Morning Brew Daily
Southwest Scraps Free Checked Bags & Tariffs Hit Steel and Aluminum
Wed, 12 Mar 2025
Episode 537: Neal and Toby discuss why Southwest is ditching one of its most prized perks: ‘2 bags fly free’ and why the airline industry is still struggling to takeoff. Then, Trump scares markets with a hike of Canadian steel and aluminum tariff to 50% but quickly pulls back. But the 25% is still happening. Plus, Greenlanders will have their say on their independence during their election and are sitting on a goldmine of valuable minerals. Also, Japan is seeing record snowfall which has skiers from all around the world flocking to its resorts… Which is also causing safety challenges. 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
What changes has Southwest Airlines made to its baggage policy?
Yeah, it shows that investors, pardon the pun here, don't have nerves of steel. The big issue is that Canada is the top foreign source of steel and aluminum that is used in just everything that you mentioned. Cars, planes, soda cans. So these import taxes, yes, they could boost U.S. steel makers, could boost their bottom lines, but it also could make U.S. manufacturing a lot more expensive.
Auto industry execs in particular are very nervous about this because of how much aluminum and steel go into their vehicles. So it's Yes, it has been just this one. It was kind of everyone was really scared a little bit yesterday when those tariffs were at 50%. We have backed down a little bit from that down to 25%. But still, it is alarming that for auto manufacturers in particular and U.S.
manufacturers that their input costs are going to be raised so much.
Yeah. And this is not the first time that Trump has input imposed tariffs on steel and aluminum. He did it back in 2018 during his first term. And that might be instructed to see what the impacts might be this time around. Prices for both metal, steel and aluminum rose significantly.
two percent and imports fell by a quarter that is probably the intended uh effect of tariffs it's supposed to raise prices to help out uh domestic manufacturers who are competing with foreign metals at the same time it raised prices uh companies like caterpillar uh raised prices for customers citing a hundred million dollar loss loss and profit from from those tariffs.
So you see the give and the take from tariffs last time those President Biden actually kept those tariffs on for many of the U.S. trade partners, rolled them back a little bit. So steel and aluminum tariffs have been with us for a while and they're just coming back to the entire world right now.
And Canada plays an outsized role in the global aluminum market. Actually, most of their aluminum does end up across the border in America. 90% of its aluminum exports go to the U.S. But one thing that is interesting about Canada is that they don't actually have a lot of the raw materials you need to make aluminum. bauxite is actually raw aluminum ore. They don't have any of that.
Most of that comes in from Brazil. What they do have is an abundance of cheap hydroelectric power, which, again, we've talked about it. This is something that gets imported over the border. This was part of the entire spat to begin with. But their hydroelectric power infrastructure makes it one of the top producers of aluminum.
So it's not just that they have a bunch of aluminum ore laying around the country. It's just that they're very good at fashioning it into aluminum itself.
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