Global Trade This Week – Episode 251
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Keenan Brugh 0:01
You're watching Global Trade this week with Pete Mento and Doug Draper.
Doug Draper 0:07
Hello, and welcome to another edition of Global Trade this week. We left you in limbo last week. We had a hiatus, but we are back in full scale. We're ready to rock this show big time. My name is Doug Draper. I am one of your hosts. The other one is my partner in crime, who I'm not really sure where he is, but he's dressed for summer, and he's ready to rock and roll. mr. Pete Mento, Peter, what's up, brother?
Pete Mento 0:31
Peter, I don't know, Douglas. What's up? Way to use my government name. Nice. I I'm in D.C. in our offices in beautiful Tyson's, Virginia, Tyson's Corner, where the very wealthy come to not work, but I somehow come here to work. I don't know how that happens in Virginia. Kind of like when you work from home in Steamboat. Like, is the Steamboat a pretty hoity-toity place?
Doug Draper 0:52
Oh yeah, yeah. Well, no. Let me back that up. That's a double-edged sword. Yes and no. How about that?
Pete Mento 1:00
It's where people have their second homes that are hoity-toity.
Doug Draper 1:03
Yeah, and the other thing is, people like I've met people here in my co-working space, and I'm in a little cube. So when people I'm in here, this is like a big, large phone booth, right, where I can get quiet. But there's been a handful of people like, oh, when I had my exit from my company,
Pete Mento 1:20
which
Doug Draper 1:20
is code for I made a shitload of money and I'm kind of up here just puttering around, so there's plenty of that. But there's a lot of folks that are just up here for experience, right? They want to ride their bike. They're here for the mountains, and if they make rent until the next week, then that's fine with them. So it's kind of a dichotomy of lifestyles.
Pete Mento 1:40
You know that I made my exit line that reminds me of in Forrest Gump when when Bubba says, and then we didn't have to worry about money no more. Like that's more or less what he's saying when he says I made my exit for myself. Yeah,
Doug Draper 1:52
oh yeah, yeah. And they're great people, and they've done real successful. But when I hear that word, I'm like, okay, I got you.
Pete Mento 1:58
We're not in the same tax bracket. I aspire to be able to say that someday, but my days of getting the chance to do that are quickly fading. Does
Doug Draper 2:05
yeah, yeah. Well, hey, one one other thing to say, Pete, before we jump into it, and this is mostly for Pete. Well, everybody can appreciate this-the fires that are going on, right? I think the Northeast is just getting blasted from Canada, but as crazy as this sounds, Pete, there's a fire going on right now, less than 10 miles from my house, but firefighters are absolutely freaking amazing, right? You wouldn't be able to tell here in Steamboat. I'm looking outside right now, blue skies. They've done a phenomenal job, and so I don't know if anybody. I would think somebody has relationship to firefighters and first responders. I tell you what, I was in the grocery store yesterday, and I saw three of them walking through getting groceries. And I stopped them, gave them a big handshake, said, "You know, the community appreciates you being here, and they should be knocking that thing down in the next week or so. But anyway, I've learned a lot about it, and my God, being close to it, everything's cool. There's no problems. There's been no evacuations at all on Steamboat, but God bless them, man. They work their asses off, and I just wanted to give a shout out to all those folks, whether they're smoke jumpers in the mountains or just hounding the streets in D.C. It's it's cool, and I wanted to say we all appreciate it.
Pete Mento 3:16
That's awesome, man. You know, I got a great story about a firefighter last week, his friend. He was working out with another person, and someone collapsed in the middle of a gym, and he brought them back to life. They were out. They were done.
Doug Draper 3:30
Wow!
Pete Mento 3:31
You don't think about those stories. You know these guys that throw themselves into a fire from a plane, like they're doing for you right now, and guys that are out there and God knows how hot and awful it is fighting that fire to keep your home from being burned down. I think we we sometimes forget the level of level of bravery that it takes to put yourself in that job. So yeah, yeah. God bless them.
Doug Draper 3:51
Cool, good deal. All right, cool. Well, from a thank you to our first responders to our first topic, how's that for a transition, Pete? I'll let you go first.
Pete Mento 4:00
Yeah, man. So the Straits of Hormuz are, I guess, a hot zone again. We're blowing stuff up, or blowing each other stuff up, or doing everything can to stop people from blowing each other stuff up. But I was looking at it at a different angle from what this means for the future of energy, which we've talked about a lot the last couple of months. And here's some fun new facts to put into all of that, but I don't know that people are necessarily focused. I think it's fascinating. So the U.S. oil reserve was actually in super good shape before this happened. We were we were topped off. Things were good. It's like going on a road trip and you had stopped at the Wawa before to fill up, right? You were good to go. At the same time, though, what was happening is production was super high, so under this particular new administration, we've been able to produce, you know, drill baby drill. We've making a lot of stuff, so it didn't really hit us that hard. But here's the thing that's screwing us up: we're manufacturing a lot right now. We're manufacturing a lot, and the data centers are all starting to come online. So consumption is way higher than we ever would have expected. So the strategic oil reserve was not set up for a period of production, data or otherwise that it is right now. So we're actually consuming a lot more energy in the U.S. than we normally do, which makes the mathematics on that reserve pretty ugly, and we're only days away from being in dangerous levels on our strategic oil reserve, so that means that the American consumer and American businesses should start seeing that elevated cost happening again, and this time it's going to be prolonged. So we're probably going to see gas prices up around those fives in most places. I know in places like Colorado and and and you know the West Coast it's high because of taxes already, but it's going to be even higher, and we're probably going to see that then affect the transportation market. The magic number on diesel is $8 When diesel hits $8 a gallon, commerce begins to slow down and stop because people make second decisions about do they really need to have that thing. That seems to be the number on the American driver. It's $4.70-five cents. So when we see a national average hit that number, people begin to think maybe I shouldn't be driving so much, and that also impacts Uber prices, the bus, everything that we do. So those three things coming together is a perfect storm. As good as it might sound, right? Production manufacturing is up. We're doing a whole lot of of production ourselves. It turns out that we're beginning to hit the wall on that, and unfortunately, Doug, when you don't have enough, that impacts prices.
Doug Draper 6:30
Good take on the energy consumption for sure, right? I was in Fresno a couple. I guess it would have been about a month and a half ago, whenever the first spike hurt, and I saw diesel in the Central Valley, California. I think I may have said this before. It was like $7.20-seven cents. It was just astronomical, and so $8 It's going to start. You know, I always joke like you fill up your tank, and you're like, "Oh my God, this is expensive, and then you start pumping, and a Britney Spears song comes on, and you kind of forget about it, right? Just it's the nature of the beast. But at some point, the Britney Spears song is going to fade away, and you're going to look at that fuel price and say, "Yes, I need to make some changes. And yeah, I didn't know 475 because we're pretty gosh darn close to that. We're over that here where I live, but yeah, eight bucks. My gosh, that's a shocking number when you said that. So, I think the pump drives a lot of decisions, and it's interesting that those numbers are pegged. So we'll have to see what happens.
Pete Mento 7:33
I remember in 1986, I would drive my 1974 Volkswagen thing to the gas station. I could still get lead of gasoline at some gas station, so I buy that. Wow! Care about the car, and I could fill my car up. I get a pack of cigarettes, a Dr. Pepper, and a Twix bar, and it cost me like 10 bucks. The good old days.
Doug Draper 7:56
Yes, I also remember
Pete Mento 7:58
being a broke ass comic and having to go to work and having to make the decision about am I having lunch today or am I driving my car this week? Right, it was it was that kind of a deal, and I think most American consumers are finding themselves in that trade-off situation for the first time in decades. Am I going to buy X or am I going to buy Y? If I buy X or Y, is that going to mean I can't buy A, B, or C? The economy is in worse shape than I think people realize because we're not looking at the right mix of consumer products to understand those impacts.
Doug Draper 8:26
Yeah, it'll be interesting what transpires. You you blink your eye, you got back to school. I'm already seeing commercials for for BTS, and then what happens with consumer buying habits in Q4 and the holiday. So we got two two indicators coming up should be interesting.
Pete Mento 8:42
All right, Bud, what's your topic?
Doug Draper 8:46
All right, so this one caught my attention last week. So there was it's related. This is a parcel. I got a I have a a global trade one for my second one, but this is about parcel and trends that some of the big big players are doing so. There's been all of this talk about Amazon's now providing parcel services to people that are not directly connected to Amazon. You don't have to be using their services in a warehouse environment to get their service levels right. So now everybody's like, "Oh my gosh! If you add a, you know, Amazon is technically the world's largest logistics company, and they're coming in hot and heavy. Well, the underlying maybe the story that people aren't talking about is if they look at what's going on with FedEx and UPS, and the big picture is that they are just moving away from the commoditized box movement, right? So FedEx is out there chasing healthcare, automotive, aerospace, supporting data center growth. They're kind of creating a moat around their profit, right? Can you hear me? Okay.
Pete Mento 9:54
Yeah. No, I said a moat. Yeah.
Doug Draper 9:56
Yeah, moat, and getting into specialized logistics, right? High barrier to entry, right? You got to have systems, infrastructure, the whole nine yards. Strong margins. It's not easily overtaken by other other companies. It's just not a lot of competitors. UPS, I think they dropped 48 mil into some cold storage pharma infrastructure, right? So Amazon comes in and says, "Hey, we want to move a bunch of boxes, and the two other big players are like, "We're kind of stepping away. We're going to go into some specialized parcel where margins are greater. There's better insulation. You know the concept of the moat. So when these big guys are, you know, are spending tons of money to find those niche parcel programs, for lack of a better term. It seems like are we starting, you know, kind of a death spiral to the bottom, right? Kind of like a Hunger Games, and the last person is the one that no longer makes any money, so it's interesting to see. I think I think those big guys and other other parcel supporters and adjunct businesses are like, fine, take the boxes. We don't want them. It's not profitable.
Pete Mento 11:15
Doug, I had a guy I wish for the name of Phil Coglin, who I love. I worshiped him. I still think he's just incredible, and it was like a game with him. He'd say, "Give me any company, I'll tell you it's a supply chain company. All right, McDonald's goes well. That's easy. He said, "You know, McDonald's has to make sure they have a hamburger ready for someone. Think about all the things that have to happen. Have that hamburger happen. Really, they're just supply chain companies. Like Merrill Lynch, because Merrill Lynch is just supply chain company. They have base of production for basically thought for ideas. It really is a supply chain, and he convinced me over time that every company was a supply chain. Amazon is a supply chain company, and I think when they started, they kind of knew that. I think they realized that in the end, all they're really doing is providing products at the place of consumption. So, what happens someday when they're making more money on logistics than they are products? And before you say I'm crazy, if they keep selling everything, I wonder-I don't know-but I wonder if the margins are higher on the sale of the product, or the margins are higher on the transportation costs, given the volume that they can buy at, are they going to eventually make better margins on moving the product than selling it? They might. Maybe not on everything, but maybe on a lot of stuff. Amazon is a logistics company that just happens to sell you crap you don't need.
Doug Draper 12:37
Balance. Well, they're getting into every aspect of logistics, you know, cradle to grave, port to door, whatever you want to turn it. So, if you're offering all those different services, including warehousing, you know, you can take a lost leader on a couple of them to keep yourself afloat. I've seen that in the warehouse business where, you know, I've competed against companies that are like, hey, we fully admit we're doing the we're doing the handling in the warehouse at a break even or even a loss because our money is in managing the parcel and so I think that if Amazon expands and has you know the forwarding piece of or whatever and and this may already be happening but once when they what happens when they start financing inventory yeah we're assisting Joe Blow's like you and I that have an idea for some shade shade sale that we want to build, and we don't we don't know where to go to get our money. And Amazon says we're here for you. If that has already happened, hopefully people will make comments on the show.
Pete Mento 13:34
Yeah, it wouldn't surprise me if they are. I mean, UPS does that, right?
Doug Draper 13:38
Yeah, with their UPS capital.
Pete Mento 13:39
Yeah, G UPS Capital. I know Wayfarer thought about doing it. I don't know if they ever actually did it, but they talked about that financing their foreign suppliers because, in the end, it just means you have more product to sell, and you're also making more better margins on the product that you sold because you're getting some degree of interest, I imagine, on financing. So it's just more ways to bring shareholder value.
Doug Draper 13:59
Yeah, great. All right. Well, that brings us to halftime. Brought to us by Cap Logistics. We appreciate them. We appreciate Keenan for making this show happen every single week. Check out CapLogistics.com. All right, Pete, you want me to go first? You go first.
Pete Mento 14:15
I can go first. So first of all, shout out to Matt Priest and FDRA.
Doug Draper 14:20
Hey,
Pete Mento 14:20
spoke for him last week. He had stickers made up. I'm putting them on everything. Shoe tariffs suck. I told him it'd be cool if we just had tariffs suck stickers, but I understand he's in a niche market, so I let it go. Been doing a lot of traveling the last couple of weeks, so I went from Washington D.C. to Providence, Providence to Boston, Boston to New York. I'm back in D.C. today. I'll be going to Knoxville, Tennessee tomorrow night, and then Birmingham, Alabama, and then back home to New Orleans. So a lot of car time, a lot of car time. But I was in New York during the big World Cup frenzy. You know, I got I got back to DC last night, and I got to tell you, man, I felt like. Half of Argentina was in New York. Everywhere I turned around, there were Argentinians everywhere. They were having a good time. So what I wanted to talk about today was all right. World Cup's over. Spain won the whole thing. Congratulations to the Spaniards. I ended up watching the game, something that I never would have done before, ever. So I want to take a quick talk about it, Doug. I mean, what were the winners? What were the losers? What do we think about it now that it's finally leaving our shores, and all these people came to visit? So, I mean, I can go first. I loved all of the love that America got. I loved all of the love from people who came to visit us and saw that we are not the monsters they think we are. That's actually a pretty cool place. The places that they made me love about my country again. You know, the wide-eyed look on this German kid's face when he saw the Grand Canyon and couldn't believe it was real. There's one of a woman from France. She actually was moved to tears looking at the Grand at the at the Rockies there in Colorado. Just the fact that people came to this beautiful country. It made me feel very good that other people got to see what maybe sometimes we take for granted is such a wonderful place. I would love to know just how much money was spent in this country over the course of the past, I guess, month. Right? Maybe a little more than a month. Revenue was brought to small businesses to everybody because we had so many folks coming to visit here, and I think that America might give a damn about the world's biggest game. Finally, I think this might help us to maybe, and maybe maybe it could be wrong, but we'll find out in four years, right? Maybe we've turned a corner and we care about football again. We care about soccer. However, I will say, if we ever win a World Cup for the next four years, it's called soccer everywhere. I think that's fair, but I did I did find myself as much as a World Cup truther, just curmudgeon. Like I'm such a jerk about it. I really did enjoy it, and I have to admit I was wrong. Having the World Cup here in America was not only good for business, I think it was good for our PR, and I'm glad that we did
Doug Draper 17:00
it. Yeah, yeah. So my my take is my wife has a good friend lives in Seattle. She went there whenever not my wife, her friend went to the game when it was when the U.S. was playing up there, and then the John Denver song. I don't know if you saw that one when the whole stadium when when oh yeah
Pete Mento 17:18
yeah,
Doug Draper 17:19
and she was like it gave her goosebumps, you know. And it didn't matter what side of the aisle, quote unquote, you're on or whatever. Everybody was just group hugging and just enjoying America. So I I can appreciate that and all the different examples that you spoke about. Specifically, me I went a little bit more narrow. Is that I kind of understand the rules a little bit better. I still can't figure out offsides.
Pete Mento 17:42
Neither can
Doug Draper 17:44
I. I don't really get it. And then there are some characters in there. You know, we we got our characters in American football, but this Mbappe dude. Yeah. You know, I thought originally he was related to the band Hanson, but that guy is pretty chill and looks professional. Then obviously he got messy, and then that guy from Norway.
Pete Mento 18:08
Oh yeah, I can't
Doug Draper 18:10
Holland or
Pete Mento 18:11
Holland? Yeah, yeah, yeah. He's like a monster out there.
Doug Draper 18:15
I know he was he was a scary guy. So anyway, it was there. There were some characters that were developed. There was some camaraderie and American spirit that was rekindled, which is what we needed for the summer. So yeah, pretty good, pretty good. I do have one
Pete Mento 18:29
more thing to talk about. So I I do like country music, but I'm not I'm not a modern country music guy. Most of what I listen to is Willie Nelson, Willyland Jennings. I went and saw Morgan Wallen this weekend.
Speaker 1 18:40
Uh oh,
Pete Mento 18:42
in Baltimore, there were, according to the the ChatGPT, 70,000 people at Raven Stadium.
Doug Draper 18:52
Wow.
Pete Mento 18:53
Okay, and I probably knew two of his songs. The lady that opened for him was named Ella Langley, she was absolutely incredible, and if you haven't listened to music, she's she's going to be a massive star. The reason I'm bringing this up is I'm a guy that goes to like Metallica, you know, Pantera shows because I love the energy. I don't care who you are, if you were in that that stadium, you had a good time on Saturday night, explosions and fireworks, and I don't I don't know if the guy was being sincere or not, but he really seemed to give a damn about the people who buy his music. It was wonderful, and he turned me into a fan. What I'm trying to say is that the rock concert is alive and well, and not just Taylor Swift does them. There's a lot of people out there doing God's work, getting people out listening to live music. I hadn't been to a stadium show in a long time, Doug, and I'm glad I went. I really did enjoy myself. So, yeah, the best part of my night though was he walks out with some local celebrity, and he they show him the show on the big screen before he walks out, and we got Ray Lewis. So he's walking out. The place went. Absolutely bananas, bananas for Ray Lewis, and he did the little you know dirty bird dance. I did the whole thing as he walked out there. Yeah, just went nuts. So imagine 70,000 people losing their minds because this guy's doing dance. I don't know, Doug. If you have a chance to see the tour, it's worth doing. It's worth going.
Doug Draper 20:17
Yeah, yeah, yeah. He came through Denver a couple weeks ago and he got drunk and broke a piano or something on stage.
Pete Mento 20:23
Nice,
Doug Draper 20:24
yes, love it. That's classic rock and roll. I wonder who he walked
Pete Mento 20:28
out with, John Elway. I don't know if John Ellicott. I don't.
Doug Draper 20:30
I didn't hear. I didn't hear. But that that would have been. I don't know if Elway would have done that. But yeah, something something of that something that degree. So what you got
Pete Mento 20:37
for us, Doug?
Doug Draper 20:38
All right. So these are two questions pointed to you. You've you've done a good job in former shows about getting to know me, right? And so, my wife's been on a kick. This guy named David Sedaris, who's like a oh, I love
Pete Mento 20:49
I love him. I have an autographed poster from one of his shows. I love David Sedaris.
Doug Draper 20:54
Yeah, he's. I've just kind of gotten introduced to him. He's pretty funny. So this first question, you may know of it, and some of our audience may know of it, but it was a thing where he was walking with a friend of his, and they were looking at a 18 wheeler, and he's like, "Do you think you could eat that tire in the course of one year? Now it's not going to make you sick or hurt you, but you have to eat this tire in 360-five days. So my question to you, Pete, how would you eat the tire
Pete Mento 21:23
on an 18-wheeler?
Doug Draper 21:25
Yeah, that big tire.
Pete Mento 21:26
Am I allowed to prepare it somehow?
Doug Draper 21:28
Oh yeah, yeah. However you want to get it into your system and eat it, but by day 360-five you got to be popping the last piece of rubber in your mouth.
Pete Mento 21:36
I would absolutely somehow liquefy it. I would I would take it down to its base components and turn it into a liquid.
Doug Draper 21:42
Nice. And would you would you drink a little bit a day, like cut it up into 365 pieces, or would you like just say I'm going to do this once a week and hammer
Pete Mento 21:52
it? No, I I would absolutely break it in 365 days, and I would I would turn it over to liquefy it. That's going to be scary because they're stealing it, but whatever, right? You're saying I can't get sick or get hurt from it, and I would mix it with bourbon and I would drink it over 365 days, and I think it'd be just fine.
Doug Draper 22:08
Love it.
Pete Mento 22:08
I can't imagine it's possible, but if you were to ask me how I'd try, that's how I try.
Doug Draper 22:13
Yeah. Okay. And so the next question is this or that, and I would probably do it the same way. I was thinking of anyway. I'd cut it in 365 and and figure out a way to consume it. So the next question is: This is we were floating out on some rafts when I was on assignment a couple weeks ago, and this popped in my head. So if you had to give up five years of your salary in exchange for being able to immediately, right now, accumulate all of the lost change, lost money, I should say, not just change, dollar bills in the United States. What would you choose?
Pete Mento 22:55
Five years of money hiring.
Doug Draper 22:56
Yeah, let me clarify that. Right. So any bit of lost change, and you can't go into fountains and stuff like that where people were pitching coins. Just if you were able to find every dollar bill and every penny that's lost, bottom of the ocean, no treasure, just lost money, and you say that's I get all of that today, but I have forego five years of salary. What would you do?
Pete Mento 23:18
I'm taking the lost money. I got to show there's a lot more out there than I make.
Doug Draper 23:25
Yeah, I don't have to
Pete Mento 23:26
find it. I just get what's lost.
Doug Draper 23:28
You get what's lost, right?
Pete Mento 23:30
So what do you not?
Doug Draper 23:32
I don't know. I mean, it's just kind of a thought-provoking. I don't know what the number is. It's just a matter of are you willing to take you know a leap of faith out there. So, boy,
Pete Mento 23:42
swap that out.
Doug Draper 23:43
Yeah, yeah. Most people that in my group that I asked the question would forego five years of salary in exchange. Just a one time, you don't get lost money for five years. Just you snap your fingers, and whatever's lost today is what you get.
Pete Mento 23:57
I'm taking the money. I'm taking the risk on that.
Doug Draper 24:00
Yeah, yeah, it's a good one. Agreed. I think most people I've spoken to about that have have said the same thing.
Pete Mento 24:05
How have we Keenan right now is looking at ChatGPT or Claude or something to tell us what that possible number could be?
Doug Draper 24:11
Yeah,
Pete Mento 24:12
in the whole world or just the U.S.
Doug Draper 24:14
Just the U.S.
Pete Mento 24:16
All right, I bet it's an impressive number.
Doug Draper 24:18
Yeah, I bet it is. Yeah, no treasures in the ocean, just lost floaties, and you can't scavenge into into fountains.
Pete Mento 24:28
I'm willing to bet that it's an eight-figure number.
Doug Draper 24:31
Yeah, for sure. Well, like you said, Keenan's behind the scenes literally right now. So when this show's over and we do our postscript, he's going to tell us what that number is.
Speaker 1 24:41
Yeah.
Doug Draper 24:41
And speaking of which, that's halftime. Brought to us by Cap Logistics. Check them out at CapLogistics.com. All right, brother. Second half. What's your second topic?
Pete Mento 24:51
Customs came out with a like a hey, hey everybody. Here's a real pretty document. We're going to go out and tell you some stuff about. These normally come out and. Only true dorks like me bother to read them, but lately, because of AIPA, people have been reading a lot more of the output that customs been doing. And this one read like a Stephen King horror novel from start to finish. It was like there's someone in the closet. The phone's coming from inside the house, right? Like it was, it was, it's terrifying. There's one particular passage I wanted to make sure people heard about, where they're saying that ignorance of the rules has never been an excuse, and it doesn't matter where you are in the company, we're coming for you, and it specifically mentioned members of the board of directors. People in my world have heard the stories of a board member saying to the CEO, hey, what if we just you know massage the facts a little here, or or didn't tell the whole truth and just try to get away with it? We've all heard those stories. Well, guess what? Customs is coming for you, Jack. They have put out just as many 20 eights, which is a request for information, as they always have, but the CVP 20 9s which is those requests end in you getting a fine, has skyrocketed. The amount of money they're coming in, so they're getting better at asking the questions, knowing that they're going to get the money. Their targeting systems are absolutely incredible, and now they're not just looking at the people on the front line; they're looking at the people who told them to do it, told them to do it, and all the way up the line. Customs has already recovered a billion dollars in fraud. A billion-that's criminal and civil penalties. That's just not the fines and penalties. That's going after individuals. It's going to be a hairy couple of years, brother. So, the next time someone that works that you work for tells you to do something stupid, you might want to remind them that customs is going to hold them responsible. I'll stop.
Doug Draper 26:45
Yeah, it's valid. You know, I think executives. Excuse me. Customs. That's a logistics department's problem, right? Just don't tell me about it. And compliance was a couple of guys named Poindexter in the basement pounding out spreadsheets and stuff, and now the stakes are too high. Yeah, it's like margin; it's impacting margin and true businesses versus just take care of this problem and make sure it doesn't go away. Doing that, whether that's nefarious or not, to your point, isn't going to cut it. Technology, the aggressiveness of what we've seen in the last 18 months, better
Pete Mento 27:22
watch out. Yeah, I was I was on the phone with Cindy. I'm the phone. I was doing a you know podcast with Cindy Allen, and she brought up some of those numbers. I'm like, damn, and you know, billion dollars. That's scary. I'd love to know what it was last year. I bet this is multiples of that. They're just getting so good at finding dirtbag behavior. Don't be a dirtbag.
Doug Draper 27:41
Love it. All right, I'm going to jump in your neck of the woods a little bit here with my final topic. It's related to the Section 122s that came out. Section 122 is part of the 1974 trade agreement. Yeah, yeah, Trade Act. Thank you. So that was whenever the court shut down the IEPA and said, you know, no MOS, and they need to start doing refunds. And then all of a sudden, this new law section act popped up, right? But that was just for 150 days. Well, that 150 days is ending, right? I think it's ending Friday.
Pete Mento 28:24
Yep.
Doug Draper 28:24
And so that's always been designed, from what I read before this, because I wanted to get a little bit more knowledgeable on it. It's always been a stopgap, right? That's what happened in '74. Is like we need to figure this out. We need to give power to be able to just take a time out while we have a chance to figure stuff out, kind of you know, kind of what was done during the the banking holiday during the Great Depression, but there's going to be tools that are out there. I guarantee it is that other tools are going to start coming into play related to tariffs. We've already seen a little bit with the 301s and the unfairness and the discrimination, we spoke about it last year. Child labor, things of that nature. 232. I think that's going to go beyond what it's on steel and aluminum now. I think it's going to, yeah. I think it's going to dive
Pete Mento 29:20
into
Doug Draper 29:21
pharma and all that kind of stuff, but there's one tariff when I did a little research on this that I think we're going to start hearing about, which is Section 338 which was based on a tariff act in 1930 and I'm reading it here. It says retaliation against countries discriminating against U.S. commerce. How freaking vague is that? Very talk about a tool that could be used on any level of how you may see fit. So I don't know the 338. If people haven't heard of it, you're going to hear about it here in the next 30 days. Or something as another arrow in the quiver to pull out to help generate some tariffs. So, have you ever heard of 338 And what's your take?
Pete Mento 30:08
Can be as high as 50%
Doug Draper 30:10
Yeah,
Pete Mento 30:11
think about that. And the the math to do it, the the work to do it, and the background is a little tougher than 230 twos and 300 ones. They're they're nasty and it's super vague. So, the 230 twos and 300 ones. The president's been doing a very good job with his team to make sure they'll stand up in court. The three three eights will probably be even easier to do, but they can last for years. The three threes. Yeah. So what you're going to see by the 24th is these one two twos go away. They're already in the courts. We're already expecting refunds on them. But these 230 twos and these 300 ones don't expect to see a penny of refunds on these. These are done properly. We went through all the channels. Even they're even having public hearings. Oh, oh, you know what the tariffs? Thank you for your concern. No, we listen. Just thank you. Here's your new tariffs. And at any point, either today or tomorrow or Wednesday, you're going to find out that the new tariffs are in effect on September at midnight. Saturday at midnight. It's going to happen. Go ahead and timestamp this. We're going to have brand new tariffs all over the damn world, in between somewhere between 15 and 20-5% depending on the country of origin and the actual HTS. Winter is coming, everybody. Winter is coming.
Doug Draper 31:15
I love it. Yes, we'll see. We'll see what happens midnight on Saturday.
Pete Mento 31:20
Yes, sir. All right. Well, those are two topics and a halftime for both of us, and that means that we have finished yet another just gripping, gripping global trade this week. Want to thank our friends at Cap Logistics for their support for us, and thank you for always listening. Thank Keenan back in the booth, making all the dials and buttons work right. And if it's happening in global trade, we'll be talking about it next week at Mobile Trade this week. See you, Doug.
Doug Draper 31:43
Okay. See you, bud.