Morning Brew Daily
Meta Trims its Workforce for AI? & Trump Stamps 25% Tariffs on Steel
Tue, 11 Feb 2025
Episode 516: Neal and Toby discuss Meta’s continuation of its ‘Year of Efficiency’ as it begins another round of layoffs amid its investment into its AI strategy. Then, President Trump imposes 25% tariffs on steel and aluminum that will likely hurt Germany, Canada, Mexico, and Asian countries. Next, another push to abolish the US penny. Meanwhile, Apple Watch wearers are moving their trackers down to the ankles. Lastly, a roundup of the biggest headlines from the day. 00:00 - It’s official, Gulf of America 3:00 - Meta layoffs 8:15 - Tariffs on US Steel 12:30 - Penny waste? 19:10 - Toby’s Trends: Ankle Watch 22:40 - Sprint Finish! 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. Check out https://wise.com/business for more! Listen to Morning Brew Daily Here: https://link.chtbl.com/MBD Watch Morning Brew Daily Here: https://www.youtube.com/@MorningBrewDailyShow All investing involves the risk of loss, including loss of principal. Brokerage services for US-listed, registered securities, options and bonds in a self-directed account are offered by Public Investing, Inc., member FINRA & SIPC. Public Investing offers a High-Yield Cash Account where funds from this account are automatically deposited into partner banks where they earn interest and are eligible for FDIC insurance; Public Investing is not a bank. Cryptocurrency trading services are offered by Bakkt Crypto Solutions, LLC (NMLS ID 1890144), which is licensed to engage in virtual currency business activity by the NYSDFS. Cryptocurrency is highly speculative, involves a high degree of risk, and has the potential for loss of the entire amount of an investment. Cryptocurrency holdings are not protected by the FDIC or SIPC. APY as of 1/16/25, offered by Public Investing, member FINRA/SIPC. Rate subject to change. *Terms and Conditions apply. Learn more about your ad choices. Visit megaphone.fm/adchoices
Chapter 1: Why is the Gulf of Mexico being renamed?
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Good morning, Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, hold on to your piggy banks because the penny could be going extinct.
Then bust out the cardboard boxes in Menlo Park. Meta's layoffs have begun. It's Tuesday, February 11th. Let's ride.
If you live in the US, open up Google Maps and scroll to the big body of water west of Florida, you'll notice a big change. The Gulf of Mexico has been officially renamed Gulf of America. The company said that it made the update in accordance with a new executive order from President Trump citing longstanding practice of changing labels based on guidance from countries.
So at least for the next four years, people in the US will see Gulf of America, people in Mexico will see Gulf of Mexico, and people everywhere else will see both names. Toby, what did you think when you saw this change?
I didn't think anything, Neil, because I didn't even notice it. I used something called Apple Maps, which still has it as Gulf of Mexico. Yes, I will use this as an opportunity to advance my Apple Maps is superior to Google Maps. agenda. People still remember Apple matches original launch and how glitchy it was, but I'm telling you, give it another chance.
It is far superior, but yes, back to the news. Apple hasn't made any changes in Apple maps yet, but it does redirect searches for Gulf of Mexico or Gulf of America to Gulf of Mexico. So clearly they are thinking about it. I wonder how long they will hold out. And I also wonder if a new administration comes in, if they'll change it back and it's just like a snip, snap, snip, snap.
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Chapter 2: Why is Meta laying off employees despite record profits?
Gulf of America, Gulf of Mexico, back and forth.
Apple behind Google. I mean, Apple Maps behind Google Maps. It's what it's been like for the past decade.
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So wise. If you want easy international payments, visit wise.com slash business. That's wise.com slash business. If you're seeing a lot more open to work banners on LinkedIn this week, you're not alone. Meta began mass layoffs on employees across the world yesterday. According to reports, the company is cutting nearly 4,000 roles, equal to about 5% of its workforce.
These aren't your normal layoffs, though. Meta just reported record profits, a 48% operating margin, and the stock has gained 15 straight trading days, its longest streak ever. By every metric, this is a very healthy company. but Mark Zuckerberg thinks it can be healthier. These layoffs are performance-based, targeting underperforming employees as determined by internal talent evaluations.
It's a continuation of principles laid out in Meta's vaunted year of efficiency, which started in 2023, and aims to streamline operations and redirect resources towards AI initiatives. Case in point, Meta plans to start hiring machine learning engineers and other AI-related roles over the next month, even as it trims its overall headcount.
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Chapter 3: How do Trump's tariffs impact the steel industry?
That is the subtext to it all that you're cutting roles so you can hire up an AI so you can technically cut more roles in the future.
Now, just for some big picture numbers, it sounds like there's been or it feels like there's been a lot of job cuts this January. But if you go back to last January, there was a lot more. The figure for this January is down 4%. 40% from last January. Last January, there were tons of cuts, especially in the video game industry, which was the most job cuts in January for 15 years.
The trade war entered a new theater yesterday, one with a steel curtain. President Trump announced 25% tariffs on all steel and aluminum imports to the U.S. beginning March 4th, in a move that intends to protect and grow American production, but at the same time could disrupt trade with close allies.
When it comes to making steel and sending it around the world, China is the world leader and no one else is close. Chinese mills crank out more steel and aluminum each year than the rest of the world combined. But the U.S. gets its steel from a group of closer friends. Canada is the number one supplier, followed by Brazil, Mexico, South Korea and Vietnam.
And those are the countries most likely to be affected by 25 percent tariffs. But as Trump's tariff plans go, that he's targeting metals isn't surprising. Steel, which is a relatively small industry in the U.S., but a politically sensitive one because of its home base in Pennsylvania, has been a pawn in trade wars for years.
Trump imposed tariffs on steel and aluminum his first go-round in office, and Biden mostly maintained those trade barriers when he was in the White House. Anyway, this caused a major market reaction. Stocks of American steel and aluminum producers like U.S. Steel, Cleveland Cliffs and Alcoa surged while European producers fell. Toby, another big shakeup to trade weeks into the new administration.
Yeah, let's actually go back to that 2018 year that you mentioned when Trump first instituted those 25 percent tariffs. on steel. At the time, he cited national security as the big reason for it, but said another reason why he wanted to do it was to strengthen domestic production. And what were the results from that? They were a little complicated. Technically, steel imports to the U.S. did fall.
They fell 35% from 2014 to 2024. But domestic steel makers were still not producing enough to satiate U.S. steel demand. And they were still complaining that imports were continuing to harm them. They're
Technically, yes, it did bolster the domestic industry, but it's just we don't quite have enough production here to fully replace the demand that you would get from importing from countries like Canada, countries like China.
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Chapter 4: Why is there a push to abolish the US penny?
Guess the coin flip was on President Trump's mind because right before the Super Bowl, he dropped a copper-plated bombshell. Trump said that he had ordered the Treasury Secretary, Scott Besant, to stop producing new pennies. Why no new pennies? Government efficiency, according to Trump.
He said, let's rip the waste out of our great nation's budget, even if it's a penny at a time, adding that pennies literally cost us more than two cents. He is absolutely right about that. The U.S. Mint said last year that it cost three point six nine cents to produce and distribute a single penny far more than the coins face value of one cent.
All told, the mint lost $85 million last year, producing 3 billion pennies, which made up more than half of all the coins the mint made last year. Why are we making so many pennies is an excellent question that no one has a good answer to. And Trump would seem to have broad support in his attack against the penny, which has no clear role in today's economy.
The only problem is it's not clear whether he has the authority to unilaterally stop penny production. Congress, not the Treasury nor Fed for that matter, oversees the production of coins and operations at the
I thought you were going to ask a penny for my thoughts on this one, Neil, but I will give you my thoughts anyway. Elon Musk has come out and said this is not going to be a huge savings for the government, but anytime we're spending more money on something that people don't actually use, that's an example of something we should probably change. But what if I told you...
Elon Musk didn't actually say that at all. And in fact, Barack Obama said it all the way back in a speech in 2013. So it really shows that this has been a decades-long debate about keeping the penny around. It is this very emblematic thing of government waste. It's not Huge amounts of government weight is $85 million in the grand scheme of things.
But it's certainly one of those things where you look at it and say, it's just brutal to produce something that literally is worth one cent for over three cents. So you can just look at around the world, though, to see that other countries have successfully done this. Many would probably be surprised to learn that Canada got rid of its one cent coin more than a decade ago.
They just round up or round down at this point. So it might be tough psychologically for American consumers to go to a convenience store and see their 99 cent Arizona iced tea rounded up to a dollar. There is a legitimate psychological tax that happens when that occurs.
So maybe it's been tough to get Americans on board with it, but this could be finally the death knell for the penny that has just probably overstayed its welcome. Can I play devil's advocate?
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Chapter 5: What are Toby's trends on wearable technology?
Yeah, I guess my final point here is we're not really sure what the future holds for the penny because, as I said, Trump can't probably unilaterally do this. So he's going to have to get Speaker Mike Johnson on board and have someone pass a bill that will go through both chambers of Congress to end the penny. So we'll see what happens.
There clearly is more momentum than there has been in recent memory to get rid of the penny.
Up next, it's time for Toby's Trends.
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