Latest / Bloomberg Intelligence / Nike Sees Weakness Persisting; US Decides Against Renewing USMCA

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Nike Sees Weakness Persisting; US Decides Against Renewing USMCA · Bloomberg Intelligence

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  Speaker 2: People are looking forward turn around in Nike, particularly in China,
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  Speaker 2: on stocks trading up slightly here today, So let's break
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  Speaker 2: down the numbers with pud And Boyle, senior US e
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  Speaker 2: commerce and retail anels for Bloomberg Intelligence. You've been highlighting
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  Speaker 2: that you know, Nike's in the middle of this turnaround here,
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  Speaker 2: talk to us about what you learned on there from
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  Speaker 2: their earnings in a conference call.
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  Speaker 3: So there were a few things. You know, the turnaround
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  Speaker 3: is still very much underway, and it's not a full
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  Speaker 3: recovery yet or anywhere close to it, as if they've
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  Speaker 3: cut their forecast or I guess that sales are going
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  Speaker 3: to deteriorate further in the first half of their fiscal year,
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  Speaker 3: down by low to miit single digits in the first
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  Speaker 3: quarter and then down further in the second fiscal quarter.
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  Speaker 3: So that was a clear negative, but it was due
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  Speaker 3: to tougher comparisons from a year ago when they re
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  Speaker 3: entered wholesale in a more meaningful way and had higher
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  Speaker 3: digital promotions in Amia. That's said on the quarter, And
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  Speaker 3: to answer the first part of your question, Paul, China
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  Speaker 3: was better than expected, but still down seventeen percent. So
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  Speaker 3: what I would say is, you know, still a lot
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  Speaker 3: of work to be done in China, and it's not
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  Speaker 3: going to be an overnight fix. It will take twelve
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  Speaker 3: to eighteen months.
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  Speaker 4: Twelve to eighteen months sounds like a long time. Is
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  Speaker 4: there anything that Nike can do or Elliott Hill can
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  Speaker 4: do to kind of change a narrative more dramatically.
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  Speaker 3: I think there's a lot of things that need to
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  Speaker 3: be done. If you think about the US turnaround and
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  Speaker 3: what happened in the US. The first thing is to
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  Speaker 3: write size inventorI and that takes time. It takes twelve
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  Speaker 3: months sometimes longer, just to make sure that you can
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  Speaker 3: exit out of old inventory and bring.
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  Speaker 5: In new product.
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  Speaker 3: The other thing is in China, they need to bring
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  Speaker 3: Nike back to being a premium brand and work with
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  Speaker 3: the local endorsers the local market to really create exclusive
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  Speaker 3: product for the China marketplace.
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  Speaker 5: So there is a lot of work to be done.
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  Speaker 3: I think at their analyst meeting in mid November, they'll
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  Speaker 3: highlight a path to profitable growth in China. But once again,
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  Speaker 3: it's not going to be in the very near future
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  Speaker 3: that we see that happen.
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  Speaker 2: So from your perspective, you've covered the company for a while.
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  Speaker 2: Have they kind of lost their feel for the market.
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  Speaker 2: Have they lost kind of their magic a little bit?
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  Speaker 2: Or is just just blocking and tackling.
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  Speaker 3: It's just blocking and tackling. They definitely haven't lost their magic.
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  Speaker 3: I think they're doing all the right things. I think
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  Speaker 3: it's a big ship to turn and it just needs time.
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  Speaker 3: And I know investors are getting impatient, but I do
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  Speaker 3: think that they've worked down North America it's working. China
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  Speaker 3: is next, and I do think they'll right size China
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  Speaker 3: to It's just a matter of time and things will
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  Speaker 3: start to move as long as they continue to push
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  Speaker 3: out innovation, which they're working on. So I think we
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  Speaker 3: just need to give them a little more time.
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  Speaker 5: Still, how about the rest of the world.
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  Speaker 4: I mean, I see Nike, Nike's brand and you know,
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  Speaker 4: discussion of Nike pickup now that it's the World Cup
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  Speaker 4: in North America, and I wonder if that is providing
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  Speaker 4: a bit of a tailwind for the brand around the
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  Speaker 4: rest of the world, given that the World Cup is
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  Speaker 4: such a global enterprise.
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  Speaker 3: Absolutely, you know, Nike is premiumly positioned in the World Cup,
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  Speaker 3: and I think it will get tailwinds from the World Cup.
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  Speaker 3: I also think that sports is an important moment for
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  Speaker 3: not just Nike, but for all ath leisure brands. So
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  Speaker 3: their presence in the sports world at sporting events, not
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  Speaker 3: just for kit sales, but really going even beyond kit sales,
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  Speaker 3: really earns them the right to magnify sales and other verticals.
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  Speaker 3: So I do think the World Cup is a big
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  Speaker 3: opportunity for.
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  Speaker 2: Night And you know, Nike's like it's like Coca Cola.
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  Speaker 2: I mean, you find Nike and their branding and their
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  Speaker 2: logo in every single corner of the world. I don't
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  Speaker 2: care where you are. It's just amazing. Is there a
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  Speaker 2: way do you think do they think about ways to
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  Speaker 2: continue to broaden the monetization of their brand?
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  Speaker 3: Yeah, Look, Nike is the largest sports for a brand
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  Speaker 3: in the world, and it has the large lead over
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  Speaker 3: most other peers. So I think you will continue to
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  Speaker 3: see Nike throughout the world. I think women's is a
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  Speaker 3: big opportunity for them. I think it's one area where
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  Speaker 3: you probably don't see Nike in as much of a
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  Speaker 3: lead as it has been for men's. So I do
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  Speaker 3: think that there's more opportunity to even make Nike bigger
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  Speaker 3: across the globe.
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  Speaker 4: So when you look ahead, how much can a company
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  Speaker 4: like under Armor or these other brands that are trying
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  Speaker 4: to become global sports behemoths in the same way that
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  Speaker 4: Nike has and perhaps you know is trying to regain
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  Speaker 4: can learn from the journey that Nike's been on. I mean,
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  Speaker 4: it's been up, it's been down, and now it's kind
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  Speaker 4: of trying to climb its way back up again.
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  Speaker 3: I think the biggest learning and learning that any company
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  Speaker 3: could have from Nike is you can't get too comfortable, right.
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  Speaker 3: You have to keep the pedal moving on innovation because
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  Speaker 3: the consumer is responding and they're able to discover more
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  Speaker 3: today than they ever were with the Internet, with social media,
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  Speaker 3: et cetera. So to lead and to continue to lead,
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  Speaker 3: you have to remain on top of your game at
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  Speaker 3: all times, and innovation is key there.
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  Speaker 4: Stay with us more from Bloomberg Intelligence coming up after this.
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  Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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  Speaker 2: Talking about the global energy markets, we do that with
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  Speaker 2: Ellen Walld, Senior fellow at the Atlanta Council and President
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  Speaker 2: Transversal Consulting. Now, what Tom Keane likes to do is
• 6:07
  Speaker 2: see somebody says, oh, you went to Princeton. Did you
• 6:09
  Speaker 2: study under so and so and so and so? I
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  Speaker 2: have no idea When I see somebody who went to Princeton,
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  Speaker 2: I say, Ellen, what was your go to sandwich at
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  Speaker 2: HOGI Haven?
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  Speaker 5: Well, since I generally vegetarian kills up, so you didn't
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  Speaker 5: let sandwich?
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  Speaker 2: Yeah exactly, let us.
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  Speaker 5: But some people are disappoint.
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  Speaker 2: On that hill about their favorite sandwich there.
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  Speaker 5: What are we talking about?
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  Speaker 1: Oil?
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  Speaker 6: Here?
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  Speaker 2: Is all the risk out of oil at this point,
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  Speaker 2: I'm looking at WTI crew to oil. Ellen at you know,
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  Speaker 2: blow sixty nine dollars at a power. We're kind of
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  Speaker 2: kind of getting back to where we were.
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  Speaker 5: We're kind of getting back to where we were, but
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  Speaker 5: the market doesn't actually look like that it's just the
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  Speaker 5: futures prices. If you look at what's going on in
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  Speaker 5: not just in the United States, but around the world,
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  Speaker 5: we're not seeing anywhere near normal tank or volume. Yes,
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  Speaker 5: some oil is getting out of the straight and form moves,
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  Speaker 5: but it's nowhere near normal. We're also seeing a lot
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  Speaker 5: of gaps in US products. We've been doing a huge
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  Speaker 5: amount of exporting during this time, and so now we're seeing, yes,
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  Speaker 5: futures prices are down, but refineries are running out at
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  Speaker 5: full tilt. Our inventories are extraordinarily low.
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  Speaker 6: There was a.
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  Speaker 5: Slight build in the Cushing inventories in Oklahoma, but overall
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  Speaker 5: our world inventories are way, way, way down, and that
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  Speaker 5: really eliminates the kind of cushion that we've had in
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  Speaker 5: the event of, say, any kind of outage. So we're
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  Speaker 5: really kind of, i would say, running on the edge here.
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  Speaker 5: But it also doesn't look good for US crude oil
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  Speaker 5: drillers because they put in more grigs. Mean we have
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  Speaker 5: production has actually grown, and yet prices are now down,
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  Speaker 5: so they've brought more brigs online only to find that
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  Speaker 5: the price is now dropped. So we're in kind of
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  Speaker 5: a very odd situation where we're trying to normalize, and
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  Speaker 5: yet we can't. And so some things have normalized, like
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  Speaker 5: futures prices, but everything else is still way out of
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  Speaker 5: out of whack.
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  Speaker 4: Okay, So the point remains, though that the President is
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  Speaker 4: pushing gasoline retailers to do more to bring down gas prices.
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  Speaker 4: For John Tucker when he does drive into the city,
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  Speaker 4: what does what can the White House really do at
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  Speaker 4: this point?
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  Speaker 5: Essentially unless they want institute price controls, nothing, and they
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  Speaker 5: definitely shouldn't institute price controls. The point is this happens
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  Speaker 5: every time we have some kind of a price. Bike
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  Speaker 5: prices immediately go up a gasoline and they're slower to
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  Speaker 5: come down. And part of this has to do with
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  Speaker 5: just the way things work, and part of it also
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  Speaker 5: has to do with the fact that we while futures
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  Speaker 5: prices have come down, that's not necessarily reflective of the
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  Speaker 5: price that all of the people that make the gasoline
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  Speaker 5: are paying for the components and what they have to
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  Speaker 5: do to get them to your car, and so it's
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  Speaker 5: not The price of a barrel of oil does not
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  Speaker 5: automatically translate to the price of a gallon of gasoline,
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  Speaker 5: and so there's a lag between that, Yes, we should
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  Speaker 5: expect it to come down, assuming that our refineries continue
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  Speaker 5: to run unobstructed. We may have outages. It's extraordinarily it's
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  Speaker 5: going to be extraordinarily hot in some parts of the country,
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  Speaker 5: and that can also put pressure on refineries. They may
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  Speaker 5: not be able to operate at full capacity. So prices
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  Speaker 5: will come down, but it's going to be a slower process.
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  Speaker 2: So President Trump took to social media to kind of
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  Speaker 2: put some blame on the gasoline retailers for not charging,
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  Speaker 2: you know, not dropping their prices with the price of
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  Speaker 2: oil here. But my Phillip sixty sixth station that I
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  Speaker 2: go to in rout thirty five, is that retailer a
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  Speaker 2: price setter or a price taker?
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  Speaker 4: Good question, that's.
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  Speaker 5: A good question. So some you know, some retailers are
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  Speaker 5: you know, components of a larger oil organization and some
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  Speaker 5: are more independent, and so it really it really varies.
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  Speaker 5: And I would say that that right now, it's just
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  Speaker 5: that there is a very there's just a large gap
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  Speaker 5: in terms of what retailers might be paying for a
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  Speaker 5: barrel of oil and then what they can hint for gasoline.
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  Speaker 5: And so that will normalize. It's just a little bit
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  Speaker 5: higher now. However, it might not normalize if we go
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  Speaker 5: back to war with the Ron for example, which is
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  Speaker 5: something that they have been discussing. At least we've heard
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  Speaker 5: from Vice President Jadvans that there's definitely it seems like
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  Speaker 5: there's a mindset of let's kind of take this breather
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  Speaker 5: and refill, but this conflict is not over. And that
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  Speaker 5: certainly sends a message to refineries, It sends a messages
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  Speaker 5: to producers. It says match to everyone along that supply
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  Speaker 5: chain of you know, the danger is not over. You
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  Speaker 5: need to continue to prepare for outages shortages, and we're
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  Speaker 5: definitely not in that position. So it could cause some
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  Speaker 5: higher prices to remain. It could cause some stickiness simply
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  Speaker 5: because you know, if you tailers want to be sure,
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  Speaker 5: hey we want to make sure we can get those barrels,
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  Speaker 5: we're going to store them instead of putting them on
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  Speaker 5: the market.
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  Speaker 4: For example, Ellen, when it comes to the Strait of Hormuz,
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  Speaker 4: is is that waterway open or not? Aron set of
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  Speaker 4: foreign container ship ran aground while sailing through the street
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  Speaker 4: through a so called unauthorized route. Are there unauthorized routes
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  Speaker 4: and authorized routes? I'm confused as to whether this thing
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  Speaker 4: is open or not.
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  Speaker 5: I think everyone has a bit confused. I guess I
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  Speaker 5: would say the answer to that question depends on what
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  Speaker 5: open is and what your definition of open is. If
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  Speaker 5: you're talking about open as in the way things were
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  Speaker 5: before the war, the answer is absolutely not. Apparently that
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  Speaker 5: that waterway which is actually has a defined traffic separation scheme,
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  Speaker 5: it apparently has potentially a high number of mines in it,
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  Speaker 5: and so ships really need to avoid that. So there's
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  Speaker 5: the upper route, the northern route, which goes basically through
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  Speaker 5: Iranian waters. That's the so called authorized route that the
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  Speaker 5: IRGC is policing and and all that. And then there's
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  Speaker 5: a lower route, which goes through Omani waters, which seems
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  Speaker 5: to be a route that the US military is using
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  Speaker 5: to escort ships out of the Strait of hor Moves.
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  Speaker 5: It's unclear how many have come back in that route.
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  Speaker 5: Maybe some, but the Iranians do not want that lower
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  Speaker 5: route to be used. The Omanis have been giving a
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  Speaker 5: lot of conflicting information. They say, yes, it's open, we're
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  Speaker 5: not going to charge holes, and then they go and
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  Speaker 5: they say that Ridians, Yes, we're working with the Iranians
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  Speaker 5: to set up this system to charge. It's really, I think,
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  Speaker 5: a very fluid situation. It depends on who's got the ships,
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  Speaker 5: who's got the fire, you know, the air cover. We
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  Speaker 5: don't really know. It's kind of the wild West out there.
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  Speaker 4: Stay with us. More from Bloomberg Intelligence coming up after this.
• 12:47
  Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
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  Speaker 1: you get your podcasts, or watch us live toe.
• 13:02
  Speaker 2: Looking at gasoline here three dollars and eighty five cents.
• 13:05
  Speaker 2: It is a daily national average gasoline prices for regular,
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  Speaker 2: which is what I use. Matt Miller's a very upset
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  Speaker 2: with me. I'm just using like the really good stuff.
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  Speaker 4: What the premium? Yeah, only only car heads like Matt
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  Speaker 4: Miller paid premium, I know, But anyone else that's the
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  Speaker 4: cheapest unloaded.
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  Speaker 2: Yeah it does.
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  Speaker 4: I don't know.
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  Speaker 2: But then if you go to electric, maybe it just
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  Speaker 2: doesn't even matter anymore.
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  Speaker 4: Or hybrid where you don't have to fill up as often.
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  Speaker 2: Yes, And that's what we have for offspring number four,
• 13:27
  Speaker 2: who goes to school in California. And they pay like
• 13:29
  Speaker 2: a gazillion dollars a gallon there, so it made sense.
• 13:31
  Speaker 2: It's checking with Andrew Grant Bloomberg and EF, head of
• 13:34
  Speaker 2: Intelligent Mobility and get his thoughts on what's going on
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  Speaker 2: there with the electric vehicle business going.
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  Speaker 5: Forward, Andrew electric Vehicles. I think it's safe.
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  Speaker 2: From my perspective at least, the narrative has been the
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  Speaker 2: industry maybe got a little bit too far out over
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  Speaker 2: its skis and trying to convert from ice to EV.
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  Speaker 2: Where are we now? Do you think it as an
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  Speaker 2: industry right?
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  Speaker 6: Thank you? I have a good time that question. Just
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  Speaker 6: two weeks ago, we've published our annual flagship Electric Vehicle Outlook,
• 14:04
  Speaker 6: so lots of data to share on that front. The
• 14:07
  Speaker 6: OUTDOO this year is less exuberant than previous years, as
• 14:12
  Speaker 6: you were kind of alluding to there, but generally speaking
• 14:15
  Speaker 6: the charts still go up into the right. This is
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  Speaker 6: the second year that we've had to cut both our
• 14:20
  Speaker 6: near term and long term outlook for EV adoption, but
• 14:24
  Speaker 6: that really varies by market as you go from different
• 14:27
  Speaker 6: geography to geography. The biggest negative is in the US,
• 14:31
  Speaker 6: where there's been lots of regulatory setbacks weaker fel economy rules,
• 14:35
  Speaker 6: California losing its ability to sedatony equality standards, and subsequently,
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  Speaker 6: auto makers have pushed back a lot of their launch
• 14:43
  Speaker 6: plans for electric vehicles, but global electric vehicle stales are
• 14:48
  Speaker 6: still expected in at least in our outlook, to reach
• 14:51
  Speaker 6: over twenty three point three million vehicles this year. That's
• 14:55
  Speaker 6: eleven percent up from last year, slower growth, but still
• 14:58
  Speaker 6: prey strong growth and represents about twenty seven percent of
• 15:01
  Speaker 6: global passenger vehicle sales by the end of the year.
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  Speaker 4: Okay, so the US might be turning away from evs,
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  Speaker 4: but the rest of the world that most certainly is not.
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  Speaker 4: I've been trying. I've been in the market for a
• 15:11
  Speaker 4: used hybrid, not a plug in, but a regular hybrid.
• 15:14
  Speaker 5: For my parents.
• 15:15
  Speaker 4: I want something with low mileage, and I've been going
• 15:17
  Speaker 4: to different car lots and it's been really hard to
• 15:19
  Speaker 4: find hybrids for whatever reason, maybe because everyone's looking for
• 15:23
  Speaker 4: it with the recent spike up in gas prices, and
• 15:26
  Speaker 4: so I guess my question to you, Andrew, is if
• 15:29
  Speaker 4: it's so hard to find hybrids, is that because a
• 15:32
  Speaker 4: lot of the automakers are not offering them. I know
• 15:34
  Speaker 4: that Toyota and Honda are kind of the leaders when
• 15:37
  Speaker 4: it comes to hybrids, but you know, have the big
• 15:39
  Speaker 4: US automakers kind of caught up with this at all.
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  Speaker 6: I mean, hybrid cerve is something we cover in the report.
• 15:46
  Speaker 6: We focus primarily on vehicles with the plug, but hybrids
• 15:49
  Speaker 6: are a big part of the story. They can reduce
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  Speaker 6: submissions by anywhere from ten to thirty percent, depending on
• 15:55
  Speaker 6: the type of technology that you're talking about, and it
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  Speaker 6: has proved particularly popular in certain markets the US, Japan
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  Speaker 6: as well. A lot of the vehicles are the hyper
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  Speaker 6: vehicles are coming from Japan. But really is probably something
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  Speaker 6: that was considering in addition to the fuel price and
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  Speaker 6: the fuel savings, there is just how well some of
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  Speaker 6: these vehicles hold up in the used vehicle markets. We've
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  Speaker 6: seen residual prices for hybrids hold up quite a lot
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  Speaker 6: better than some of the battery electric vehicles. That is
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  Speaker 6: improving over time, but you're getting more return when you
• 16:29
  Speaker 6: come to sell your vehicle in most markets, so that's
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  Speaker 6: certainly pushing things up in that market. It will take
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  Speaker 6: kind of another decade or so in our outlook before
• 16:40
  Speaker 6: battery electric vehicles start out selling hybrid vehicles in the
• 16:44
  Speaker 6: United States, but in markets like China and Europe, battery
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  Speaker 6: electric vehicles are already out selling those hybrid vehicles.
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  Speaker 5: In those markets.
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  Speaker 2: You talk about where there is successful adoption to electric vehicles,
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  Speaker 2: how much government subsidies, what's the role of government subjects play,
• 16:59
  Speaker 2: how long the governments have to support these programs.
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  Speaker 6: I mean, that's the question that government officials ask us
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  Speaker 6: quite a bit. How much do they have to provide
• 17:08
  Speaker 6: upfront purchase incentives and then how long do they have
• 17:10
  Speaker 6: to provide other incentives around charging, infrastructure build out. There's
• 17:14
  Speaker 6: certainly a lot of money that is flowing into this space.
• 17:17
  Speaker 6: By our account, there's about nine hundred and forty billion
• 17:20
  Speaker 6: dollars that are being spent on electric vehicles this year.
• 17:24
  Speaker 6: As far as upfront incentives, a lot of those are
• 17:27
  Speaker 6: starting to go away in various geographies around the world,
• 17:30
  Speaker 6: even in China, where there is significant evy uptake, that's
• 17:34
  Speaker 6: becoming quite an expensive burden to bear. So a lot
• 17:37
  Speaker 6: of those upfront purchase incentives are going away, and that's
• 17:40
  Speaker 6: part of the reason we see growth flowing for just
• 17:43
  Speaker 6: a bit in that market, which has a significant impact
• 17:46
  Speaker 6: on our outlook. But we'll see if that kicks on
• 17:50
  Speaker 6: from here. There's really been one hundred and fourteen billion
• 17:53
  Speaker 6: dollars spent on charging infrastructure by our account. That needs
• 17:57
  Speaker 6: to increase by the six hundred thirty five billion dollars
• 18:01
  Speaker 6: between now and twenty forty two to meet the Charging
• 18:04
  Speaker 6: Infrastructure command our appook. So a lot more needs to
• 18:08
  Speaker 6: be It needs to be spent, a lot more incentives
• 18:11
  Speaker 6: that come as part of that as well.
• 18:13
  Speaker 4: Stay with us. More from Bloomberg Intelligence coming up after this.
• 18:20
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• 18:24
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• 18:27
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• 18:31
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• 18:35
  Speaker 4: The US deciding against renewing its trade deal with Canada
• 18:38
  Speaker 4: and Mexico, the US MCA choosing instead to conduct annual
• 18:42
  Speaker 4: reviews of the pact. Let's bring in Nick Watams. He
• 18:46
  Speaker 4: is joining us from Washington right now. Nick, this sounds
• 18:49
  Speaker 4: incredibly disruptive, this idea that the three countries would conduct
• 18:53
  Speaker 4: annual reviews of the pact rather than, you know, figure
• 18:56
  Speaker 4: out what they want and kind of hold to a
• 18:59
  Speaker 4: treaty the way that we've done in the past.
• 19:02
  Speaker 7: Yeah, I mean, it's important to note that the USMCA
• 19:04
  Speaker 7: does remain in effect for now. But what you essentially
• 19:07
  Speaker 7: see as President Trump injecting a new way to sort
• 19:12
  Speaker 7: of push the US negotiating position. I mean, listen, you know,
• 19:15
  Speaker 7: USMCA was a landmark of his first administration. He called
• 19:19
  Speaker 7: it one of the greatest deals ever made. But he
• 19:22
  Speaker 7: found in the second term that this was really an
• 19:25
  Speaker 7: impediment to his desire to impose sort of broad tariffs
• 19:29
  Speaker 7: on certain sectors the economy with Canada and Mexico. The
• 19:33
  Speaker 7: agreement essentially acted as a shield against that. So what
• 19:37
  Speaker 7: you're going to see, I think is the USMCA remaining
• 19:40
  Speaker 7: in effect, but the President trying to chip away at it.
• 19:43
  Speaker 7: And indeed, automakers, there are a lot of sectors that
• 19:48
  Speaker 7: are really going to be impacted by this and are
• 19:50
  Speaker 7: going to feel the squeeze.
• 19:52
  Speaker 2: Why is the US doing this, Nick, do you think?
• 19:55
  Speaker 7: Well, I think the big thing is tariffs. Trump really
• 19:58
  Speaker 7: likes tariffs. Tariffs have been a huge weapon in his
• 20:02
  Speaker 7: arsenal in the second term, and the USMCA essentially means
• 20:06
  Speaker 7: that he can't really inject or impose tariffs on certain
• 20:11
  Speaker 7: sectors of trade having to do with two massive US
• 20:16
  Speaker 7: trading partners, Canada and Mexico, so he wants to figure
• 20:21
  Speaker 7: out ways to either change the terms of the deal.
• 20:23
  Speaker 7: There will be these rolling negotiations over time, so he
• 20:26
  Speaker 7: can get what he would potentially see as more favorable
• 20:30
  Speaker 7: terms than the ones he negotiated, you know, six years ago.
• 20:35
  Speaker 7: But generally it doesn't allow him to tariff sectors of
• 20:38
  Speaker 7: the economy and get rid of those trade deficits that
• 20:42
  Speaker 7: he so despises.
• 20:43
  Speaker 2: So for some to me, it kind of feels like
• 20:47
  Speaker 2: the USMCA has lost most, if not all, of its teeth.
• 20:51
  Speaker 2: That one could argue there really is an agreement. Everybody's
• 20:54
  Speaker 2: all three countries. I mean, Canada Mexico presumably can be
• 20:57
  Speaker 2: open to trade sanctions, tariffs at any point now, right.
• 21:02
  Speaker 7: I mean, your question really points to the big issue here,
• 21:05
  Speaker 7: which is there is so much we don't know about
• 21:08
  Speaker 7: what happens next. Because you know, what is clear is
• 21:13
  Speaker 7: that USMCA does remain in effect for now, but that
• 21:16
  Speaker 7: hasn't stopped the president in the past from saying, Okay,
• 21:19
  Speaker 7: I'm going to impose these tariffs. So there are plenty
• 21:23
  Speaker 7: of scenarios where he could basically contravene the terms of
• 21:27
  Speaker 7: the USMCA and say I'm going to impose tariffs on
• 21:30
  Speaker 7: certain sectors of the economy, on certain elements of trade
• 21:34
  Speaker 7: that I don't like and that may violate the USMCA,
• 21:37
  Speaker 7: But we can leave that for the courts to decide,
• 21:40
  Speaker 7: and in the meantime, I'm going to impose those tariffs.
• 21:42
  Speaker 7: So you know, even if we're still trying to get
• 21:44
  Speaker 7: a sense for the details and what it means, it's
• 21:47
  Speaker 7: definitely a situation that is not going to be welcomed
• 21:51
  Speaker 7: by Canada or Mexico and is going to really have
• 21:55
  Speaker 7: an impact on automakers all sorts of other importers into
• 22:00
  Speaker 7: the US from these two countries who might say, Okay, hey,
• 22:02
  Speaker 7: we're gonna hold off investment for now until we see
• 22:05
  Speaker 7: the way things shake out.
• 22:08
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