Morning Brew Daily
CEOs Warn of Price Bumps From Tariffs & Waymo Rolls Out in Austin
Wed, 05 Mar 2025
Episode 532: Neal and Toby cover the latest on tariffs concerning China, Mexico, and Canada all signaling their intent to hit back with tariffs of their own against the US. And CEOs warn tariffs will increase the price of everyday goods. Also, Commerce Secretary Howard Lutnick considers removing government spending from GDP. Meanwhile, Waymo is ready to hit the road in Austin, Texas as it plans to showcase its launch at SXSW. Lastly, a quick rundown of the headlines from the day. Subscribe to Morning Brew Daily for more of the news you need to start your day. Share the show with a friend, and leave us a review on your favorite podcast app. Listen to Morning Brew Daily Here: https://link.chtbl.com/MBD Watch Morning Brew Daily Here: https://www.youtube.com/@MorningBrewDailyShow There are risks involved with investing in ETFs, including possible loss of money. ETFs are subject to risks similar to those of stocks. Investments focus in a particular sector, such as technology, are subject to greater risks and are more greatly impacted by market volatility, than more diversified investments. The Nasdaq-100 Index® includes the 100 largest non-financial companies listed on the Nasdaq. An investment cannot be made directly into an index. Invesco Distributors, Inc. Learn more about your ad choices. Visit megaphone.fm/adchoices
Chapter 1: What are the effects of the trade war on the economy?
Good morning, Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, day one of the trade war sent stocks tumbling, businesses scrambling, and Canadians ditching their politeness.
Then Uber and Waymo are teaming up Power Ranger style this week to offer driverless rides in Austin. It's Wednesday, March 5th. Let's ride. Let's ride.
Chapter 2: How is Waymo expanding its driverless rides in Austin?
2025 is quickly becoming the year of the very long speech. Days after Adrian Brody set the record for the longest Oscars acceptance speech in history, President Trump last night delivered the longest speech ever before a joint session of Congress.
Chapter 3: What did President Trump discuss in his longest speech?
The unofficial State of the Union lasted one hour and 39 minutes, topping the previous record set by President Bill Clinton in 2000, who spoke for one hour and 29 minutes. No one longs for the days of Richard Nixon, but he gave the shortest State of the Union on record, clocking out after 29 minutes in 1972, or just about a Curb Your Enthusiasm episode.
So what the heck did he talk about? CNN calculated the exact minutes and seconds Trump... spent on each topic. Immigrants and crime got the most airtime with just under 10 minutes, followed closely by trade and tariffs at eight and a half minutes, which we'll get into what he actually said about that topic in our top story.
Elon Musk, who was in attendance, got a 40-second shout-out to go along with the two minutes spent talking Doge. That was more than the minute and 30 seconds he devoted to inflation, which was likely intentional. Neil, zero time spent thinking the Academy, though, which thankfully moved things along. Now a word from our sponsor, Invesco QQQ. Neil, I was thinking about longevity today.
Don't tell me you're taking magnesium pills and cold plunging. No, I'm thinking much bigger than that about companies that have stood the test of time, companies that make up the Invesco QQQ ETF. It's been tracking the NASDAQ 100 for over 25 years. It's basically been around longer than me. Aren't you 28? Ah, the last three years don't really count, but think about that. Invesco QQQ
Chapter 4: How will tariffs affect consumer prices and businesses?
It's one of the OGs of innovation funds. Well, Trump's long-promised tariffs are here, which means that price hikes for everyday consumers like you and me on everyday goods like electronics and gas are looming, unless a compromise can be reached, which we'll get to in a little bit.
Target and Best Buy set the mood yesterday, warning that prices will increase following Trump's 25% levies on imported goods from Mexico, Canada, and China, with some hikes hitting shelves almost immediately due to short supply chains.
Target CEO Brian Cornell told CNBC yesterday that they may be forced to raise prices on fruits and veggies as soon as this week due to a heavy reliance on Mexican imports in the winter. Best Buy sang a similar tune, telling investors on an earnings call yesterday that price increases on its gadgets and gizmos aplenty are highly likely due to tariffs.
China and Mexico are the company's top two supply chain sources, with over three-fourths of its products sourced from those countries. The market didn't like the sound of that at all, and Best Buy fell 12% to be the biggest loser in the S&P 500. It looked like the red wedding out there in general yesterday, too.
The S&P 500 fell 1.2%, with more than 80% of the stocks in the index closing lower today. After a great start to the year, all the post-election gains for the S&P 500 have been wiped out. The vibes were not great yesterday, though later in the day, Commerce Secretary Howard Lutnick did say that the U.S.
would likely meet Canada and Mexico, quote, in the middle with an announcement coming as soon as today. Stock futures did tick up as of that announcement. But in the meantime, vibes are still not great.
No, economists have warned forever that they've been around that tariffs will lead to price increases for consumers, for businesses. And that's what we saw from the earnings reports from Target and Best Buy yesterday. Trump did acknowledge that prices may go up due to his tariffs in that unofficial State of the Union last night.
He said tariffs are making America rich again and making America great again and will happen rather quickly. There will be a little disturbance, but we're okay with that. It won't be much. So there's Trump acknowledging that prices may go up for Americans due to these tariffs on the three largest U.S. trading partners. How much is the typical U.S. family might see price increases?
Well, the Peterson Institute calculated that the average U.S. household will pay more than $1,200 a year under the current tariff regime.
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Chapter 5: What is the controversy over changing GDP calculations?
Chapter 6: How do tariffs impact the auto industry?
No, economists have warned forever that they've been around that tariffs will lead to price increases for consumers, for businesses. And that's what we saw from the earnings reports from Target and Best Buy yesterday. Trump did acknowledge that prices may go up due to his tariffs in that unofficial State of the Union last night.
He said tariffs are making America rich again and making America great again and will happen rather quickly. There will be a little disturbance, but we're okay with that. It won't be much. So there's Trump acknowledging that prices may go up for Americans due to these tariffs on the three largest U.S. trading partners. How much is the typical U.S. family might see price increases?
Well, the Peterson Institute calculated that the average U.S. household will pay more than $1,200 a year under the current tariff regime.
And let's go through what those tariffs might impact. I said everyday goods affecting everyday people, and it really is because one of the biggest things that will go up is the price of gas. Oil refineries process and transport Canada and Mexico's crude to the United States, so they are being tariffed multiple times. And so about two-thirds of all crude oil imports into the U.S.
will take a hit, which means that the Northeast especially could see an estimated 20% to 40% increase in gas prices per gallon by March. West Coast and the Midwest are likely to follow as well. And then also, if you have young kids, you're probably looking at this going, oh my gosh, because 80% of toys are imported from China.
So you could see price increases on stuff like, you know, the Mighty Dump Truck that could get a $10 increase, according to Basic Fund CEO Jay Foreman. And then also the auto industry. We've talked about this
a lot at this point but the auto industry has a very complicated supply chain a lot of parts go back and forth over the border so that is expected to be especially vulnerable to these tariffs yeah for some numbers on that the average pickup truck is expected to cost 10 000 more that is sold in the united states and that's why you saw shares of ford and general motors take a beating
Yesterday, the average crossover utility vehicle will rise by at least $4,000. That's according to the Anderson Economic Group, while the cost of an electric vehicle will rise three times as much. So that's $12,000. That's why you have auto industry executives basically calling Howard Ludnick, the Commerce Secretary, calling President Trump and saying, please stop.
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Chapter 7: What are the international responses to U.S. tariffs?
We need an exemption here, because without that... Our production is going to shrivel up and estimates say that in the next few weeks, a third of U.S. North American auto production could halt altogether because all of the flow of all of these parts across Canada, the United States and Mexico will essentially stop.
And we mentioned the international response because it has come in hot and fast. Canadian Prime Minister Justin Trudeau said that the 25% tariffs in Canadian imports is, quote, very dumb and vowed to fight back with 25% tariffs of its own. China also announced countermeasures. Those are starting in mid-March. 15% tariff on chicken, wheat, corn, and cotton. 10% on stuff like pork, vegetables,
beef, fruits, and veggies. And then Mexico also is scheduled to announce their retaliatory tariffs sometime later this week. So especially the comments coming out of Justin Trudeau yesterday were, I mean, using the words, quote, very dumb is, you know, as in Canadian terms, as about as inflammatory as you can get up there.
So definitely you saw some pushback from the United States alleys. So looking ahead, we had these comments from the Commerce Secretary Howard Lutnick yesterday saying that maybe Trump will meet Canada and Mexico in the middle. We might get an announcement today about some rolling back of tariffs.
But a vibe of uncertainty is still permeating the markets, is still permeating businesses who, these auto manufacturers especially, who need to figure out where they're setting up plants. This is a multi-year process. When you make a large capital expenditure, where are you going to do it? Are you going to do it at all.
So the uncertainty is going to lead to just essentially a regime of savings where people just don't spend money because they don't know what U.S. policy will be.
And you saw that even before tariffs were implemented in that manufacturing survey that we talked about yesterday, where manufacturing in the United States is almost at a state of contraction because manufacturers are just not investing when they don't know what the tariff policy will be one day to the next.
The final embodiment of that vibe that you were just describing, I think a newsletter from the information put it very well. I was reading it this morning and it started with a line. If you're unhappy about the weather in San Francisco, you only have to wait a few minutes until it changes. That line is starting to seem very applicable to the Trump administration's terrorist plans.
There is this feeling of uncertainty around it. It does change day to day, hour to hour, minute to minute, it feels like. So you are right that there is still this uneasiness permeating kind of the business landscape around it.
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