Global Trade This Week – Episode 246
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Keenan Brugh 0:01
You're watching Global Trade this week with Pete Mento and Doug Draper.
Doug Draper 0:06
Hello everybody, and welcome to another edition of Global Trade This Week. My name is Doug Draper, coming to you from the great state of Colorado, and my other partner in crime, we were just talking about some pretty crazy stories, mr. Pete Mento. What is going on, my friend?
Pete Mento 0:25
Hey buddy, coming to you alive from New Orleans. Hasn't killed me yet, it's not gonna either. It's good to see you, Doug.
Doug Draper 0:32
Yeah, good to see you, and alive after a pretty potent weekend, I should say
Pete Mento 0:39
spirited weekend. Yes, yeah,
Doug Draper 0:41
good, good, all right.
Pete Mento 0:43
You might as well live it.
Doug Draper 0:45
There you go, there you go. Well, let's just get into this thing. Normally, we chit chat for a while, but you know, we got a lot of important stuff going on, so I know we're going to tag team one topic and have a couple others. So, why don't you go first and get the party started?
Pete Mento 1:00
Are we tag teaming topic number one, or are we?
Doug Draper 1:04
Yeah,
Pete Mento 1:05
all right. Let's tag team topic number one. So topic number one has to do with the pending appeal that's going on right now with the IEPA refunds. Everything is going, I think, smoothly, right? So, from my opinion, I know there's people out there that disagree, but for my opinion, from the importer side, information is going to the government. The government is finding ways to reconcile that, and then, in a pretty speedy manner, giving the money back. The government contends that, although the CIT can tell the government how to give the money back, when that they must give the money back, they can't tell them how, and they're particularly upset about the period of liquidation. This is an interesting tidbit for everyone. Few people that aren't brokers know this, but an entry is essentially open for 314 314 days on average, but then after that it's only open for 90 more days for protests. In that pre-liquidation window period, we can make adjustments and changes to the entry. After that, we can only do it through protest. When Cape was built, they said we're going to give you entries that aren't liquidated yet. We're also going to give you an additional 80 days, and that sounded pretty fair to everyone, but the problem is a significant portion of these refunds are in what are called informal entries. Many of those are with FedEx, UPS, DHL, and unfortunately they're liquidated far beyond the 80 days. So that means that these organizations can't easily go back and recover those tariffs when something is past the period of liquidation. You only have one last resort, the law. You got to go to court, buddy, and going to court is going to take years and years and years, and it's also going to dissuade people from getting involved, because they will have to hire an attorney, they will have to see the case through, which means it's going to erode the amount they get back, and it's a much more public pronouncement of the fact that they're standing against the president and his terrorist, so the court has said to customs to knock it off, extend the amount of time that we can use cape, and customs has told the government we don't have an administrative methodology to do that. I mean, we've really pushed this to the limit, this is the best we can do. And so right now they're in conflict, and while they are, we're all worried, worried that Cape's going to get suspended and that the refund process is going to be stopped for a while. This has added a great deal of chaos to a program that it felt like it was moving pretty smoothly up until a couple days.
Doug Draper 3:33
Yeah, yeah, you know, the like you said, Cape is doing its job, right? I don't, they've given back billions, right, 86,000,000,086 right, and there's many more to come,
Pete Mento 3:47
100 billion.
Doug Draper 3:48
This upending the apple cart is kind of what I'm, I'm seeing, right? This, this is kind of big news, right? I mean, you're the pro in this, in this arena, but this kind of came out of left field, it hasn't really made the news, at least the news that I follow, and it's scary. I mean, this could really upend things, and to your point, if I'm, you know, a Joe Blow importer, I'm not this massive company. At some point, you're gonna be like, "Screw it, I got to move on with my business, I got to move on with my life, and I cannot afford to pay a lawyer 10, $20,000 to get my $5,000 back, and it's just going to be dropped, and it's another play to not have those refunds. I was also thinking that if you have already what I read, Pete, you can check me on this if you've already filed a suit, right? Even those things are liquidated. You're step ahead of everybody else, right? And I know that you know FedEx took care of that. UPS, some of these big guys are like the second this thing happened, they're like, we're gonna, you know, take it to the law, possibly because knowing. That you know what was going to potentially happen, so I think this is a big deal, and I think it's a great way to not pay people the money that they are owed, and it could create more chaos for the average guy or gal company that just says, "Hey, I got five grand, just give me my five grand, I did all the things you asked me to do, and now you're throwing something else into the hat. I just got to move on with my life. I got a business and employees and people to take care of. All right, I'll tap out. I'm done. I think
Pete Mento 5:30
you're going to see more and more of that. I think that's going to be a headline, is just get some more momentum. So take that one step further. All right, Doug, imagine you're a company that only had 50 grand, and how what percentage of these importers are in that? I don't know what percentile is. I don't know that, but now you're being told by a trade attorney that to file for the case between like nine and 15 grand, depending on who you talk to. I've just taken all that out, and then I've also got to pay legal fees beyond that. It just, there's no money left for me. So, what percentage of this would end up just staying with the government out of an action, and that feels unjust to the trade nerd in me. People should be able to get their money back with as little administrative work as possible. If you're Costco or you're Amazon, yeah, you can, you can spend the money to get your money back, but for a lot of the people I work with, if you're getting $100,000 back, and between legal fees and all the rest of it, half of that is going to get eaten away. They have to ask themselves a question: Is it really worth right? Might be worth it to walk away.
Doug Draper 6:32
Yeah, it'll be interesting. All right. Well, I can't believe I'm going to say this, because we're like six minutes into the show, but let's do halftime, so we can do our other topics at the end, of course. It's brought to us by Caplogissix. Can't thank them enough for making this show happen every single week. So, Namaste, our friends@caplogissix.com All right, mr. Pete, what do you got? Half
Pete Mento 6:56
interrupt, Doug. All right, so I want to hit you in or you're out. You ready,
Doug Draper 7:01
yeah. These are funny, because people are like, "Wow, I didn't really know you were passionate about that comment. So this exposes me a little bit to me, Doug Draper, as a person. But let her rip
Pete Mento 7:12
pool guy. Do you get in the pool, or do you, or do you hang around outside?
Doug Draper 7:18
No, I'll get in the pool. Yeah, absolutely. I'm in.
Pete Mento 7:20
Are you a sunscreen guy, or do you just say screw it and see what happens?
Doug Draper 7:24
Yeah, screw it, see what happens.
Pete Mento 7:27
Blue cheese in or out?
Doug Draper 7:29
Out
Pete Mento 7:31
after dinner drinks, coffee or cocktail? Do you are you in or out?
Doug Draper 7:36
I am in. It'd be probably more coffee.
Pete Mento 7:40
Do you believe that we are living in a simulation?
Doug Draper 7:43
No, that's silly.
Pete Mento 7:45
Car washes, do you go to car wash? You do it yourself. Are you in on car washes or out?
Doug Draper 7:49
Oh, I love car washes. I'm that guy that has a subscription where they just take money out every month, so I'll wash my car when it's not really needed. I'm part of the problem related,
Pete Mento 8:00
like I'm spending 50 bucks a month for litter washes. You bet your ass I'm going every couple of days. UFC events, do you like watching the fights?
Doug Draper 8:07
Never watched the USC event my life.
Pete Mento 8:10
Okay, disaster prep, are you prepared for something to go sideways in your home?
Doug Draper 8:16
No, no, disaster prep.
Pete Mento 8:20
What's better? Are you in on dishwashers or out? Would you rather do it by hand?
Doug Draper 8:25
I'll take the dishwasher. I did them by hand when I first moved in an apartment after college, so I'm an adult now. So, dishwasher
Pete Mento 8:33
farmers markets are buying things from far roadside farms. Are you in or out?
Doug Draper 8:38
Oh, I'm in. I like it.
Pete Mento 8:40
Chicago pizza.
Doug Draper 8:42
Yeah, I like all pizza.
Pete Mento 8:44
No, Chicago pizza is a war crime to serve to someone. It's an abomination. It has no place on any table whatsoever. And I will die on that hill for any Chicagoans who want to fight about that. It is garbage. Tap water in a restaurant, in or out.
Doug Draper 9:00
I'm fine with it. That's good. Tap water, I'm in
Pete Mento 9:02
reptiles as pets.
Speaker 1 9:04
No way, no way.
Pete Mento 9:08
I'm with you. Jewelry on men, a wedding ring is one thing, a watch is another. But how do you feel about jewelry on men?
Doug Draper 9:14
No, I'm out
Pete Mento 9:16
thinking of the answer. This one, sneakers with suits, in or out.
Doug Draper 9:21
Um If I guess I'd be in, you know, ask me that when I started my career. No, but now if they're fashionable, you don't, don't get a wear a pair of Skechers, for God's sakes. But if you have, you know, a high-end classy sneaker, I'm in.
Pete Mento 9:40
I'm telling you, it was guys on ESPN and the football shows that got us all to do it. Gas barbecue in or out.
Doug Draper 9:47
Oh, I'm in
Pete Mento 9:49
last one. Terrestrial radio. Do you still listen to the radio or is everything now podcasts and apps on your phone?
Doug Draper 9:57
Yeah. Yeah, I still listen to radio.
Pete Mento 10:02
Okay, some quick feedback for me, Doug. I still listen to sports radio, but listen to it on an app. So, actually, ever listen to my radio in my car? Sneakers with suits, I think, are wonderful. It's uncomfortable enough to make a little bit better. Reptiles as pets, no. Absolutely not. I don't understand it, and never will. There's a lady here in New Orleans who apparently has, like, a big snake in her studio that just creeps me out. Tap water in restaurants. If you're worried about what's in the water at some of these places you're eating, you'd think again. Farmer's markets and roadside stands, buy from farmers whenever you can. The fact you don't watch the UFC troubles me, Doug. It is the best sporting event ever. We do live in a simulation. After dinner coffee, I think is fabulous after all that carbs. Blue cheese is disgusting, and I need to use more sunscreen, and I don't, so just some back and forth for me.
Doug Draper 10:58
There you go. Well, I would say most of those were aligned.
Pete Mento 11:01
I think you're right. I think you're right.
Doug Draper 11:03
Yeah, cool. All right. Well, we always joke we should never talk about specific time dated topics, but we do it every episode. We
Pete Mento 11:13
do
Doug Draper 11:13
it every episode. So this week the World Cup starts, and I was like, give me some fun facts about the World Cup. So, nothing controversial here, but I didn't realize this, that there are 48 teams this year. I'm like, I don't know, is that a lot of little, but apparently it used to only be 32 teams, so that's like a 50% increase in the number of nations participating, first time there's been three continents involved, so you got us, Canada, and Mexico. The one thing I didn't realize, Pete, is 78 matches are in the US and 13 are in Canada and 13 are in Mexico, so by far and away it's US dominated as far as the number of matches, total matches 104 right? Used to be 64 so again it's a huge increase from the 20 every four years, so that would have been 2022 they had 64 and about 1200 players across 48 different teams, so largest collection of soccer slash football players descend here on North America, and I didn't realize it. I thought it was like two weeks. This is how stupid I am, and some people are going to be upset about this, but this thing goes on for 39 days this year, 39 days, I guess that's about as long as the NBA Finals, but yeah, I didn't realize that. So, anything about the World Cup that jumps out at you, Pete,
Pete Mento 12:53
that I don't give a fuck about
Speaker 1 12:54
it.
Pete Mento 12:56
Here's the thing, I'm a hypocrite, Doug. Okay, if Team USA does super well, I'll be a bandwagon guy, and I'll jump on the bandwagon. If England does super well, I'll be a bandwagon fan. If Germany does super well, right, like it depends, maybe I'll watch the finals or whatever. But soccer is a fine sport for women and children, any game that can possibly end with nobody winning is stupid, and we have so many better sports now. Why are we still, why are we still doing this? I would rather watch.. I would.. wow, I would rather watch someone peel onions. I would rather. I would rather watch any, practically anything, anything than watch a soccer match. I find them to be incredibly boring, almost soul-crushingly boring.
Doug Draper 13:51
Wow, the
Pete Mento 13:52
fact that the whole world loves it so much does not dissuade me from this. I've been to many a live soccer match. I did enjoy that, because I was in on it, but any sport where America doesn't have the opportunity to dominate can fuck right off.
Doug Draper 14:05
Wow, you just burned a lot of bridges, I think that last minute.
Pete Mento 14:13
Let me tell you something, Doug, I'm a rugby fan, and a fraction of a fraction of people on planet earth care about that. That sport is so much better than rugby, so much any sport that is determined by how well one team can pretend to be hurt more than the other is really stupid. I'm just not down with it, man. I'm sorry, I don't.. I do not care at
Doug Draper 14:34
all. I just.. just when you said that, I'm thinking that ESPN, or some, or some sports highlights will be the 10 worst flops of the World Cup. You got to think that's going to happen, right? And you're right, it's pretty bad.
Pete Mento 14:53
I have a British friend of mine who always likes to say that he calls it soccer, football, right, that football is a sport. Played by overpaid men with silly haircuts, pretending to be free, and I think it's just ridiculous. Posters watch rugby, those are people, women's rugby, men's rugby, kids' rugby. I don't care what type of.. it's phenomenal sport. Soccer is just preposterous.
Doug Draper 15:18
Well, those gentlemen with funky hairstyles are cashing their checks all day long, a lot of money.
Pete Mento 15:25
Yeah, that's the thing I realized, Doug. I am in the minority of the minority of the minority. The world loves soccer, and good for them, you know. Great, I like wild turkey. It's not for everybody,
Speaker 1 15:36
whatever. Nice.
Doug Draper 15:39
Well, that was halftime brought to us by Cap Logistics. Go ahead and check them out@caplogistics.com We appreciate them putting the show on every single week. All right, we're on the back half, my friend. Topic two,
Pete Mento 15:51
topic two is that the White House is using forced labor as a methodology for justifying new 301 tariffs, and I, I can see where the argument comes from, but the way the US government has is doing it apparently makes me call it into question. Nations that are buying things from countries where integrated parts and material may have come from an overseas supplier that is supporting forced labor, basically what they're talking about is seems like a bridge too far. We're talking about places like Europe, who have just as strict, if not stricter, rules about UFLPA as we do here in the United States, and also not to mention the fact that many nations have pointed out that we have issues with slave labor. We have all kinds of manufacturing being done by prisoners in this country, so it just seems like it's, it's, it's paper thin. I think two three twos will be hard to break, but, but basing 301 tariffs on, on, on slave labor for some of these nations, it just seems like, you know, they're trying to justify these tariffs any way possible. At least they're going through the process. I just can't imagine they're going to hold up very well.
Doug Draper 17:00
Yeah, well, child labor by any standard is absolutely horrific, and we don't stand for it, but it's incredibly subjective, right? I mean, we talked, I don't know how many, probably last year, whenever our episodes were in the one hundreds, where there was child labor in Northeast, Northwest China, I don't know. How do you validate that? Somebody just says there's child labor, you know. And, and how do you.. how we have enough difficulty trying to just trying to track the supply chain when you look at CT Pat and everything else? Like, where's the origin? Are the people that are moving this compliant. We are challenged just to even get that, let alone some small town in the middle of nowhere, in some country that we have no jurisdiction over. What they're doing, and how do we prove it? And the shell game that goes, that goes on. So, in my opinion, to arbitrarily say this is coming from child labor is really difficult. It's subjective, and most people are like, "Oh, okay, I guess I'll trust the government, and that must be, that must be a true statement. So horrific child labor standards, but it's just difficult in my opinion to try to pin it down to have something quantifiable to say this is the reason because this factory in this location did this exact thing with these aged children and they made this thread that goes into the shirt that I'm wearing now that is a really long bridge to cross, if that's.. I'm not saying that right, but you understand
Pete Mento 18:46
the US government, along with allied governments around the world, have done a very impressive job of identifying certain suppliers, but it's a fraction of the ones that are probably out there. There's a whole database that the US government has that outlines places where they have discovered it, either through third-party analysis or intervention, having people who are involved in that production come out as whistleblowers to say what's going on, but it's not an exhaustive list, by not even by any means, it's not an exhaustive list. Most of the stuff that we're talking about is in, it's in China, you know, other parts of the world that maybe aren't necessarily, you know, they're all rising economies, they're not developed countries and economies, but I can remember doing social responsibility audits when I was in my 20s and going to visit some of these foreign suppliers where the legal working age was 13, it was a legal working age, and it's not child labor if the legal working age is 13, we had to put that in our reports. There was, you know, no instance of that. If that's the local custom, and that's how things work. Who are we to judge, you know? But it would appear that the idea of slave labor is also a massive problem, whether it's fish processing facilities in China being the. Uh, being staffed by North Korean political dissidents or other nations that use political dissidents for that war, it does happen, but the ability to find out exactly who's doing it and how, I think we're really just scratching the surface. There's a lot more out there than we'll ever realize. This idea, though, of basing all of these tariffs on something so esoteric and at times subjective, I think, is going to be difficult for the White House to improve. I, for one, after seeing young people working in these facilities, it makes my heart hurt, you know. The fact that so much chocolate comes from cocoa that is harvested by children, sold in slavery by their families, it's a scary thing, then. So, do I.. do I want to see it abolished? Yes. Do I think tariffs are being done to do that? No, I think tariffs are being used in order to justify additional tariffs.
Speaker 1 20:52
Yeah, that.. that last sentence seat is the whole purpose behind it.
Pete Mento 20:59
All right, buddy.
Doug Draper 21:00
Yeah, yeah, so this topic is about peak season. We spoke about it either last week or the week prior, kind of to peak or not to peak, Pete. That's the question. Is the
Pete Mento 21:12
question
Doug Draper 21:13
that is the question, right? So, reading some stories in the last week, there's a lot of inventory that's being pulled forward as quickly as possible, right. So, there is an acceleration of shipments that are coming, and in June and July, I think that is going to be the peak, right. We're like, when is it going to happen? Is it going to be on the regular cadence? Is it not? I think it's going to happen this summer, and it's going to be over, you know, by august 1, and there was a statistic in there, which is a little deceiving, is that the month of May, right, year over year was up, right, oh yeah, we were important more stuff, but if you look at what was going on a year ago, that's whenever all this tariff stuff started, and people were freaking out, right? And they were on kind of a pause button, so you're comparing a year over year number that is impacted by other governmental legislation, you know? So it makes that number look a little off, right? So it isn't really a recovery strategy, right? Those numbers would say, oh, we're coming out and we're starting to recover. It's more of a, like, a risk mitigation type of strategy, because we don't know what's going to happen when we just spoke about it at the beginning of the show, related to Kate and and all these lawsuits, and if it's liquidated, sorry, you're out of out of luck. So I think it's a risk mitigation, get my stuff in the United States as fast as I possibly can, so I can sell my product in Q, and if I got to pay a little bit more in storage, or I got to deal with the three pl and warehousing, which is my business, so be it, but I'd rather have it here than not have it here, because you need it to sell it. So I think there's going to be a surge. I think we're starting to peak way early, and then the projections in Q and Q are going to be abysmal.
Pete Mento 23:17
Could not agree more, Doug. I think that the peak has already been baked into the year. I think that there's been so much anxiety, whether it's energy costs, straits issues, global conflicts, tariffs, all of that. People are saying we have not seen the worst of this yet, so let's be smart about it and get it in while it looks as calm as it's probably going to look. Consumer sentiment is in the toilet right now. You add all those together, I think the peak is peaked, and what we'll see over the course of the next few months is just picking up the pieces of that. I don't think we're going to have a common, a common peak like we normally would. I think you're absolutely right.
Speaker 1 23:51
Interesting. All right,
Pete Mento 23:54
all right. Well, that's going to be it for us. We want to thank our great friends at Cap Logistics for always unwaveringly supporting this show, regardless of what silly things Doug and I say. Vic Kenan back in his underground bunker, growing his beard, managing all of this forest, the bells, the buttons, and the dials, and the switches. Want to thank all of you for all the support that you give us, sharing the show with your friends, subscribing to it either on your podcast platforms are on YouTube, and yeah, that's going to do it for us. It's happening in Global Trade. We'll be talking about it next week on Global Trade this week. Thanks, Doug.
Doug Draper 24:28
Excellent, thanks, Pete. Have a great one.
Unknown Speaker 24:30
Bye.
Transcribed by https://otter.ai