00:00Kevin Gajiwara is co-president of political risk advisory at Tineo where he advises Fortune 100 CEOs and key institutional
00:07investors on geopolitical risk. Is your phone already ringing off the hook today?
00:12Started early this morning. Yeah absolutely. Give me a sense here though because there is has been this discussion that
00:18at least kind of the worst of the tariffs have already sort of funneled through corporate income statements and balance
00:24sheets to a certain extent.
00:26The idea that they may not like them but they know what they are. And even with the uncertainty potentially
00:30being raised today. Is anyone really under the assumption that we could see additional tariffs on what's already been levied?
00:38Well look I mean I think you're absolutely right. I think if anybody who listened to the Supreme Court arguments
00:45remain you know even the even the the the the split in the in the decision today was something that
00:51was pretty anticipated.
00:52So most companies I think were prepared for this outcome. I think that there was some concern a few weeks
01:00ago when there were some dates that the Supreme Court could have ruled and they passed on it about what
01:05was what was happening.
01:06Was there a bigger argument going on? And clearly the issue of the fact that they've punted back to the
01:11lower courts the decision on the on the refunds.
01:14And that is going to continue to be out there for some time does does does render this uncertainty.
01:18However you know I do think that the president in his remarks today clearly was unhappy with this decision and
01:25clearly to the point that Gautam just made is doubling down in a way.
01:30Now all of these other authorities that he has got you know have different limitations on them.
01:35There have to be investigations in some cases in some cases that can only be applied for limited duration or
01:40a limited rate.
01:41And against sectors as opposed to entire countries. So there is still uncertainty about about that out there.
01:47And of course these two thirty two and three oh one type investigations could be launched again against new against
01:54new industries.
01:54But also to pick up where Gautam left off on the midterm question. And we have no idea how it's
01:59going to shake out in November.
02:01But there is a lot of speculation that the House maybe even the Senate could flip back into Democratic control.
02:06Does that become a factor that you yourself didn't go back to these corporations as a way of sort of
02:13assessing what could happen.
02:15Because if the congressional authority does shift to the opposing party I would assume that would at least blunt potentially
02:20some of the legal maneuvers that Trump makes.
02:22Yeah but I do think that you know Romain at the end of the day the election and you know
02:27what's going to impact the outcome of it and what the implications of that will be are a lot more
02:31complex than the tariff issue.
02:33I mean I was as we have seen you know with regards to affordability that's related to the tariff issue
02:38of course.
02:39But you know we saw the the GDP print this morning also that inflation the feds PCE essentially coming in
02:46above expectations.
02:47I mean it's a still a very very complex complex picture out there especially with this kind of muddled employment
02:53situation as well.
02:54So I do think that companies are looking at it in a more holistic way than just than than just
03:00on the trade front to be sure.
03:01Well I'm curious you know for the companies who have raised prices to sort of deal with these tariffs and
03:07it seems like the vast majority of companies have actually sort of eaten it themselves.
03:10But for those who have you know turned to pricing to help mitigate some of the impact on their margins.
03:16I mean do you see those prices coming down.
03:19I mean how do you think that C-suites will sort of deal with these tariffs now being peeled off.
03:24Well I think that for one thing you know it last week the Federal Reserve of New York issued its
03:29report right which famously said that 90 percent of the tariff cost is being borne by U.S. companies and
03:35or consumers.
03:36It didn't really specify what that split was and I think a lot of companies definitely tried to absorb that
03:40took taking the margin hit so as to not lose market share or the like.
03:44But to the fact that to the point of there's this kind of one-off adjustment but it's going to
03:48then persist then I think that may have to then filter into into the end user consumer.
03:53We are also going through a period of course through end of through the end of last year and early
03:57this year where a lot of contracts with suppliers overseas were being renegotiated.
04:01So of course they were trying to put pricing pressure on the on the exporters and shift that balance a
04:07little bit.
04:08So yeah I think that that mix is going to be in shift as this as this continues to play
04:13out.
04:14And I'd love to talk about the geopolitical element of what as well because in addition to of course the
04:19Supreme Court ruling there's also concerns that the U.S. might actually take action in Iran this week and certainly
04:26the president has said that he hasn't ruled out a limited strike.
04:29And you think about you know what is more directly under his control now that of course the Aifa tariffs
04:34have been ruled against.
04:36I mean could you see sort of the geopolitics of it all becoming more intensified from here.
04:41Well to be sure I think we've got to be very concerned about the Iran thing playing out here in
04:46the near term right.
04:47I mean there is a considerable amount of firepower that has now been put into the region and is on
04:51station.
04:52It can't stay at that high alert for for forever.
04:56And of course we've got the State of the Union coming up on on on Tuesday as well.
05:02So yeah I would be certainly prepared for this to happen.
05:06President has said about 10 days or what have you.
05:09But you know it could certainly happen before that.
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