How C-Suites Are Navigating Tariff Turmoil

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00:00It's all fun to joke around about this stuff, but it's a really serious decision.

00:04In fact, the president has said he thinks the most serious decision the Supreme Court's made in 100 years,

00:09they're going to decide on his IEPA powers, whether or not he can actually just decide himself

00:16about what to tariff other countries and when using the, what is it, the International Emergency...

00:22Emergency Economic Powers Act.

00:24There you go, the IEPA.

00:26Glad you guys said that.

00:27So what do you think? What are we going to hear?

00:29I mean, look, the bottom line is this could go any number of ways.

00:33Now, let's remember, the president has already lost twice at the International Court of Trade

00:37and then at the Federal Court of Appeals in a 7-4 verdict, right?

00:40But nonetheless, as we were talking about...

00:42On previous cases, right?

00:43On this case.

00:44Oh, on this case, because he also tried to ban TikTok.

00:46Before he was for TikTok, he was against it and he used IEPA.

00:49On the use of the emergency authorization, right?

00:52To put these reciprocal tariffs on basically all trading partners, right?

00:56I don't think that it's necessarily a binary outcome.

00:59Either he's allowed to or disallowed to and then will have to pay back the refunds.

01:04There's a lot of different potential outcomes here.

01:07And so, as usual, has been the case throughout the trade dispute that started all the way back

01:12in April, you know, I think companies and our trading partners alike really cannot straight line anything.

01:18Because even if he does lose, which the betting markets suggest he will, as does, you know,

01:23as do a lot of legal scholars, by the way, out of the 40-some-odd amicus briefs that were filed

01:28with the Supreme Court, only six were in favor of the president's policies.

01:32Keep in mind that, you know, he can still pursue Section 232 and Section 301,

01:37other pathways to being able to impose these tariffs.

01:40Well, I want to dig in on a point you made that, you know, it's not a binary here.

01:44There's a range of outcomes that we could get from the Supreme Court.

01:47Of course, where you sit at Tineo, you're in constant communications with corporate executives.

01:53I mean, talk us through how this impacts the C-suite.

01:57And when you're considering all the different multitude of options that could be at play here,

02:02I mean, what do those conversations sound like?

02:04Well, Katie, I mean, you're exactly right.

02:07But the point here is, is that it depends on the industry you're in as well.

02:11And if you think back to the big news last week, which was President Trump's meeting

02:15with President Xi Jinping in South Korea, you know, they essentially came to an agreement,

02:21right, to sort of holster their weapons and take the off-ramp and stop this kind of spiral

02:27into a trade war.

02:28But a lot of the details that have come out have come out from the White House, and they

02:32have not yet been confirmed by the Chinese side on the amount or when, let's say, soybean

02:39orders would be taken, how they were going to police issues on fentanyl, how they were

02:44going to police issues regarding, you know, some of the export controls and the like.

02:48So, you know, if you're in the higher tech industries, it's a little bit unclear, right?

02:52I mean, NVIDIA, as a perfect example, hasn't yet been solved or settled.

02:58There's still more talks to come.

03:00So, you know, I think the point here is, is that the array of outcomes is still a pretty

03:05wide one.

03:06And so what I'm talking to C-suites and boards alike is that this uncertainty tax that

03:11I've talked about on this program before continues to hold.

03:13It is perverting the behavior of these companies during a time of great uncertainty.

03:18Well, that's fascinating because we were talking in the commercial break that if you take a

03:22look at the stock markets, the equity markets, it seems like there's this growing sense of

03:28resilience or maybe just numbness to all the different cross currents we're getting when

03:31it comes to global trade, when it comes to the U.S. government being shut down now, encroaching

03:37on a record here.

03:38Is there that same sense when it comes to corporate America?

03:42Can you basically just look past some of this noise at a certain point and say it'll work

03:47itself out?

03:48I think, look, I mean, I think most CEOs are optimistic.

03:51That's why they're in the seat that they are in.

03:52And they think that the opportunities are going to are going to present themselves.

03:56But I would say there's a lot less, let's call it irrational exuberance in the C-suite

04:00than there is in the markets.

04:02And I think because the decisions that they are making are absolutely fraught.

04:07Ten years ago or, you know, going back to Trump 1.0 when he initiated the first trade

04:12war against against China, you know, there was a big continuation of the China plus one

04:17manufacturing policy, like let's move to Vietnam, let's move to Thailand, et cetera.

04:21But now that tariffs are going to be cut against, you know, brought back down on China, it makes

04:26them a lot more competitive again.

04:28A decision that looked genius, you know, eight years ago is starting to look perhaps more

04:32questionable now.

04:34What are you telling the CEOs, the boards that you advise about the U.S.-China relationship?

04:40Because it seemed as though China truly had us by the short hairs with regards to rare

04:46earths, right?

04:47There's nowhere else we can access them.

04:49And if we don't access them, our entire manufacturing economy is dead.

04:54On the other hand, China seemed really worried when President Trump went to Asia and started

04:58getting along so well with these competitive economies.

05:02And now it looks like at least for a year we have a deal.

05:06Well, yes.

05:07And by the way, that year is going to expire right in front of the midterm elections.

05:10Let's not for let's not forget that.

05:12The bottom line here, though, Matt, is that, you know, companies, CEOs are going through

05:17something that none of them have ever gone before, gone through before, in the sense that

05:21the United States has never had a challenging economy the way that, you know, the way that

05:26China represents.

05:27And the reality of it is, is that probably both countries have overestimated a little

05:31bit the weapons that they have in their arsenal.

05:34But you're absolutely right.

05:35Even though we have taken an off ramp, their foot on our neck with regards to the rare

05:41earths, especially at the heavier end of the elemental spectrum, is absolute.

05:45And that can come back to haunt us.

05:47No matter how much money we invest in this, this is not something that's going to go away

05:51in a year or two.

05:53It's going to be very, very complex for the companies and industries that require these

05:58metals and magnets and elements going forward.

06:02It's going to require billions of dollars and time.

06:04China has spent the better part of the last 50 years developing the supply chain, developing

06:09the processes for it.

06:10They've got graduate programs in their universities, all of which we're still sort of at square one

06:14on.

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