Latest / Beyond Fulfillment Podcast / Rare Earths, Trade Policies, and Inflation: The Real Impact of Trump’s Tariff Strategy

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Rare Earths, Trade Policies, and Inflation: The Real Impact of Trump’s Tariff Strategy · Beyond Fulfillment Podcast

• 0:00
  Foreign.
• 0:07
  Dave Gulas, Beyond Fulfillment Podcast special edition.
• 0:10
  Back again with my good friend Jim Tompkins.
• 0:13
  Good morning, Jim.
• 0:14
  Good morning, Dave.
• 0:15
  Good to see you.
• 0:16
  Likewise.
• 0:17
  So we're continuing on with our ongoing series about the tariffs and the impact on the supply chain.
• 0:25
  So let's just catch up here.
• 0:26
  Jim, so what's been going on over the last week with the tariffs and in particular regards to China?
• 0:35
  Yeah, so the, the big, the big prize is a China agreement.
• 0:42
  And as we were talking just a few minutes ago, Trump says a deal is done.
• 0:50
  China is a little bit more conservative, and they are saying a consensus had been established.
• 0:57
  And now to.
• 0:59
  How do you translate that from Chinese into English?
• 1:02
  Well, what that means is when they say a consensus has been established, that is a real signal that they believe we are well past the halfway mark and we don't expect any surprises between here and the end.
• 1:18
  The US Translation that we're getting out of the government is that a framework has been established.
• 1:26
  And what Trump is saying is a deal is done.
• 1:29
  So it's really interesting to read these different phrases.
• 1:35
  I think most consistent phraseology is consensus from China equals framework from the U.S.
• 1:43
  however, consensus A little bit further along than framework.
• 1:49
  But now Trump has gone a little bit further along saying a deal is done.
• 1:52
  Now, it depends what you're talking about.
• 1:54
  Quote, deal is done.
• 1:56
  It is clear that China has reduced their tariff for us from 125% to 10%.
• 2:05
  So it went down 115 points.
• 2:09
  Now, is 115% significant?
• 2:12
  Absolutely.
• 2:13
  I mean, I mean, something like 100 points is the difference between being turned on or being turned off.
• 2:21
  If you put a hundred percent tariff on someone, it's off.
• 2:24
  There's nothing being traded.
• 2:25
  So 100% tariff cost you the exact same thing as a 1000% tariff because no one is going to trade at that rate.
• 2:33
  And so that's what's interesting.
• 2:35
  Both the US and China came off 115 points, which is the consistency.
• 2:41
  We see China went from 125 to 10, and we're seeing the United States saying they went from 145 down to 30.
• 2:50
  Now, the question is, why did they start at 145?
• 2:53
  Because, in fact, at one point, they were at 154.
• 2:57
  I'm not sure what happened to those nine points, but China has said we went from 125 to 110.
• 3:03
  Excuse me, from 125 to 10, a drop of 115%.
• 3:08
  And the US sent, we went from 145% to down to 30%, which was 115% drop.
• 3:16
  So that's some parity there.
• 3:19
  Now there's some things not quite included.
• 3:21
  The aluminum and steel is not included.
• 3:23
  The fentanyl is not included.
• 3:25
  And some people are saying, yes, the US dropped from 145 to 30, but that 30 is really 55% if you do the add ons.
• 3:35
  And so how do you get that confusion?
• 3:37
  Well, well, there's a question about when are we negotiating tariffs and when are we talking about trade policies?
• 3:46
  And that's where we kind of get a little bit of an interesting wiggle here is yes, the tariff is now down to 30, but it's really 55.
• 3:59
  What explains that 25?
• 4:00
  Well, there's 25 points in there for fentanyl, for semiconductor trade policies and so forth.
• 4:07
  So there is a real clarity that a lot has been done that they're both projecting a drop of 115%.
• 4:16
  And so I do believe a deal is essentially done.
• 4:19
  And I think where we need to go now is with some trade policies as far as the rest of the world.
• 4:26
  The rest of the world is now serving until July 9th because of the delays of the tariffs, about a 10% blanket tariff.
• 4:35
  And now there are some exceptions to that in different countries, but for the most part right now, the tariff from the US on other countries has been dropped to 10%.
• 4:48
  And so Trump's negotiation of starting off at 40% and 30% and 42% and all those numbers and now dropping them down to 10, people are saying, boy, that's a relief.
• 4:59
  We can live with 10%.
• 5:00
  So the rest of the world is kind of cool, they're kind of relaxed.
• 5:04
  Trump has said that in the next one to two weeks, he said this last week, in the next one to two weeks, we're going to see letters that are going to be coming out to 150 countries.
• 5:17
  And these 150 countries are basically going to be, you know, this is your option, either take it or forget it.
• 5:24
  And so if you want to trade with us, you're going to take the deal.
• 5:27
  Now the top 15 to 20 countries are going to have their own deals negotiated.
• 5:31
  A lot of that's already ongoing.
• 5:33
  A lot of that's been decided.
• 5:35
  UK has been decided.
• 5:36
  India, South Korea, Japan have essentially been decided.
• 5:40
  And so we're knocking those off.
• 5:42
  So we are where you and I talked about earlier, by late June, early July, we are going to have the tariff thing basically decided.
• 5:52
  And we're going to be in some pretty good shape.
• 5:55
  So great, great, great progress made in the last Couple of weeks.
• 6:01
  The fact of the matter is China cannot go on longer without a deal.
• 6:05
  And the fact of the matter is US cannot go on further without a deal.
• 6:09
  And so they have come together and we now have a deal deadline, July 9, that Trump set.
• 6:15
  We're going to beat that.
• 6:17
  And I think tariffs are going to be done by what we said originally, late June, early July.
• 6:23
  Now, an interesting thing that's happening.
• 6:25
  You and I, Dave, we know this, but the audience doesn't.
• 6:28
  You and I are talking.
• 6:29
  It's now 10 after 9 on Monday morning.
• 6:32
  It's starting this morning at 9 o' clock.
• 6:35
  Prime Minister Kerry from Canada and President Trump had an off the record call, a discussion face to face in Alberta in Canada.
• 6:46
  And the discussion there is going to be heavily focused on tariffs.
• 6:50
  And then we note that Prime Minister Kerry obviously have the seven there.
• 6:59
  Canada, France, Germany, Italy, Japan and the UK and the US but then Prime Minister Kerry, being the host, he also has decided to invite India, which obviously is a very large economy and is very involved with India, with
• 7:15
  the United States and is leaning towards the United States.
• 7:18
  And then he's invited Mexico, the president of Mexico was there, which is extremely interesting because Kerry's going to want to talk about the USMCA in further detail.
• 7:30
  And so he's got Mexico, he's got Canada, he's got us all at the same meeting.
• 7:35
  And he's also invited Ukraine.
• 7:38
  And so it's going to be an interesting set of meetings.
• 7:41
  I imagine there's going to be some interesting observations about tariffs, some interesting observations about the Israel, Iranian war, some discussion about Ukraine, obviously some discussion about Gaza, and then a lot of discussion about tariffs.
• 7:57
  So it's a very interesting time of progress, but more to come even in this week.
• 8:07
  Okay, and you mentioned trade policies just a minute ago.
• 8:10
  What's happening there?
• 8:13
  Well, this is the thing that really got the United States and China together because we each have a major problem.
• 8:21
  The problem that China has is that they're not doing trade with us and, and that's hurting their economy in a very significant way.
• 8:33
  And we have put in trade policies which are restricting them from further growth.
• 8:40
  And the three things that were negotiated when they were together in London last weekend or the weekend before actually, is that China now has a clear path to jet engines.
• 8:53
  That's not a tariff issue, that's a trade policy where we were restricting that from taking place.
• 8:59
  China now also has the ability to get the artificial intelligence, semiconductors.
• 9:06
  It's not clear what happened on the AI programming that that has not been mentioned.
• 9:14
  And then the third issue was the visas for the college students.
• 9:18
  That's very important.
• 9:19
  Trump pulled all China students visas.
• 9:22
  They've now returned them.
• 9:23
  So there was four issues on the table from a trade policy point of view from that China wanted from us.
• 9:29
  They got the jet engines, they got the AI semiconductors, they got the student visas, they did not get the AI software.
• 9:38
  And so they got.
• 9:39
  Three out of four.
• 9:40
  US Came to the table with one thing and one thing only.
• 9:43
  Rare earth minerals.
• 9:44
  We have to get rare earth minerals.
• 9:48
  There's other places in the world that need them worse than we do.
• 9:51
  Europe specifically is in big trouble.
• 9:53
  They're closing down automotive assembly plants because they don't have enough rare earth minerals.
• 9:59
  But the United States also is hurting on rare earth annuals.
• 10:02
  And so what we had agreed to originally with them about a month ago is that they were going to free up on that.
• 10:08
  Well, they did free up on it, but they did it through this licensee program that turned out to be a huge amount of bureaucracy.
• 10:14
  And so what was implied there was going to be something, you apply for a license, we give it to you.
• 10:18
  The next day.
• 10:19
  It turned out you apply for a license and maybe you get it sometime next month, two months, three months.
• 10:28
  And, and we didn't get the rare earth mineral.
• 10:30
  So we now have that solidified.
• 10:33
  So rare earth minerals, air jet engines, student visas, that was the big trade policy stuff that took place over the last week or so.
• 10:43
  Okay.
• 10:43
  And since you mentioned rare earth minerals several times just there, let's just expand on that.
• 10:48
  Can you help our listeners better, like why those are so important?
• 10:54
  Well, you know, rare earth minerals, I could list all 17 if you wanted me to, but I'd have to look it up again because I keep forgetting them.
• 11:04
  I do know they all end in imu ium and I don't know what they are.
• 11:08
  Okay, so there's these.
• 11:09
  The end.
• 11:10
  The interesting thing is, and this is going to sound funny, rare earth minerals are not rare, okay?
• 11:18
  They're, they're in abundance.
• 11:19
  And so you kind of go, why did you call?
• 11:21
  Well, the reason they're rare is because we don't want the, the, the raw minerals.
• 11:26
  We want them.
• 11:27
  Number one, you got to do mining.
• 11:29
  And number two, you have to do processing.
• 11:31
  The mining and processing of rare earth minerals takes a long time to deploy.
• 11:37
  And it's, it's very, very, very expensive.
• 11:40
  And so what we have is the.
• 11:43
  Where are rare earth minerals in the, in the world?
• 11:47
  They're in China, they're in Brazil, Russia, Ukraine, U.S.
• 11:50
  canada, Republic of Congo, Greenland, Australia and Vietnam.
• 11:55
  So some people say, why is Trump so excited about Greenland?
• 11:58
  It's rare earth minerals.
• 12:01
  So rare earth minerals are in abundance in Greenland, but they're not farmed at all.
• 12:06
  Why?
• 12:06
  Because the coal, the cost of getting them out of the ground is way, way, way out of line.
• 12:11
  And so you really gotta have a very, very optimistic view of mining technology if you're going to do that.
• 12:18
  If Greenland doesn't find big money from the US or Denmark or somebody.
• 12:24
  Although I did notice Marcon from France was in Greenland yesterday on his way over to Alberta.
• 12:31
  He stopped in, in Greenland and he's giving a big speech that, you know, you are Europe, we are together.
• 12:39
  I wonder if France is looking at making an investment because getting those minerals out of the ground is going to be very expensive.
• 12:46
  But what we find is that today about 90% of the rare earth minerals in the world that are processed are done by China.
• 12:57
  So they have a monopoly on this.
• 12:59
  They saw this coming.
• 13:00
  Rare earth minerals, they're the, what you need primarily for those is their magnets.
• 13:07
  Very high, powerful magnets that are in essentially every motor of anything.
• 13:12
  And so the automotive industry, which has a huge number of motors, a really need of rare earth minerals.
• 13:20
  And that's the really the stickiest of all the points.
• 13:24
  And in fact, if you want to get more specific, electric automotives has more rare earth minerals in it than a gasoline automotive.
• 13:34
  And so cars are a big, big deal.
• 13:37
  But also we find the big deal is in smartphones, LED lights and defense systems.
• 13:44
  And so that's where it's somewhat of a tacky issue.
• 13:48
  The United states today gets 77% of its rare earth minerals from China.
• 13:55
  That's dangerous.
• 13:56
  And in fact, all automotive companies from the United States have gone to Trump and saying we got to get more rare earth minerals.
• 14:03
  We, we now are down to a 40 day supply.
• 14:07
  And then some of the automotive countries claim a 30 day supply.
• 14:10
  And so they're getting close to not having the motors even for the windshield wipers and all the other motors in the cars we don't have.
• 14:18
  They're also needed obviously for smartphones and LED, which is very, very popular.
• 14:24
  Japan in 2010 got 91% of the rare earth minerals from China.
• 14:31
  They've, over the last 15 years, they have spent $10 billion on mining and refining and they're now down to 58% dependency upon China.
• 14:45
  So that kind of gives you a little bit of a view of where they are.
• 14:49
  So Japan is the leader in diversifying their sourcing of rare earth minerals.
• 14:54
  And there's still 58% depend upon China.
• 14:59
  The worst country or the worst series of countries is Europe.
• 15:04
  99% of the rare earth minerals in Europe come from China.
• 15:10
  And so there's a real, real, real problem here.
• 15:13
  You notice in that list is Republic of Congo.
• 15:18
  President Trump, although he's having some difficulty with this, is also eyeing Republic of Congo.
• 15:24
  The cost of getting rare earth minerals out of the earth's crust in the Congo is about half of the cost of getting it out of the earth's crust in Greenland.
• 15:33
  And so Congo is very attractive as well.
• 15:37
  But there's some other political issues there.
• 15:39
  The US does have an agreement with getting rare earth minerals out of Ukraine.
• 15:44
  That'll really be good.
• 15:46
  And in fact, there's a lot of rare earth minerals in the United States.
• 15:49
  But now we're trying to get the mining rights and then figure out the mining and then the processing and so forth.
• 15:54
  So this is a problem that's going to be with us for at least another 10 years, independent of how high a priority we make on it.
• 16:01
  Congratulations to China for understanding this early.
• 16:05
  They jumped on it back in 2005, and they're way ahead of the rest of the world, so we need to catch up.
• 16:11
  And at this point, they got a stranglehold on us with rare earth minerals, but we have a stranglehold on them with respect to AI and jet engines and education for their students.
• 16:22
  And so it's kind of a detente.
• 16:24
  And this is interesting how these become very, very important.
• 16:28
  If you would have told me three years ago that rare earth minerals was going to be the thing that was going to change the path of global trade, I would say I don't think so, Dave.
• 16:39
  I knew what a rare earth mineral was for about the last five years, but I didn't pay any attention to it until about two years ago when I started understanding how China had dominate to this industry.
• 16:49
  And you go, oh, wow, they really figured it out early.
• 16:52
  That's what, I guess what I would call insightful leadership.
• 16:56
  They really did a great job there.
• 16:59
  Okay.
• 17:00
  All right, so switching gears, let's talk about the tariff revenue for the U.S.
• 17:04
  what's been the impact there?
• 17:07
  Well, it's really interesting because virtually all the tariffs on hold except for a flat 10%.
• 17:17
  And in China, it's a flat 30%.
• 17:21
  China and Hong Kong both have 30%.
• 17:23
  But if we look at the tariff income, in the month of March, United States made 19.5 billion.
• 17:32
  In April, we made 25.8 billion.
• 17:36
  And in May, we made 23 billion.
• 17:38
  That was the income.
• 17:39
  That's a total of 68.3 billion, which is more than double what we made in prior years on tariffs.
• 17:48
  And so the tariff income is becoming significant.
• 17:52
  Now, if we look at the three months, March, April, May that I stated, which are the highest incomes on tariffs we've had in many, many, many years as a percentage of the total GDMP as far as actual dollars,
• 18:07
  these are record numbers.
• 18:08
  All three of these are record months.
• 18:12
  But if we look at those three months of March, April and May of 2025, that's only 11% of the federal income tax.
• 18:21
  If we look at the entire year to date.
• 18:24
  So before the 10% tariffs went on by Trump, it was only 5%.
• 18:29
  So the total money we've got in since January to now would only run 5% of the federal government.
• 18:37
  If we look at the rate of the last three months, it would be 11% of the federal government.
• 18:44
  That's small numbers.
• 18:45
  5%, 11%.
• 18:46
  But it's a lot of money.
• 18:48
  It's a lot of money.
• 18:49
  And so that's going to be money we can spend on other things or money that we can place against the balance of trade deficit.
• 18:58
  And certainly a key is to get our balance for trade deficit wiped out and turn that into a surplus.
• 19:05
  And so I believe if we deploy the 10% plus some of these special things across the board, we're going to wind up being able to take about a 20% tax cut from income taxes.
• 19:17
  And then if we look at our GNP growing by doing other smart things, I start to see a path to a balanced budget.
• 19:27
  So it's making sense to me and it's real exciting to see those numbers climb up and make a difference.
• 19:33
  Okay, yeah, appreciate you clarifying that and explaining how the impact of those numbers.
• 19:38
  So with the, the tariff activity, what's been the impact on the trade deficit and inflation specifically?
• 19:46
  Well, the trade deficit had a great April.
• 19:52
  In the month of April, our trade deficit was $61 billion.
• 19:58
  Okay, so that means we exported.
• 20:05
  Well, so in the month of March, the trade deficit was 140 billion.
• 20:16
  So it went down by 61% from 140 billion to 61 billion.
• 20:25
  It went down by, you know, it's half of what it was.
• 20:29
  And this is done by a record of 16% drop in imports and a 3% import increase in exports.
• 20:40
  Now, this is really, really good news.
• 20:43
  This is great news and it's significant.
• 20:48
  However, in fairness, we need to understand that this is a little bit.
• 20:55
  We're cooking the books on the supply chain side because we are front loading shipments to get ahead of the tariffs.
• 21:01
  And so the export drop in April is in fact a result of US Exporting us having more.
• 21:17
  Excuse me, I said that wrong.
• 21:19
  The trade deficit going down to 61 billion is a result of a 16% drop in imports.
• 21:27
  And that 16% imports is really not a real number because the fact of the matter is we imported that stuff early.
• 21:35
  That stuff came in in February and March.
• 21:39
  And so people brought stuff forward.
• 21:42
  So to say that the tariffs have allowed us to balance up our trade deficit by half would not be accurate because we did for that one month.
• 21:53
  But that trend is not going to continue.
• 21:55
  So I hope I did I make that clear, Dave?
• 21:57
  I think yeah.
• 21:58
  Okay, got it.
• 21:59
  Okay.
• 22:00
  Now inflation, the other half of the question.
• 22:03
  Now this is where we have very interesting information.
• 22:06
  And you recall that you and I had a talk a while back when we were talking about experts opinion and one of the experts opinion I didn't like is that the concept that tariffs are inflationary.
• 22:18
  Well, we now really have tariffs.
• 22:20
  Now.
• 22:21
  They've only been in place for three or four months.
• 22:23
  So maybe once again, it's not quite fair to say that tariffs aren't impacting inflation.
• 22:30
  However, to date, the consumer price index rose just 2.3% year over year through April through May, it's probably going to be about 2.4%.
• 22:44
  And if you compare that to where we were a year ago, our inflation was running about 9%.
• 22:50
  And so not only have the tariffs not resulted in increased inflation, the fact of the matter is the increased inflation has not hit the consumer yet.
• 23:04
  Now that again, to be fair, it still may be coming because it hasn't been passed down yet.
• 23:10
  And people been bringing stuff in early.
• 23:12
  And so once it's on the shelf in most stores, they're going to sell it.
• 23:16
  If it came in without a tariff, they're going to sell it without a tariff.
• 23:19
  There's some stores that are playing games with that, but most of the large chain are doing that well.
• 23:25
  But there's a couple of things we can look at that Trump actually ran on in his election.
• 23:30
  Once again, I'm not making political statements here.
• 23:32
  I'm just stating the fact that the four things that were really three things that were really significant to Trump when he was running for office was gasoline, eggs and coffee.
• 23:45
  Those were the three kind of prime indicators that we were looking at.
• 23:51
  And if you look at gasoline, gasoline prices have dropped sharply.
• 23:56
  In April 2025, it was a 30% reduction over April 2024.
• 24:03
  So it did not inflate.
• 24:05
  It went down by 30 cent.
• 24:07
  Eggs have gone down substantially.
• 24:10
  And in fact, egg prices today are the same places they were in mid-2022.
• 24:17
  Now, once again, let's not try to misread these.
• 24:21
  You can play a game with that and say, oh, you see, tariffs are not inflationary.
• 24:25
  But the fact of the matter is in 2024 we had this chicken flu and we were killing the chickens, not getting eggs.
• 24:32
  And so there's a little bit of difficulty of looking at that number.
• 24:35
  But if we're looking at pure prices of eggs today, the eggs prices are down to 2022 numbers, which is well, well, well below the rate they were selling a year ago.
• 24:48
  Coffee once again has not shown any increases in prices.
• 24:55
  And in fact the prices are stable.
• 24:57
  They're unchanged from 2023.
• 25:01
  The issue here though is that that doesn't really, in fairness, an inflation issue, even though it was one of the prime things people were looking at.
• 25:10
  The fact of the matter is we had very poor harvest of Coffee in 2024.
• 25:15
  So out of fairness, we gotta, we gotta look at that and understand where we are.
• 25:20
  So, you know, you can look at gasoline and say, wow, it's great.
• 25:22
  You can get eggs and say it's great.
• 25:24
  You can get coffee and say it's great.
• 25:25
  But there's another side to each one of those stories that could give us a different conclusion.
• 25:31
  However, if we look at overall inflation, inflation is not an issue today.
• 25:39
  The inflation is basically at the rate that the Fed wants it at.
• 25:44
  And so tariffs have not hit inflation yet.
• 25:49
  And I believe if in fact we have a deal with China, we'll have a deal with other countries, inflation will not be hit.
• 25:58
  And in fact, I think we'll actually be able to buy more groceries and more things than we were able to before.
• 26:04
  And so we're going to have a little bit of leeway for the consumer to spend, have more spending money.
• 26:12
  Okay, now I also hear you saying that the uncertainty due to tariffs will largely be over by July.
• 26:20
  So what impact does that have on the location of warehouses within the U.S.
• 26:26
  Now, I love that question, Dave, because now you're forcing us to stop looking at tariffs, but now what you're doing is forcing us to look at how does affect the supply chain and what do we do with all
• 26:42
  this blah, blah, blah about tariffs.
• 26:45
  And so that's really wise on your part.
• 26:49
  I want to take a step back on that question before I move it forward.
• 26:56
  And stepping back, if I look at The Chinese book, the Art of War, which really is not about war, it's really about strategy and business as well as war.
• 27:10
  But in the book, probably the greatest quote you hear from that book all the time, if you know the enemy and know yourself your need, you need not fear the result of the next hundred battles.
• 27:27
  So what that says is what we in the US need to do is understand China and we got to understand the US and what the Chinese need to do, they need to understand the Chinese and they got to
• 27:40
  understand the U.S.
• 27:41
  and so we both have the same assignment.
• 27:44
  And what make that interesting is because both countries have started on this about the same time and have now reaching some of the same exact conclusion.
• 27:56
  Which answers your questions.
• 27:57
  Where should we place our warehouses?
• 28:00
  Where should our 3 PLs be placing their facilities?
• 28:03
  And what it boils down to is in 2014, the National Institute of Standards and Technology created a report called Based on Advanced Manufacturing the Future at advanced manufacturing.
• 28:20
  Between 2014 and 2024, interestingly, the next year 2015, China instituted a study that's called MIC 2025.
• 28:35
  And so we went from 14 to 24, they went from 15 to 25.
• 28:39
  Both of us selected two 10 years.
• 28:41
  China had our report in their hand when they were writing 15.
• 28:45
  In fact, there's paragraphs from the NIST report from the United States that are almost quoted in the MIC's report.
• 28:54
  Now the interesting thing is when the MIC report out came out, it was called Mic 2025.
• 29:01
  And then if you read the big print, it said Manufacturing Innovation Centers.
• 29:07
  Well, that didn't last and people started calling MIC Made in China.
• 29:12
  But this is the exact opposite definition of what we thought of MIC Made in China back in 2001, 2002.
• 29:21
  So between 2001, 2002, when they were getting junk manufacturing, primarily cheap blow molding product out of China, to 2015, when they started the study, they were looking not at Made in China, but they were looking at manufacturing innovation.
• 29:38
  But in fact the manufacturing innovation had the same initials, MIC.
• 29:43
  And so everyone said made in China 2025.
• 29:47
  One of the things that the Chinese had in their report that we did not have in ours was that it's important that we have centers of excellence.
• 29:56
  And those centers of excellence need to be where we focus the primary companies and the support companies.
• 30:04
  And so those are people that make the materials they need, make the, the, you know, the equipment that's needed, has the right infrastructure from a transportation and from a warehousing point of view.
• 30:19
  And so taking the concept from the Chinese center of excellence.
• 30:25
  And looking at where we are going to be after we have the tariff settled, the near showing, the friendly shoring, the reshoring.
• 30:32
  Once we get all that straight, what are we going to see?
• 30:35
  Well, what we're going to see is toys.
• 30:38
  Toys are not going to be made in the U.S.
• 30:40
  toys probably won't be made in China either.
• 30:43
  They'll be made in other countries, possibly Africa, possibly, you know, Romania, possibly, you know, Mexico.
• 30:51
  And so what we're going to find is toys are going to be made where you have a low labor cost.
• 30:58
  You're going to find the same thing as far as apparel and footwear not going to be made inside the US you're going to find the same thing with Christmas decorations which today have made predominantly in China.
• 31:10
  They'll be leaving China because if you look at what the MIC 2025 report says from China, those types of manufacturing are leaving.
• 31:20
  And what they're bringing in is the higher level manufacturing where you pay more dollars per hour and you have more skilled labor force.
• 31:28
  And so the same thing that's happening in the US is also happening in China.
• 31:32
  So therefore, if you want to build a warehouse and you're in the toy business, the footwear and apparel business, the Christmas decoration business, where should your warehouses be?
• 31:44
  At the port.
• 31:46
  Okay, so go find the water, go build your warehouse.
• 31:49
  If you're a 3 PL and you want to service those industries, build a your warehouses by the ports.
• 31:55
  And that's going to be West Coast, East Coast, Gulf Coast.
• 31:58
  And so that's going to happen in very, very, very clear now to the contrary.
• 32:04
  If you're in the semiconductor business, the places you want to be is Phoenix, Arizona, Austin, Texas and Columbus, Ohio.
• 32:13
  Those are, that's, those are centers of excellence for semiconductors.
• 32:18
  So Phoenix is hot, Austin is hot.
• 32:20
  Columbus, Ohio is hot.
• 32:22
  If you're in pharmaceuticals, the number one place you want to be, interestingly is North Carolina.
• 32:27
  Right here.
• 32:27
  I am, I'm living in the middle of pharma.
• 32:30
  Huge, huge.
• 32:30
  Huge pharma research and development here, huge in Boston, huge in the state of New Jersey.
• 32:37
  So that's what we want.
• 32:38
  So if I'm a 3 PL that wants to service pharmaceutical industries, there's three places I should think about being.
• 32:44
  New Jersey, North Carolina and Boston.
• 32:46
  That's where the action is.
• 32:47
  Advanced materials.
• 32:49
  San Jose, California.
• 32:51
  Columbus, Indiana.
• 32:52
  Unbelievable.
• 32:53
  The research being done on advanced materials in Columbus, Indiana and Pittsburgh.
• 32:58
  If you're in energy, obviously Houston is number one.
• 33:01
  Phoenix and Detroit are huge.
• 33:03
  If you're in infrastructure, Dallas, Chicago and Atlanta if you're in high tech, what's number one?
• 33:09
  Silicon Valley.
• 33:10
  Of course, everyone agrees that number two, Seattle, number three is Austin.
• 33:14
  If you're an automated manufacturing, where do you go?
• 33:18
  Back to the Rust Belt, Detroit, Pittsburgh, and Chicago.
• 33:21
  That's where automated manufacturing is going to flourish and has been flourishing.
• 33:26
  And so those are the locations.
• 33:27
  So if someone asked me the question, okay, Jim, where should I build my 3 PL business, where should I expand?
• 33:33
  Where should I be building my warehousing?
• 33:35
  And my answer always is, what industry are you in?
• 33:39
  Because if you're in pharma, you're going to get a totally different answer than you if you're in advanced manufacturing, which is totally different than if you're in energy.
• 33:46
  And so what we need to do is become industry focused for our service industries, warehousing, distribution, transportation, and we need to focus on those locations.
• 33:58
  So it's extremely important, the question you ask and that companies have a strategy that's aligned with that.
• 34:03
  And so what I find is a lot of three people say, well, we're going to just build more warehouses by the port, because those have done pretty well over the last five years.
• 34:11
  Well, they have.
• 34:13
  But you got to understand that's changing because we are doing some reshoring, we are doing some friendly shoring, and we are doing near shoring.
• 34:22
  And so we need to understand where those things are going to take place.
• 34:26
  Where we have pharmaceuticals and where we have advanced manufacturing, and where we have focus on semiconductors and pharmaceutical, those want to be located in the countries I stay in, the towns and the states, I said.
• 34:42
  And so we really need to be specific and we need to get our heads into that because it makes a huge difference as far as what we're going to build and how we're going to build it.
• 34:51
  Okay.
• 34:51
  And Jim, if people, companies want to get expert advice and they're hearing this and they want to learn more about how they can find a partner that can help them optimize their supply chain.
• 35:02
  Talk about Tompkins Ventures and why that could potentially be a good idea for companies to reach out to.
• 35:08
  Well, Tompkins Ventures, we are now in 59 countries.
• 35:12
  We have 238 business partners in those 59 countries.
• 35:18
  And these are folks that have 20, 30, 40 years experience in supply chain in all of the industries you mentioned today and many others.
• 35:30
  And so we have a huge core of experts who are there to service you, not as consultants, but as matchmakers.
• 35:39
  And so what we do is we know who are the folks in the world that are really, really, really the best at doing this.
• 35:46
  So you bring your problem to a Tompkins Ventures business partner and what that Tompkins Ventures business partner is going to work with the entire entire ecosystem to figure out who are the best two or three people to really
• 35:59
  solve these guys problem.
• 36:02
  And then we hook them up at no cost.
• 36:04
  We hook them up in a hope that they're going to find a great solution.
• 36:09
  And when they do find a great solution they will pay their suppliers and the suppliers will pay us a small fee for us bringing them the opportunity.
• 36:17
  And so it's a really interesting ecosystem where without any cost to you, if you tell us what your problem are, we in 59 countries of the world can tell you what the right solutions are based upon the vision
• 36:32
  you have of the future of your company.
• 36:34
  So that's what we do.
• 36:34
  We would love to do it and drop me email, give me a call.
• 36:41
  The email is J.
• 36:43
  Tompkins T O M P K I n s@tompkin ventures.com.
• 36:48
  love to talk with you.
• 36:49
  Thanks so much Dave.
• 36:51
  Okay, we'll link all that in the show notes for everyone.
• 36:53
  All right Jim, great to talk to you as always.
• 36:55
  We appreciate the insights.
• 36:56
  We will see you next time.
• 36:58
  Look forward to it.
• 36:59
  Thanks Dave.
• 36:59
  All right.