's a whole art of classification. It's a very difficult and it, but it's illegal to choose your classification based on duty rate. You know, you got to choose it based on what's correct. Now, if the correct duty rate should happen to be lower than the incorrect one, then you're doing a great job at life. And so that's a whole, that's a whole art and science is how do you make the case, prove it that you, that you did in fact get the right HS Code classification.

16:54Ryan Petersen:Hello, I'm Stephen Carroll. I'm in Brussels, where many of Europe's biggest decisions get made. And I'm Caroline Hepker in London. We're the hosts of the Bloomberg Daybreak Europe podcast.

17:04Joe Weisenthal:We're up early every weekday, keeping an eye on what's happening across Europe and around the world. We do it early so the news is fresh, not recycled, and so you know what actually matters as the day gets going. From Brussels, I'm following the politics, policy and the people shaping the European Union right now. And from London, I'm looking at what all that means for markets, money and the wider economy. We've got reporters across Europe and around the globe feeding in as stories break. So whether it's geopolitics, energy, tech or markets, you're hearing it while it happens.

17:36Ryan Petersen:It's smart, calm and to the point.

17:39Joe Weisenthal:And it fits into your morning.

17:40Ryan Petersen:You can find new episodes of the Bloomberg Daybreak Europe podcast by 7am in Dublin or 8am in Brussels, Berlin and Paris.

17:47Joe Weisenthal:on Apple, Spotify, YouTube, or wherever you get your podcasts.

17:54Tracy Alloway:I want to talk more, obviously, about the logistics of the next several weeks and months about how this is going to be. But just in terms of maybe not necessarily fraud per se, although that was very interesting. What else have you seen basically since last April in terms of companies rerouting any of their, you know, what are the big trends in terms of restructuring the direction of the supply chain? Because part of the question, to my mind, is going to be, with ongoing uncertainty about the future of tariffs, and there's already a new tariff, and Trump may try to restore the old tariffs in aggregate through other means and so forth, have there been changes in trade flows that you expect companies are just going to keep because at this point, this is the new normal and it's not sort of worth going back?

18:38Ryan Petersen:For sure, lots of manufacturing has been moving towards Southeast Asia and Latin America, are kind of the two big winners, Turkey, a few other locations where you're seeing stuff that can shift, move. I think the most interesting and not immediately obvious, the most interesting trend has been that it's actually, in many cases, Chinese companies setting up factories in these countries. And so it's like literally you're working with the same company you worked with before and they've cloned the line. In many cases, they've sent Chinese workers to manage the line. And so it's not that as far as the money flows, like it's still kind of going straight back to China in a lot of those cases.

19:16Ryan Petersen:People are frustrated because the quality is just a lot worse. It's not easy to just pick up shop and move the manufacturing. I mean, you're just adding layers of cost here. A lot of what's happening is in order to change the country of origin, it's not just you can't just ship it to that country and then ship it to the U.S. That would be called transshipment. And the U.S., one of these recent executive orders did this like new tariffs on transshipments. But it was just a ridiculous concept that shows that the government doesn't understand their own rules because you just ship it to Vietnam and then ship it to the United States.

19:51Ryan Petersen:It's still a product of China. So there's no tariff on transshipments. It's just the tariff on the Chinese goods. So that law was nonsensical. That executive order was totally nonsensical. You have to actually create and show that you have trans. It's called substantial transformation. You have to show that like, okay, I've assembled products in this country. I've added enough value, whether it's through labor or other components to make it a product of Vietnam. But of course, by definition, that's just adding costs. And then transit times too, because Vietnam is further away than China. There are less direct ocean sailings, et cetera.

20:23Ryan Petersen:So it's been very difficult for people to navigate. I said that would be my last sales pitch earlier, but we do have a free tool for this as well. It's at atlas.flexport.com. You can see the transit time between any two ports in the world, like the actual like how it moves. So this has been quite helpful for people to go navigate. And tariff.flexport.com helps you see what the tariff rate is.

20:42Joe Weisenthal:Always be pitching, Ryan. H.S. code. It's fine.

20:45Ryan Petersen:They're free tools, so I don't feel like I'm trying to make money off your audience. Public service.

20:48Joe Weisenthal:So one of the reasons this story is so interesting is obviously there's a logistical element. There's an economics element, but there's also this political element. I feel like all of economics nowadays is pretty political. But in any case, you know, Trump has said that the American consumer doesn't pay the tariff. And yet it seems we are very much about to talk a whole lot about how much money American consumers might be owed from tariff refunds. Do you get the sense that any companies are sort of caught between a rock and a hard place where, you know, like maybe they would like to pay out some of their refund to their customers?

21:27Joe Weisenthal:but at the same time, they also don't want to make huge announcements about returning money that Trump says was never taken away in the first place.

21:36Ryan Petersen:Yeah, I mean, it's definitely those the FedEx, UPS, DHLs of the world that are in that condition. USPS will be an interesting one. I'm not sure if, you know, it'd be interesting to go look at those parcels he didn't see. Was it actually USPS or was it FedEx? Because if it was USPS, presumably you are the importer of record, but maybe it's USPS. That'd be a kind of a crazy case, actually, if USPS doesn't give back the money that they charged you. That would be a great class action. Yeah, those are probably the ones. But it's really just like a brand and business question more so than a legal one, I think.

22:08Ryan Petersen:Maybe they don't want to piss off the Trump administration.

22:11Tracy Alloway:By the way, I might just spend the rest of this conversation only half paying attention because I'm now playing at atlas.flexport.com. It's really cool, like clicking all these ports and seeing all the routes and seeing how long it typically takes from one route to another. I know. It's amazing. I think you've done this. It's very helpful. This is a really fun website you built.

22:32Ryan Petersen:Global Trade has been this mysterious black box for centuries, and now you can just see how it actually works. Where do the ships go? It's like the bus routes. What ports do they stop at? How long do they take?

22:42Tracy Alloway:No, this is a really fun website. So thank you for plugging it. So, okay. Tell us actually about, I guess because you're highly automated and digital, et cetera. Do all companies have really good records on this stuff? Is it very clear just from a sort of over the last year, would you say the vast majority of companies know exactly how much they've paid unambiguously?

23:04Ryan Petersen:I would say they do not, but they can very easily. So the U.S. Customs Technology System is called ACE, Automated Commercial Environment. And customs brokers love to complain about this. It's like healthcare.gov, like times a million in terms of debacle of engineering problem. But it works. It took them like a decade longer than it should have to launch the thing. And you can, every importer that does entries like commercial customs entries, not the Tracys of the world shipping a package to themselves, but like real customs entries, a formal entry. All those entries are available to you so you can see your past history.

23:38Ryan Petersen:You have to just go to, and you all have an ACE account. If you don't, you've got to go create one. And if you want a refund, you must have an ACE account. Until about two months ago, no, until February 6th, all refunds were done via paper checks from the Treasury Department, from customs. And Flexport has gotten over$900 million worth of refunds for our customers in the last five years from customs, one of my most proud life achievements. And all of those came via paper checks. Many of them got lost in the mail. Some of them got cashed by scammers, et cetera. So this was on February 6th, they updated so that now refunds will be electronic, which was actually maybe a sign that they kind of had a sense of what was here to come.

24:16Ryan Petersen:But yes, your ACE account does show you your entire past history of all your imports. And if you go to tariffs.flexboard.com at the top, you can upload that and we will just show you exactly how much money you're owed. And we got about 70 Fortune 500 companies signed up in the last week. Wow. Starting to calculate these tariffs and CFOs are coming to look. Again, it's a free service. You can just go look up your tariff refunds.

24:39Joe Weisenthal:Do you get any sense from your clients of, you know, I'm pretty sure they're excited about potential refunds, but do you get any sense of what they're going to do with them? Is it just, you know, fill the hole that was left from paying the tariffs in the first place? Or does this count as like a windfall payment that they could potentially hold on to and use to invest or whatever?

25:00Ryan Petersen:Yeah. These are sick and demented people who have an addiction to just buying inventory. and they're going to just buy a lot more stuff and try to grow their business. No, I'm joking. But I assume that that's what will happen is everyone's an optimist. You get a lot of money. Most lottery winners go broke, although that might not be – it might be an urban legend. But I think they will go reinvest in their business in ways that may not make sense. I've been advising people, you know, put it in your bank account, buy something, you know. Save it for the next round of tariffs, presumably.

25:27Tracy Alloway:So this is actually what I was going to ask, which is – so already there's this new 10 % tariff. One of the things I think I saw was that in his latest Truth Social post, he said 15 percent, but that actually it's like the actual formal thing is 10 percent. What is the current state of tariffs as you see them?

25:46Ryan Petersen:It's currently 10 percent. Section 122 is 10 percent. There was a legal limit of 15, and that's what he did the next day. First, he announced 10 on Friday after the Supreme Court, like an hour or two after. Then the next day on Saturday, he went to 15. I thought he was going to wait at least until the hockey gold medal match. And just like if Canada won, then put the 15 % in. But like he jumped the gun on that.

26:09Tracy Alloway:But did he put the 15 % on? Because what is the terrible?

26:12Ryan Petersen:He did, but he did it via, I think, Truth Social or some other post. That's not how the laws work. So you have to actually publish it through the code of federal regulations. And they haven't done that yet. So we're waiting for like official word, which, you know, usually it's a couple of days lag from when he says something. So it's still 10 % as of today, but I would expect, you know, maybe by the time this episode airs, it goes to 15.

26:33Tracy Alloway:Tracy, did you know, speaking of the gap between announcement and formal thing, that technically Kevin Warsh hasn't been nominated yet? Because there's a part, he has like send it to, it hasn't been sent. And his odds on Polymarket were at 99 % the day after the announcement, and they're now like 96%. So people are wondering what's up with, anyway, just throwing that out there.

26:53Joe Weisenthal:I should just say we're recording this on February 26th because, again, all of this stuff seems to change day by day, if not hour by hour. So that's the disclaimer.

27:01Ryan Petersen:It's very fluid. And the Section 122, it's the Section 122 of the Trade Act of 1974. And that's what gives the – that's one of the several tools. I would say that Trump probably – he lost AIP in the Supreme Court. he has at least four other acts of Congress that have delegated trade a tariff authority to the president under certain conditions. IEPL was the one that they never been used before for tariffs, always for sanctions and outright bans on trade. The reason they liked it, it was under their interpretation. It gave them blanket authority just to do what they wanted whenever they wanted on demand.

27:40Ryan Petersen:Like he could just wake up in the morning and just like you get a tariff, you know, You look at them the wrong way and you got to tear it.

27:45Tracy Alloway:That seems like it was in Switzerland specifically, right? Didn't he say specifically he was just annoyed? I forgot. Yeah, I wouldn't surprise me. Exactly. What you're describing was not actually a hypothetical.

27:55Ryan Petersen:No, I mean, that was basically what he was doing. Canada a couple of times, et cetera. So the other ones require, they have much more formal mechanisms that will require like the Commerce Department or USTR to do something and go run a report, go demonstrate that, in fact, this country and this sector are being anti-racist. competitive and they're doing something and then punish them. Now, 122 is the one that he put in. It has relatively blanket authority, but it has two limits on it. One is that it's a maximum of 15%, which we just talked about. And the other is that it's a maximum of 150 days.

28:29Ryan Petersen:And that'll go until July 20th of this year. And so then what you should expect is between now and July 20th, that he'll be using these other mechanisms of which there's Section 301. That's the famous China tariffs from his first term were Section 301 tariffs. Those have not been challenged. He's been able to maintain those. And then Section 232, and 232 is on national security grounds. That's what the steel and aluminum tariffs have come in on. That's not getting challenged, or if it has, they won the case or will win the case. It's reasonable to say that steel and aluminum are important from a national security perspective.

29:04Ryan Petersen:However, he also used Section 232 to impose furniture tariffs on national security grounds. And I think that's a little bit of a stretch personally.

29:14Joe Weisenthal:Couches, comfy couches are a security issue, I would argue. I imagine on July 20th, what's going to happen is we'll have like a one day tariff jubilee or a 15 minute tariff jubilee, and then they just get re-extended for another 120 days, right?

29:27Ryan Petersen:That was my prediction. I think I talked to a couple of trade lawyers about that prediction, and they told me that, yes, he might do that, but there's no way that that would hold up in a court. So it's one thing what Trump does versus what a court finds to be legal. We'll find it.

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31:05Joe Weisenthal:Going back to the way these tariffs were originally described by the administration, the whole idea was bringing jobs and industry back to America. And like some of the justification seems to have morphed since then at the State of the Union address Trump was talking, I think, about how he used tariffs as like a tool of political power to influence countries and get them to do other stuff that he wanted. But again, when you look at your customers, do you get the sense that these tariffs have been successful in their original goal in shifting economic activity back to America?

31:39Ryan Petersen:It's a little hard to parse out. I mean, like a lot of our customers are importing goods, so they're not the ones that the exporters. You know, I've met as many companies that export that said that these tariffs actually hurt them because they import components. Right. And it makes it uncompetitive. You import a component, you got to pay a duty on it. And if they were to put that factory in Mexico, they wouldn't pay the same duty. They could import the goods. And then if they're selling in the US, fine, it's like one way or the other, it's the same. But if you're selling it into Europe or you're shipping it abroad, then it really makes that manufacturing less competitive.

32:14Ryan Petersen:It's probably a little hard to parse out, though, because we're going through this incredible AI CapEx build out that, you know, there's a lot of industrialization happening, a lot of stuff. Like, in general and theoretical grounds, like tariffs are good for manufacturing. in a purely economic, theoretical world. But these things are, I think, much too complex to be centrally managed by the state is the great lesson of the last century.

32:39Tracy Alloway:I do think the point about tariffing imported components for, you know, because we don't, in theory, we don't want to just build stuff here. We want to build complex, high-value ads. And then sell it to other people. And sell it, supposedly. But yeah, if your input costs go up because here's this one piece of metal or whatever it is, then that does make the cost of doing business higher in the United States. But on the AI, I'm curious, just setting aside all the tariffs, since you brought up the AI boom, that's creating its new different trade flows, incredible imports from Korea, right, for memory chips.

33:14Tracy Alloway:And those prices are going insane. And I think I saw a stat, just the pure level of importing that we're doing from Taiwan is just staggering all because of chips, et cetera. But what else are you seeing interesting in terms of trade flows because of all this AI activity that's going on? Or do you see any fingerprints of that?

33:34Ryan Petersen:Yeah, you see a lot in the air freight market, especially because one of the Trump administration crackdowns was the end of de minimis shipping, which was if you ship something less than$800, you didn't have to pay customs duties on it. And that was just this huge boom. It had been 50 % of the world's air freight. And so when that ended back in, I think it was in May for China. They stopped, they ended that program. All the experts, including me, went on the record and said, hey, the price of air freight is going to collapse because it's 50 % of the world's air freight is de minimis shipments from Asia, from China mostly, and that's all going away.

34:08Ryan Petersen:And so the price is going to collapse. Well, it turns out price of air freight has stayed stable, stayed high because there's so much, so many components for data center buildouts getting flown around the world. It's more than made up for the drop from the de minimis shipping.

34:23Joe Weisenthal:That de minimis exception, the 800 exception, that always reminds me of, you know, the charts that you see of men's like self-reported heights where like no one is 5 '8 or 5 '9. Everyone is either like shorter or 5 '10 and above. Like all the shipments were either, you know, like less than 800 or a lot more than 800 and like nothing just around there.

34:46Tracy Alloway:What happened, though? Because I thought they were going to kill Sheehan and Timu and some of these things with the de minimis stuff. What happened with those businesses?

34:54Ryan Petersen:Those guys are actually doing pretty well. It turns out it wasn't just tariff arbitrage. So that's also part of the story on the air freight market that we got wrong. It's like they're doing okay. And one thing they've set up, fulfillment centers in the U.S., they've set up some pretty big automated networks that are probably like 20 % of the size of Amazon's network now is these fulfillment centers for Chinese companies. run by Chinese e-commerce companies. It is really a massive kind of an underreported thing there. And they're still flying it from China. They're paying the duties. One of the most interesting facts I learned this year, actually, is that Shein does 40 billion of sales, 40 billion of revenue last year.

35:33Ryan Petersen:And no purchase order that was made from Shein to its factories was more than 200 items. So you're talking like tens of millions of little tiny granular purchases. And that means they never have to discount because they don't keep much stock. They only have 200 of each thing. Whereas if you go to a lot of websites, retail stores are always running a sale because they bought too much stuff and are dumping it. So the business model actually has some attractive features for it. And we had started to build that service. We were offering it for a lot of... We do still offer a similar service. We can ship from overseas, and then we'll just inject it directly to the postal service or other last mile carriers.

36:11Ryan Petersen:We stopped investing there because I was like, this is going to die with the end of De Minimis, but probably a mistake in hindsight. We're seeing actually that model is still working.

36:20Joe Weisenthal:Actually, that reminds me, when you look back at, gosh, I can't believe it's only been a year basically, but when you look back at the past year and your customers, what was the biggest differentiating factor between those who handled the tariffs well and those who didn't? Was it just size and their ability to squeeze out concessions from suppliers, or was it, I don't know, data records and really good lawyers, I guess? What did you see that made a particular company handle this better than others?

36:50Ryan Petersen:Yeah, I mean, you have to look probably within an industry because certain industries just have sectoral advantages or disadvantages. It's hard to move electronics out of China. And then some of those industries were exempted from the tariffs. Actually, you know who did the best was the guys who went to manage to get a meeting at the White House and shake hands and convince them, you know, like Apple, don't tariff the iPhone. But that was a very privileged small number of people that had that kind of access. But smaller, all other things being equal, I think that like more entrepreneurial companies that could just move quickly and make good decisions and just like, all right, cool.

37:22Ryan Petersen:We're going to set up manufacturing in Mexico or Latin America or some of these places and actually move relatively quickly. But it's not just speed. You got to make good decisions. You know, like people who moved to India in a hurry and then found out India got hit with a 50 percent tariff, like not doing that great. So maybe some of it's just luck, too. I mean, it's very hard to forecast how this thing did play out and what's going to happen next is kind of anybody's guess. So sometimes the best thing to do is nothing and just let things go stable. I met a couple of companies that said that was their plan.

37:54And I was like, that's kind of bold and I like it on some level.

37:59Tracy Alloway:So, OK, you're fairly optimistic that this is not going to take as long as perhaps some people think. But what are companies doing right now to walk us through the actual nuts and bolts of getting the refunds and what's happening right now and how the timeline works and what they have to do to actually get them and so forth? Walk us through that.

38:18Ryan Petersen:It's a bit of a technical thing, but you guys have a nerdy audience. So I think the way that it'll work, first of all, there's some uncertainty of how the timing is going to work. If there are refunds at all, it's still not guaranteed, although I feel pretty high certainty. The way that it's likely to work is you're going to need to pull that ACE report. That was, I was talking about earlier, pull it from customs, calculate how much you're owed. You then are going to need to file. It's unclear if you'll need to file protests. Typically the way that it works to get a refund is you go, you file a protest, you make your case to the government that, hey, we got this misclassified.

38:48Ryan Petersen:We are protesting and we, and you'll get a refund. So that's typically how it works. And that's how we're set up to go do that is go file these protests on your behalf to go challenge the IEPA protests and say, hey, you never should have paid me this. and I'll get a refund. So we're putting that program in place right now for companies to go just make that easy, take away the paperwork. The piece that's a little bit more sophisticated is where people are selling these things in the secondary market that I mentioned earlier. So there's at least three big banks that are out there. I don't know if they're big, but there are three groups that are out there, at least three.

39:22Ryan Petersen:There's probably more that are buying these things. And like I said, the market price went to 52%. So there's a lot of negotiating right now of going, all right, what's this time value of money? What's your relative certainty of when and how this is going to play out? That's a market that I'm tracking very closely. Thus far, those guys have only transacted where a company's refund is at least$10 million. One of the things I would like to be able to do is say, hey, we can pool a bunch of these guys together.

39:48Tracy Alloway:I was going to ask, have any of the banks come to you and said, rather than trying to get gather all of these you know tens of thousands however hundreds of thousands of companies do they just come to any of the freight brokers and say like assemble your crew and we

40:03Ryan Petersen:like do a batch a batch sale yeah until last friday we have we've talked to all of them until last friday there was just a little too much uncertainty for us to put in the effort and like to build the thing we built a calculator that's why we're able to go live with the calculator you know the same day as the refunds went live because we've been building that but as far as the processing we didn't really invest in building that capability until friday we kicked off those you know like in earnest so that's i'm hoping to be able to build in a hurry uh i really like to be able to pull these things and i've talked to so many companies that said hey if you could get me 70 percent i would 60 even i would do it tomorrow so that would be i think we could i think that we could create a lot of value there for everybody i mean i think My estimate is much higher than 60%.

40:49Ryan Petersen:So if I value the thing differently than you are, there should be a win-win.

40:54Joe Weisenthal:This is what I was going to ask. So just to be clear, those claims on tariff refunds are trading at 50 % or 60 % at the moment. But we are expecting the full refund amount to actually come back, right? Plus legal fees, I think.

41:12Ryan Petersen:Well, I don't know about legal fees, but plus interest. You're supposed to get 6%. I think 6 % is the current rate on that. 6 % annualized. So yeah, now we say we are expecting, that's me and my team and some lawyers I've talked to, but the brands probably aren't expecting it that high or else they wouldn't sell it for 60 % or they need the money right now. What would be the justification

41:30Joe Weisenthal:for not getting the full refund? If they're illegal, like the totality is illegal, right?

41:36Ryan Petersen:Well, the full refund would come, but in that case, they would go to the person who bought it from you, not you. So it's just a time value of money and an uncertainty question that someone's willing to take a lower rate. But yeah, I think I personally, I think if you sell it for 60%, you're probably leaving money on the table. Just wait a year. I mean, 40 % for a year is a pretty good return.

41:54Tracy Alloway:Should set up a little side hedge fund, a little side pocket.

41:58Joe Weisenthal:Joe, I'll sell you my tariff refund claims.

42:00Tracy Alloway:All right. Maybe we'll do a little trade here and write about it. Ryan Peterson, thank you so much. Great to catch up with you. I'm sure there will be more opportunities in the coming months and years ahead of all this. But thanks for coming back on Nodlots. It was great to be here again.

42:15Ryan Petersen:Thank you.

42:15Joe Weisenthal:Thanks, Ryan.

42:29Tracy Alloway:Tracy, we should do an episode on the new delivery network that's actually being built by the Chinese companies inside the United States. I didn't know that existed at all. I think that'd be fascinating. 20 % is already as big as Amazon's logistical network. That's pretty wild.

42:43Joe Weisenthal:Well, this is why, you know, I was asking a few questions about like how you actually classify items and things. Whenever you see this kind of sweeping rule change, I feel like you get a very immediate reaction from the people who are paying it. And some of them get extremely creative, if not illegal. Right. And it's fascinating to look at some of those solutions.

43:03Tracy Alloway:Yeah. No, I like the I it's I mean, it makes obvious sense. It's all I sell this thing for one hundred dollars. I mean, I set up a company in the U.S. that I sell it to for a dollar. Right. And then that company sells it for$100 to, you know, or tries to. That's business. It's also illegal. It's business. But the fact that you see it's like that it shows up in the data, right? That there's like all that a foreign company can theoretically apply for the refund and et cetera, or can establish. What was the importer of record that a foreign company can establish itself as the importer of record and that it shows up in the data like that shows how much creativity was underway since Liberation Day.

43:40Joe Weisenthal:I mean, just from a broader macro perspective, and I know that wasn't the focus of this episode, but maybe we'll do one at some point. It is going to be really fascinating to see what refund recipients actually do with that money. Right. Yeah. I feel like if you're a corporate analyst at the moment or if you're an investor, like it's going to tell you a lot about the direction of that particular company, what they do with that money.

44:02Tracy Alloway:I think a big question is just going to be how many announced sales or something. Because there's going to be some pressure to refund money to consumers, right? And it'll be interesting to see if any do some sort of nominal rebate of some sort. I mean, obviously, they're not legally obliged to. But I think a lot of people, it's going to really annoy people, especially if there are categories where it's obvious that consumer prices went up. because of the tariffs. Or if companies, in some cases, may have, oh, we're putting a tariff surcharge on you, right? And they might have spelled it out of some sort of bill.

44:42Tracy Alloway:Or they probably did, because they don't want to be seen to be raising prices. So if you were the type of company that's like, look, we weren't raising, we didn't want to raise prices, we just have to. So we're telling you that part of this$50 that you paid, X amount is a tariff surcharge that we're applying. They better give you a refund. Otherwise, that's going to be really annoying. I guess we will find out. It's like a de facto windfall for them.

45:02Joe Weisenthal:Well, you know who handled it pretty well?

45:04Tracy Alloway:Go on.

45:05Joe Weisenthal:All things considered, at this moment in time, it seems like they handled it pretty well at Costco. Because I think they explicitly said they weren't going to pass on the tariff charges to customers. They were just going to eat the loss, but also file suit against the Trump administration saying the tariffs are illegal. And so now they get the refunds. They don't have to actually pay them back to customers, but they don't take the brand hit from not doing that because they never charged them anyway.

45:33Tracy Alloway:They say they never charged them, but in theory, they could have held a price steady and maybe in the alternate universe, the prices would have come down, right?

45:43Joe Weisenthal:Sure, we'll see. At least from, I'm saying from a PR perspective, it was a good play. Yeah, yeah, totally. I'm only saying that because I'm a big fan of the giant Spanish hams that you can get at Costco.

45:55Tracy Alloway:Which are presumably tariff.

45:56Joe Weisenthal:I guess, but this is the first year I ever bought a Costco ham. So I can't tell you. Was it good? It was so good. I can't tell you what it was the year before if it actually went up.

46:08Tracy Alloway:Can I tell you a little life hack for the people that are still listening to the very end of the conversation? If you ever like show up at a party and you bring a Spanish ham, people will just love you. And like, you know, they're a couple of hundred dollars or whatever, but there's a lot of food in the Spanish ham. And if you're the guy who shows up at a party with a big Spanish ham on the whole, on the spit or whatever it is, that year would be the life of the party. It is a very strong move. A friend of mine did that and everyone loved him.

46:36Joe Weisenthal:I think that's an excellent idea. I bought my husband one for Christmas and I will say, I think it lasted us like a good three weeks and we ate a lot of ham.

46:43Tracy Alloway:You just leave it out there, right? No, it's great. Yeah, they preserve very well.

46:47Joe Weisenthal:Some cheese and ham for dinner for like three weeks.

46:49Tracy Alloway:You just keep carving at it. It's value for money. Yeah, it actually is.

46:52Joe Weisenthal:All right, shall we leave it there?

46:53Tracy Alloway:Let's leave it there.

46:54Joe Weisenthal:Okay, this has been another episode of the All Thoughts Podcast. I'm Tracy Allaway. You can follow me at Tracy Alloway.

47:00Tracy Alloway:And I'm Joe Weisenthal. You can follow me at The Stalwart. Follow our guest, Ryan Peterson. He's at TypesFast. Follow our producers, Carmen Rodriguez at CarmenArmin, Dashiell Bennett at Dashbot, and Kale Brooks at Kale Brooks. And for more OddLots content, go to Bloomberg.com slash OddLots. We have a daily newsletter and all of our episodes. And you can chat about all of these things 24-7 in our Discord, discord.gg slash OddLots.

47:24Joe Weisenthal:And if you enjoy OddLots, if you like it when we talk about Spanish hams, and the tariffs, then please leave us a positive review on your favorite podcast platform. And remember, if you are a Bloomberg subscriber, you can listen to all of our episodes absolutely ad-free. All you need to do is find the Bloomberg channel on Apple Podcasts and follow the instructions there. Thanks for listening.

48:15Tracy Alloway:If there was a big red button that would just demolish the internet,

48:20Joe Weisenthal:I would smash that button with my forehead. From the BBC, this is The Interface,

48:25Tracy Alloway:the show that explores how tech is rewiring your week and your world.

48:29Joe Weisenthal:This isn't about quarterly earnings or about tech reviews. It's about what technology is actually doing to your work, your politics, your everyday life, and all the bizarre ways people are using the internet.

48:42Ryan Petersen:Listen on bbc.com or wherever you get your podcasts.