David Warrick, EVP at Overhaul, joined Brittany Lewis on "Forbes Newsroom" to discuss the recent legal actions surrounding President Donald Trump’s tariffs, global trade negotiations, plus the impact on the global supply chain.
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00:00Hi, everybody. I'm Brittany Lewis, a breaking news reporter here at Forbes.
00:07Joining me now is David Warrick, Executive Vice President at Overhaul.
00:10David, thank you so much for joining me.
00:12It's great to be back. Thank you for inviting me.
00:14Of course. And you and I first spoke the day after what President Trump dubbed as Liberation Day,
00:20where he unveiled his sweeping tariff policy.
00:23And when you and I had that conversation, you said you were in shock.
00:26The tariffs were way more broad ranging than anticipated.
00:30So now, as we sit here two months to the day from Liberation Day,
00:34I'm curious what your experience has been like on this tariff roller coaster, which we will get into.
00:39And more importantly, to start off the conversation, has that shock worn off?
00:45I think that the initial shock has definitely worn off.
00:49And I think it's been a very interesting eight weeks.
00:53When we last spoke, I did say, you know, you asked me what advice was I giving the companies at the time.
01:00And my advice was, hurry up and wait and be prepared to act quickly.
01:06Now, I don't like to say that I'm always right.
01:11But in this instance, I actually was right.
01:14It was if you'd made a decision on any given day over the last eight weeks, there's a fair chance that you would have to have rolled back that decision nearly immediately.
01:26And so from a supply chain perspective, this ongoing turmoil is interesting and it is challenging in terms of what is going to happen next.
01:38And right up until Friday, you know, we even thought it was starting to calm down a little bit.
01:43We thought there's negotiations happening with China and then suddenly steel and aluminium come back on the agenda on a speech from the president on Friday evening and doubling the tariffs on those.
01:55And I watched our conversation back from early April and you were right on a bunch of things.
02:01So, A, give yourself a pat on the back.
02:02But B, your advice was hurry up and wait, but be prepared to act quickly.
02:06And I actually wrote that down because I'm curious if that's the advice you would give in light of the court rulings regarding the tariffs.
02:13Because last week, the U.S. Court of International Trade ruled against President Trump's tariffs.
02:18They called them unlawful.
02:19He exceeded his authority in doing that.
02:21And less than 24 hours later, an appeals court ruled that the tariffs can stay in effect for now.
02:27So what are your what's your advice to the business community?
02:30Hurry up and wait, but be prepared to act quickly.
02:33What does that look like?
02:33My advice has not changed because I think that this is still this is still such such a complex set of activities that have to happen.
02:44I do not doubt that the White House are working, you know, very, very quickly to try and sign agreements, trade agreements with a lot of countries around the world.
02:56But we haven't really seen a lot of progress.
02:59We hear a lot about the conversations, but we haven't seen real factual progress.
03:04That has to happen.
03:05The 90 days that we that the president initially talked about, we're getting close to the end of that 90 days.
03:12You know, listening to the commentary from from Besant and from Lutnik, they're saying, OK, we're in these negotiations.
03:20But but I did you know, I read an article this morning which said that to a certain extent, a lot of what happens next depends on what is agreed with China.
03:29And that is that that's an interesting perspective, because it means, you know, it's not just supply chains are saying, hurry up and wait.
03:38The global economy is to a certain extent saying, let's see what happens with China.
03:43And that may well set the precedent for what happens with everybody else.
03:48And that's perfectly fine.
03:49But we just need it to happen.
03:51We need it to actually we need something to be on paper so that we can all now step forward.
03:55And let's talk about then let's start with what exactly is happening with China, because last month, China and the United States came to a temporary agreement for 90 days where they majorly rolled back the tariffs.
04:07But that's seemingly this relationship is seemingly falling apart over the past couple of days, because I want to read what President Trump said over the weekend.
04:14He claimed that China, quote, has totally violated its agreement with the U.S.
04:18And China rejected wholeheartedly that allegation.
04:22And China's commerce ministry said that the actions from the United States, quote, seriously undermine the existing consensus reached at the Geneva economic and trade talks and seriously damage China's legitimate rights and interests.
04:34What do you what do you make of where we are right now in the trade negotiations with the United States and China?
04:40I really do hope that this is, you know, this is some active positioning.
04:47And, you know, I think a number of very senior, you know, members of the cabinet have said it's really going to require a conversation between between the two leaders.
04:59And if that conversation can happen, and again, there's speculation that could be this week, if that conversation happens, I firmly believe that it will it will allow us to get over this current impasse and move forward.
05:14But that depends on to the two most senior leaders probably in the world being able to come together and have a conversation and really push the agenda forward.
05:25So I, you know, in this current phase, to be honest, I don't depend on anything happening as it should.
05:32But I always am very hopeful that common sense will prevail and the conversation will happen and we'll move on.
05:40And so I know you said that all eyes are on China and then people can figure out their next steps depending on what that negotiation, what that deal looks like.
05:49I mean, what do you think, what are some indications of what that deal looks like before people make their next moves?
05:54I mean, what should people be looking out for?
05:58I mean, I think people should be looking out for, you know, what does the final result look like?
06:03So this is a very interesting, you know, psychological test.
06:08So there was no tariffs or there was 20% tariffs.
06:11Suddenly that became 145%.
06:13Then it reverts back to 30% and we all celebrate.
06:17But if you think about it, we're actually still in a worse position than where we started.
06:22So from a pure, you know, if I told you, hey, this thing that you were going, if you were going to buy this particular item in February,
06:29and then I told you it was going to be 145% more expensive.
06:33And now after, through all of the different conversations, it's still going to end up 30% more expensive.
06:40You kind of look at that and go, okay, that's really interesting in terms of the cycle that we've been through.
06:45So what does success look like?
06:48A good outcome looks like a fair balance of trade for all countries around the world.
06:54It is our ability to be able to streamline and optimize the supply chain to accommodate all of that.
07:01And it really is the stop of these knee-jerk reactions.
07:04I mean, you know, one of the indicators that supply chain professionals look for are, you know, the shipping rates coming from China.
07:11How much does it cost to ship a container from one of the southern Chinese ports into Long Beach or into, you know, the port of Seattle?
07:19And those rates have been fluctuating madly over the last six weeks as the different decision points happen.
07:28Supply chains work best when there's some level of stability.
07:31So how do we get to that level of stability?
07:33I'm not a politician.
07:34I can't tell you how those conversations need to work.
07:37But I do believe that it's better for everyone if we can get to an agreement.
07:42And then I'm curious how you think that the court rulings impact all of this.
07:47Do you think multiple federal courts ruling that the tariffs that President Trump imposed largely are unlawful?
07:54Do you think that gives other countries more negotiating power?
07:57I mean, what do you think that really does to the ongoing negotiations?
07:59I think it was super interesting and we probably weren't paying enough attention to this smaller court who actually had this ability to make this powerful decision.
08:13What does it mean?
08:14It means that we are still in flux.
08:18So, you know, again, there's been countless articles, you know, news articles over the weekend to say, look, this is not the only way that tariffs can be imposed.
08:27There's different capabilities that the president has to be able to impose tariffs, you know, at a greater level.
08:37And so, you know, I look at this and say, OK, I think that this is due process, right?
08:43The courts have now had their opinion.
08:45That opinion was appealed.
08:46It will be appealed again.
08:48We'll go to a higher court.
08:49Hopefully it doesn't end up in the Supreme Court, but it looks like it might have to end up there.
08:54And then that will set some guardrails.
08:57Am I hopeful that those will all be very positive?
09:00I'm very positive that we will get to a good place, but I worry a little bit about what that means.
09:07I worry a little bit about what does that outcome actually look like.
09:11And yet again, you know, when you think about what happened on Wednesday and Thursday of last week, the tariffs were on, then suddenly the tariffs were illegal and they were all off.
09:22And then the next day they were back on again for small businesses, for even for big businesses and for supply chain practitioners, really tough to navigate this current turmoil to try and make the best possible decisions.
09:36I mean, that's a really good point.
09:38What does this mean?
09:39Because I was actually in an interview, in a conversation talking about the tariffs last week when they were off and then the appeals court ruled they were on for now until June 9th.
09:51So what does that mean, do you think, for small businesses and the supply chain?
09:54Because in that 24-hour period when the tariffs were ruled, deemed unlawful, they were struck down.
10:01The Trump administration said that they were on the cusp of three trade deals and many more are on the way.
10:06Now we know the tariffs are in effect until at least June 9th.
10:09But what does this all mean for the global supply chain?
10:12For the global supply chain is, it's still a little bit in crisis.
10:17And what we're trying to figure out is, what is the longer term?
10:21So it's really interesting that the economic data that you're seeing over the last week has not been massively affected by tariffs.
10:30Now, there's lots of different connotations there in terms of, is that just a timing issue or is there something else?
10:38But in general, global supply chains are starting to go from thinking short term to thinking medium term and thinking long term.
10:46Okay, the tariffs are going to be there in some shape or form.
10:49How do we start making decisions to enable the constant flow of goods?
10:54That is where, you know, we can't sit on the edge of our seat every single day, waiting for the next decision to be implemented and then revoked.
11:04So we have to start taking a slightly longer term view on supply chain and on the economy.
11:11And what does that mean?
11:12It means getting rid of the fragility, starting to think about more about resilience.
11:18But that takes time.
11:19You know, you don't just onshore manufacturing tomorrow.
11:22You don't just change a country as an origin in terms of where you manufacture with the flick of a switch.
11:29These things take time and supply chains now have to start to become more thoughtful and also spending more time with technology.
11:37So there's a technology element of this, which is having understanding and visibility and transparency of what's in your supply chain is really important right now to allow you to make better decisions going forward.
11:51So companies are starting to actually pay more attention to that.
11:54Even in this space of eight weeks, companies have started to pay more attention to, are we really understanding our data?
12:01How do we enable ourselves to move quickly?
12:04We have to have transparency in our supply chains.
12:07We have to understand what we're deciding, what decisions we're making on what inventory and what that cost impact is going to be.
12:14And companies, I feel like, have layers upon layers now of this uncertainty that they have to kind of juggle with, hey, we're looking at negotiations and we're seeing how that's going.
12:25Hey, we know that President Trump really on a dime can pause, stop, threaten tariffs really on any country he wants.
12:33And that's what he's been doing for now, plus on top of this legal battle of are the tariffs unlawful, are they not?
12:39And as you said, there are other ways President Trump can impose tariffs.
12:43So even if this is deemed unlawful, he can go about it another way.
12:46So do you think, or are there certain industries, rather, that are more vulnerable right now than other ones?
12:53I mean, I think that, obviously, anybody who is very dependent on manufacturing in China has really been feeling the pain and has been going through a lot of challenge.
13:05At the same time, I do feel that small businesses are going to feel the biggest impact.
13:12And this is across the board, you know, in food and beverage, for example, the small business community just don't have the same buying power.
13:21And there's countless examples of, you know, small wine importers, you know, toy importers, clothing, apparel importers.
13:31They've all, there's numerous stories of, you know, great entrepreneurial ideas have put together, you know, small businesses.
13:39And suddenly their prices over the last eight weeks have, have doubled, tripled or gone, you know, just completely up to a level where they're not going to be able to, to produce.
13:51And this is, you know, buying raw materials, even to bring those into the US to be able to finish them.
13:56And there's countless small businesses are being impacted.
14:01It's really hard for them because they don't have the financial wherewithal to be able to, you know, do too much of the hurry up and wait.
14:09They don't stockpile, they're not able to stockpile inventory and they're going to be susceptible to whatever the price point is on any given day.
14:17That's where we're going to, that's where we're already starting to see some pain.
14:22And that is going to, that is going to continue until we get some level of balance in these trade negotiations.
14:28And I think something we've seen really in the past two months is that President Trump isn't just changing and slightly tinkering with trade agreements with a few countries.
14:37I mean, he is completely uprooting global trade as we know it.
14:41So from that lens, do you think this changes what small businesses and the small business community looks like forever?
14:50I think it's definitely a shock.
14:52I think it is, you know, the equivalent of a, we would call it a gray swan event.
14:57But, you know, small businesses grow up through immense creativity.
15:02And, you know, I was, I was having a conversation around, you know, the, you know, restaurants and how the restaurant business, you know, could be impacted.
15:12And, and it, it really goes to, okay, there's going to be a, you know, a higher price potentially for certain goods being brought in from Mexico or from Canada.
15:22How does a small business like a restaurant, a family owned restaurant, how do they cope?
15:26Well, they now have to think about different things.
15:28It may be you have to create different menu options.
15:31Maybe you have to create another unique identifier in terms of your customer service.
15:36So there's different ways that small businesses have to think.
15:39They have to adapt.
15:40They have to change.
15:42And that while maybe unfortunate, that's how they were created in the first place.
15:47They saw a need and they were doing something to be able to actually supply and delight customers with that need.
15:53And so I think in the natural evolution, more of that will happen.
15:57They will go down that same path.
15:59Only this time it's been because of a forced change.
16:03So I do not in any way doubt the creativity and the innovation that is available in the small business community.
16:09Now it's being put to the test yet again to be able to this time survive.
16:14And I'm curious, I want to get your reaction to this because we saw this a lot in President Trump's tariff policy that he threatens a major tariff move and then he rolls it back.
16:26He gets the country, whoever it is, the negotiating table or on a phone call.
16:30And then he says, you know what, I'm going to pause this.
16:32We saw that most recently with the EU and Wall Street analysts reportedly call his on again and off again moves taco trade.
16:40Trump always chickens out.
16:41So I'm curious, is that how companies, is that how supply chains are viewing him?
16:47And do they implement that into their strategy of, hey, President Trump might chicken out on this.
16:51That might not be the number and we should plan accordingly.
16:56I think that, you know, what we've learned over the last 8 to 12 weeks has been that, you know, change is always a constant.
17:05And so, you know, to my earlier point, making strategic decisions, making strategic bets based on any one news article or any one tweet just doesn't seem like a really good idea right now.
17:19And I read the situation as it is open to daily disruption.
17:27It is open to daily change.
17:29And therefore, that is how you have to absorb it.
17:32And that's how you have to accommodate it.
17:34You can complain about it, but it's the that is our new norm.
17:38So embrace it and figure out a way to make your supply chains more resilient and more adaptable, knowing that this is going to continue for some period of time.
17:47And I guess my question to you then is, I mean, if I'm a business owner, if I am in charge of a company, I'm I'm ripping my hair out thinking that this is how I have to go day by day.
17:57A tweet can totally upend my business or upend how I need to look at a certain sector of my business.
18:03So I was speaking with the secretary general of the ICC last week, and he said that, you know, a lot of this tariff policy is written in pencil now, not pen.
18:13So until all of these negotiations are written in pen and not pencil, until the tariff policies really are nailed down, I mean, what should businesses be doing?
18:24They should be hurry up.
18:26They should be applying the logic of hurry up and wait because they because they can't do anything else.
18:31So make the most of what you possibly can.
18:34And, you know, even for the bigger manufacturers right now, you know, as they as the initial tariffs happened with China, the first thing they did was not to not to panic and move production.
18:46They had already created some level of decentralization from the very first wave of tariffs back in 2018.
18:53So what they did in the short term was they ramped up production in those other factories, which could have been in the Philippines or Malaysia or Thailand.
19:01And they actually opportunity to say, we create a level of resilience.
19:06Let's double down on that in the short term while we figure out what's going to happen next.
19:12And so from a small business perspective, it's the same thing.
19:15It's what are your strategies that are working?
19:17What are your strategies that are helping you right now?
19:20Those are the ones that you double down on while you wait for the next iteration of the tariff discussion and the global trade discussion.
19:29Because the one thing that we know for sure is that it's going to change.
19:33We just don't know where it's going to end up just yet.
19:37I know we don't know where it's going to end up, but do we know when it's going to be ending up?
19:42Because as you said, I mean, the 30 days from the Liberation Day after President Trump temporarily paused those reciprocal tariffs, that's coming up soon.
19:50We're in the same calendar month as when that date is the deadline is here.
19:54So when that happens, I mean, what are you looking out for?
19:59I think what's going to happen is, and again, I may be a little bit speculative here, but I think what's going to happen is the deadlines are pencil deadlines.
20:10They are, okay, that's where we're aiming for.
20:14But if we're making great progress, we'll move that date out.
20:17And I think that's what we really saw with the European Union last week.
20:20It was, there's a fixed timeline.
20:22That was to force the conversation.
20:24A conversation happened.
20:25The deadline moved out.
20:26And again, the next set of conversations will happen.
20:29And if those are getting close, the deadline will move out again.
20:33That's not a good thing or a bad thing.
20:35It's just the way that it is.
20:36These are complex negotiations.
20:38They're not going to be signed quickly.
20:40And I think that there's a, you know, there's a lot of commentary to say that even the 90 days may not be enough.
20:47So my perspective is common sense will prevail as we get closer to these deadlines.
20:52It's not going to be a complete shutdown.
20:55It's going to be a, now we're going to, we've got to this step of the process.
21:00Now we're going to continue the conversation on and the hope that we'll get to that point.
21:05Now, for everybody's sake, I really do hope, Brittany, I hope it's sooner rather than later.
21:10But we don't know.
21:11And I think that we've been through three months of turmoil.
21:15Everybody's getting a little bit, you know, jaded with the ongoing changes and the discussions.
21:21But we all hope that it's leading to a better place.
21:23And that happens relatively in the short term.
21:27And to your point, there are complex negotiations and there's dozens of them happening at once
21:32and dozens of agreements that need to be nailed down.
21:35But as a supply chain expert, what do you think is missing really from the international
21:40dialogue, even from this conversation, when it comes to what we've seen on the tariff roller
21:45coaster in the past three months?
21:48I mean, I think that the knock on impact is that we've seen certainly through supply chain,
21:55but also in the business.
21:56It causes a level of disruption.
22:00And, you know, three or four weeks ago, before the president, before the talks in Geneva that
22:09winded tariffs back a little bit, there was real concern in the logistics community because
22:16the major ports were starting to go dry.
22:18We were starting to see a, you know, a real slowdown in the amount of shipping that coming
22:23in.
22:24And there's a huge population that is dependent on those ports.
22:29So the dredge drivers, the lorry drivers, the warehouse workers, those are, that's a lot
22:34of people who were suddenly now wondering, is my job safe?
22:39Am I going to, you know, am I going to have work?
22:41Am I going to be able to pay my bills?
22:42And so those things are, you know, it's, it's, when you think about the high level, we've
22:48got to do a better job in terms of how the United States is positioned in the global trade
22:53arena.
22:54But this actually goes right down to individuals, you know, on the ground.
23:00And whenever, you know, if you think about the number of owner operator, you know, lorry
23:04drivers in the US, it's a huge population.
23:07And suddenly if there's not enough, you know, inbound cargo, there's no work.
23:12And whenever there's no work, they still have to pay their bills.
23:15So do they find something else to do?
23:17And if they do that, then is there enough to drive, to bring them back?
23:22This is the COVID problem all over.
23:24So many people left the industry during COVID, found other opportunities, but then they didn't
23:30return whenever, you know, the, the COVID restrictions went away.
23:34And suddenly there's a shortage of lorry drivers.
23:37There's a shortage of warehouse workers.
23:38There's a shortage of dock workers, which further complicates the supply chain.
23:42And it makes it harder.
23:43So I think that while these negotiations are happening and it's, you know, it's, it's,
23:48it's right for the world trade, you know, to make sure that we're doing the right thing
23:52for all of the countries.
23:53But let's not forget that we're also impacting people's lives while we're in these
23:58discussions.
23:59And anything we can do to speed those along and get to a conclusion is just good for the
24:04economy.
24:04It's good for the country and it's good for the people.
24:07I think that's a great point, especially, and I'm, I'm really grateful for your time
24:13today.
24:13And I'm grateful for the conversation and really the pulse check of where we are two months
24:19to the day after liberation day, David Ward.
24:22Thank you so much for joining me.
24:23You are welcome back anytime.
24:24And I hope I can lean on your insights as we see where these tariff negotiations go.
24:30I look forward to talking about the conclusion in a couple of weeks, maybe.
24:35Fingers crossed.
24:36Have a good one.