Global Trade This Week – Episode 164
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Keenan Brugh 0:00
You're watching global trade this week with Pete mento and Doug Draper,
Pete Mento 0:08
Hello everyone, and welcome to Global Trade this week. I'm Pete mento, and with me is my indefatigable partner, Doug Draper, Doug, I believe that you're, you're in Dorado this week. No, you're in California. That's why, that's why we're doing, yeah, Doug's on the West Coast, and I am in Memphis, Tennessee, home of Elvis Presley. So, yeah, it's good, you know, when we do these so, yeah, I'm in the great city of Fresno, California,
Doug Draper 0:42
Yeah, and it's just basically 6am so that's how dedicated we are. Pete, to our listeners and the commitment to this show. It doesn't matter. You know what? We should do a show at like two in the morning, just to prove our commitment to global trade. Do it at two in the morning on a Saturday morning. It might be half in the bag. That could be a lot of fun.
Pete Mento 1:02
Doug, I might break a lot of my own personal rules about what I do and don't talk about on the air. So that can be a
Doug Draper 1:06
lot of fun. Yeah, maybe. Well, let me retract that statement and we'll just keep it during the day, my friend. So yeah, I'm excited to get this thing started. Well, if you're cool with it, we'll just jump
Pete Mento 1:20
in. Yeah, man, this first topics, a banger, so let's get after it. I know,
Doug Draper 1:24
after your own heart, you know, I'm usually like, the transportation guy, like, here's some crazy stuff going on. The post office has their head up there. And this, this one is all about global trade. And everybody has touched this in some form or fashion, I almost guarantee it, but it's the de minimis topic. You and I were talking just a second ago about all of a sudden, right? It just seems to be headline news about what's going on. Oh my gosh, the $800 what's coming into our country. We didn't realize the implications of having the dollar value so high. And here's the thing, I love, everything in the government has an acronym. And I think this was a bunch of senators, right? I think there's five that kind of kicked this thing off. And here's the cool thing, Pete, I think three of them are Democrat and two are Republican. So it's definitely bipartisan, and it'll be interesting to see how this is played out. The same topic played out with our presidential candidates over the next 60 days. So it'll be interesting. But I have a feeling that one of those senators was like, Hey, go to the intern and find some acronym that we can use, right? This is a beauty because I love these. It's called fighting, fighting illicit goods, helping trustworthy importers and netting gains of America Act. So anyway, this is a serious topic, but I just love it. They're like, hey, get Bob in here. Just figure something out. We need it in an hour. And that's what they came came up with so
Pete Mento 3:03
much job, Doug, it's like someone of the party's job to come up with it. Just some guy who sits in a windowless conference room and they knock on the door, we need you. Then he just put something together.
Doug Draper 3:13
Yeah, yeah. He's like that cat meme where he's just pounding on the laptop, if you've seen that one. So anyway, this is stepping into your neck of the woods, but it just but it just as I mentioned, I'm in the industry, obviously, and we see stuff, but the amount of stories that have transpired in the last four days, five days, just the end of last week is astronomical, right? And I think, as we had talked about, like, all of a sudden, people are realizing the impact of the de minimis at $800 right? You talked about testing that goes on and realizing the components of this fast fashion, as you mentioned, labor and forced labor with the cotton and the illicit drugs, is going to be a hot topic, and it's crazy. And then you look at the dollar amounts that are coming in that are unguarded, right? It's, I think, 50. So here's some stats I did yesterday. 54 billion in 2023 it's trending to $76 billion worth of product at 24 This one's crazy, right? So where I'm trying to get, here we go. So number of shipments coming in, not the dollar value, but the number of shipments, a billion with a B came in in 2023 they're trending to 1.6 billion shipments coming in the United States for 2024 so I think it's just like, oh my gosh, what's happening. I'm glad that the government's starting to realize what's happening, and putting the brakes on and really trying to understand what's going on. So I'm not sure if it's well, it is definitely out control. Are we heading to a disaster and and then here's the funny thing, right? De minimis essentially means, you know, too trivial to merit any consideration. Well, it's not too trivial anymore. And there's a hell of a lot of consideration going on. So Pete, this is up, right up your bailiwick man, what's Jake, and what's your take on this
Pete Mento 5:06
whole point of de minimis was for inconsequential imports, ones that were of such a small size that we didn't really need to keep track of them for trade statistics. And it was probably not going to be something dangerous. But what de minimis has turned into is this incredible beast that allows us to feed the monster that is e commerce. And Americans desire to purchase things at a low cost as quickly as possible. For people who've never seen one of these operations, there's warehouses in China where they're picking stuff off, picking it out of inventory, putting it in a Mylar bag, you know, a plastic bag, slapping someone's address on the US and they dump it in a bin. Then when that bin is full, they they stomp up and down on it to make sure they can put more in it. Then they get more in the bin. And then, you know that that bin either goes, Uh, goes into a container, or it goes air freight. A lot of its air freight. Then it gets to the US side, and they do a massive manifest entry on them where they're really clearing it as a whole pile of what was or inconsequential imports, to the tune of a billion packages, right? That's That's crazy. It's absolutely crazy. And as you mentioned, so much counterfeit and so much contraband has been attributed to this program, not without evidence. You know, we know that fentanyl is coming in other illicit drugs, gun parts. There's a guy who apparently built a helicopter by importing the parts one at a time and bringing them in under de minimis, which I think is so funny, but, but the the reality for the political side of things is it's easy to support on both sides. You're saving jobs, you're helping people saving lives, you're you're helping people to overcome forced labor and slave labor. It's kind of hard not to vote for something like that. But that number of $800 you know, I know furniture companies that were shipping couches for less than $800 it has become a real problem for our friends at CBP to keep up with the flow. That's problem number one. And then number two, we're not giving law enforcement enough time to properly review what's going on with these packages. So what I think is going to happen Doug is a, you know, always trying to pick the future on the future on the show. I think there's going to be a requirement for some degree of independent testing at the point of origin. There's a lot of companies that do that kind of work. You know, friend of the show, Rami, has that company silk. They could probably do something like that, where they're giving visual evidence of inspection using cameras on the other side of the world, mass testing for fentanyl, coming up with ways direct sniffing dogs, whatever the case may be, but the larger manifest is going to have to be inspected, more than what's happening now. And that's how you save the program, if not. Companies like Timo and Chen are, I mean, they're on fire. If this doesn't work for them, if a product is subject to the 301, tariffs, which textiles are, it's going to be stopped, and they're not going to let it into this program. So I think some intelligent ways of handling this, by collaborating with these companies, where they put inspections in earlier, is probably how they're going to overcome this problem. I don't think it's going away. I think the Chinese importation of fast fashion is something we're just going to have to deal with. I think they're going to have to invest more money these these trans these companies, invest more money in reviewing their goods before they make their way to the airport.
Doug Draper 8:24
Yeah. Well, I like that that take on it, right? Just, you know, the easy fix is, okay, it used to be 200 now it's 800 solve the problem by pulling it down, whether that's back to $200 or whether it's somewhere in the middle. But I think you nailed it. Is that, I don't think it matters what the value is, right? You can have a stuffed toy that has a value of $5 it's the inspection at origin, and let's really see what's coming into the US, right? Because there is nothing nefarious about a shipment that may be $500 that is genuinely compliant on all on all levels. So the question, last question I have on this one people, I got a lot of questions, but at least for this show, least for this show, who's doing the inspections over at origin? It would
Pete Mento 9:06
have to be an independent third party vetted by the US government. And there's plenty of those like, you know, you got abs, you got what's it called intervas? Is that what it is? Veritas? Veritas, you know, there's companies that you could train what they want done for it, but I think it's a dog inspection is probably pretty damn good place to start and have it reviewed that way. I don't know if they'll pack it so well, the dogs can't smell it, but too much fentanyl is coming in the country doing this, and too many dangerous things that we don't want people getting a hold of this happening, and also the erosion of a company's brand name through all the counterfeit goods, it's just, it's got to, you got to fix it. I don't see it turning into like, you know, the the no soup for you from, from Seinfeld. I don't think that's going to happen. I just think we're going to have to finally come to terms the fact that this got as big as it did. We got to do something about making it more efficient.
Doug Draper 9:56
Yeah, yeah. Agreed. And I. This show gets bumped up one notch because we did make a reference to a sitcom or a movie.
Pete Mento 10:06
So for those you playing at home, take a drink.
Doug Draper 10:11
I love it. You know, Pete, I would imagine this is not the first time that we're gonna talk about this.
Pete Mento 10:16
Oh no, this. This is gonna go all the way through the election. I don't think they're going to couple the way to manage it, probably until then. So,
Doug Draper 10:25
yeah, it's interesting. Last comment, at least from my perspective, is it because it's, I think, three Democrats, two Republicans. It truly is bipartisan. It doesn't matter what party you're on or what side everybody wants to stop the fentanyl and the things and then the various items that are coming in. So we'll see with bipartisanship, how fast things are going to change. And heck, people could watch this in a week, and what we're talking about maybe out of date. But our listeners don't do that. Pete, they come on immediately when these
Pete Mento 10:55
shows are produced. Well, Doug, I want to comment on that. So on Thursday at 12 o'clock Eastern, there's going to be an invite today on my LinkedIn page. I'll be giving a Live Webinar with questions and answers on this. We only have space for 800 people. Last time it blew up like we everybody was on there, and then we put it up online to watch afterwards. Had 1000s of 1000s of views for the 301, tariffs are doing the same thing for this 321, de minimis program. We'll be talking about that on Thursday. Pardon me, not Friday, Thursday, at 12 o'clock. The invite for that will be my LinkedIn today,
Doug Draper 11:34
right? All right. Well, I know that'll be good. And your agenda for that topic just got shifted based on all this,
Pete Mento 11:40
all those things. That's why we're doing it. So I'm just trying to, like, you know, emergency webcast. Here's what we know, here's what we don't know, here's what to prepare for. Like, there's all these law firms and consultancies that are charging like 50 bucks to be on this webinar. I'm like, Dude, you and I both know it cost you next to nothing to do this. Just put information out there, and then I have a competitor that has some people who are, in my opinion, just not qualified to discuss it, that are going out there to discuss it. And this is not a time for wild speculation by people who are not experts. Yeah,
Doug Draper 12:09
too important of a topic. So all right, well, we decided to tag team that one, so we're immediately into one of my favorite parts of the show, which is halftime. This is where Pete and I can talk about whatever we want has nothing to do with global trade, just headlines that catch our attentions or passions that we want to share with our listeners. Of course, it's brought to us by CAP logistics. They help produce this show, and we encourage you to visit cap logistics.com so since I did that, that monolog there, Pete, why don't you fire in with your first or your halftime topic?
Pete Mento 12:43
Doug, did you see the video of Perry Farrell and Dave Navarro, from Jane's Addiction, getting into a fist fight on
Doug Draper 12:49
stage? It's funny. I literally watched it about two minutes before we started the show. So yes, I did.
Pete Mento 12:56
All right. So I was so excited for next Tuesday night I have to be in Milwaukee, Wisconsin on Wednesday, so I figure I'll come in. I'll go to Chicago, and then I'll go see Jane's Addiction. I was very excited. Hadn't seen them in a long time. Love their music, absolutely love their music. And you know, I got my tickets, and then yesterday, hey, guess what? We can act like adults. So no soup for you again, twice. For those who at home drink and they canceled all their shows going forward, I was doing the money on this. It was a huge money grab for these guys. I mean, for the band, was probably gonna clear before merchandise, you know, somewhere in the neighborhood of, let's just call it like $13 million after costs and all the rest of it between four band members. That's a lot of money. Doug, it's a lot of money, but they couldn't keep their crap together and just get through when I hear about guns and roses, I expect them to cancel shows. When I hear about Motley Crue, I expect them to cancel shows. Like if Dave and Eddie had ever gotten back together again, I would expect them to cancel shows, but not the whole tour, not the whole tour, man. So it got me thinking about guys that can't get along, right? We got Oasis coming back together again next year. They're going to be playing all over the darn place. I'm going to, I'm going to do everything I can to go see him in the UK. I think that'll be a lot of fun. But are there other bands you wish could get along so you could see them again? You could watch them actually play one more time together. I mean, if the Eagles can do it, for God's sakes, can everybody? So is there a band that broke up? You wish you could go watch again?
Doug Draper 14:32
Yeah, this one's hard. So I got two, two answers to that number one. You just mentioned it. I was the biggest Van Halen fan growing up, and I saw them in Wichita, Kansas, at the Kansas Coliseum in like, 1981 so I was very young. I can't believe my parents dropped me off and said, See you later. We'll pick you up over there at that corner Street at, you know, 11 o'clock. But yeah. David Lee raw, you know, was a thorn in everybody's side in that band. So I. I think not only Eddie Van Halen, but pretty much everybody. So that would be one. And then here's one, Simon and Garfunkel, oh yeah, that they had a fine this is way back, way back in the day, certainly not a rock band. But I think there was a lot of missed opportunities and collaboration that those guys would have had if they would have sticked. They were stuck together a little bit longer. So those are my two, right? So we know Jane's Addiction. What do you what are
Pete Mento 15:23
your Simon and Garfunkel? They, they played, like, I think it was in New York, they did one show, and I guess it was a disaster, like, they, they, they hadn't played together in, like, what, 40 years or something. And they did one show, and they just couldn't get along, even after one show. How crazy is that? You know? Yeah. And then, you know, Van Halen man, I've seen every iteration of that band live. I saw them when it was the two of them. I saw it when it was Sammy Hagar. Shout out to Robbie Hagar. He is a fan of the show. I know that for a fact. I didn't know that. Yep, he works in the band, and he works in freight forwarding, and his uncle is Sammy. So shout out to Robbie, but I saw it with a guy from extreme when he played with them, like I saw them in every iteration, and I always wanted to see them play again. Always, always, always, Doug, have you heard this song from nerf herder Van Halen?
Doug Draper 16:15
Not even know what that is. Nerf herder is a band,
Pete Mento 16:17
and they have a song called Van Halen, and it's one of the funniest songs. It's not, it's, I mean, it's funny, but it's also a kick ass rock song for I saw, I bought Van Halen one. It was the best damn record I've ever owned. That's the first line of the song. And by the end of the song, when Dave breaks up, he's like, they brought in Sammy Hagar. Sammy Hagar, I'll never buy your stupid albums again. Never again. Yeah, you got you gotta, you gotta hear the song. Those are two bands that I would, I would love to see. Well, of course, Dave, Dave's alive, but Alex is dead. The other one I would, I'd love to see get back together is Wu Tang Clan. I would love to see the the members of that band get together and or group get back together again, again and play. I think that would be pretty amazing. But other than that, man, I saw the Eagles at city life out in New York as part of a bigger festival. They were they were atrocious. Vince Gill sounds great doing the part for God, who's a fry, playing for fry. But in the middle of the show, it was just dead. All the songs are slow and like, Don Henley's up there with a self important warbling. And they lower the lights, and you hear Joe Walsh over the microphone. Is anybody else bored out there? Like he just says it over the microphone, because I am. We're gonna play some of my songs now, and the lights come back up. No. Don Henley, no. Vince Gill it's just, you know Joe Walsh up there playing his ass off. I have a Joe Walsh story before I finish this. I was a St Louis airport when I was a CH Robinson. It's coming back from a client call, and there was Joe Walsh in all his glory. And I said to him, Hey, I'm a huge fan, Joe. Huge fan, James Gang all of it. I'm a huge fan. And he said, thanks, man, thanks. And I said, Oh, you're my favorite Eagle. And he goes, I'm my favorite Eagle too, man. And then he shook my hand and he walked away. That was, that was a really cool interaction,
Doug Draper 18:10
crazy. Well, um, my topic this is, could be enter not Entertainment Tonight, but entertainment this morning. So I'm paying homage to something that I usually turn turn away from, which is entertainment, movies and and television. So there's something and Pete. I've been looking forward to this for probably a month when they started doing this, but the transformation of the Oswald Cobblepot, I didn't know what his real name was. Had to load that one up. You went from a disfigured gangster that, or a disfigured nobody, into a Gotham gangster. So it's the penguin, right? And it's coming out, I think Thursday. And to me, I the first time I saw that, I'm like, this is going to be amazing. So I'm really excited. I think it's like nine o'clock Eastern on on Thursday. But I'm looking forward to that quite a bit. It's amazing. Now here's the one thing. Colin Farrell is the the penguin. But I was thinking like, who else would be perfect? And I think Tom Hardy, if you're if you know that actor, he's been around, yeah, and he's amazing. There was a movie he did called Legend. Did you see that one? No, oh,
Pete Mento 19:26
is that the one replaced two parts he plays,
Doug Draper 19:31
yeah, yeah. Like, unbelievable. And that's kind of the same genre and darkness and everything else. So I think when I saw that, I'm like, Is that Tom Hardy? And it wasn't. It was Colin Farrell, but anyway, I'm stoked. I'm looking forward to it. And I had to bring it up on the show, because I know that you bring up entertainment things all the time, and I'm like, Yeah, never heard of it. Don't care. But I care about this one big time. Pete, so I'm looking forward to it.
Pete Mento 19:55
Unapologetic comic Bert buck, nerd here. How? To mention a couple of things. First of all, Tom Hardy is venom in the MC universe, and he's incredible. He's wonderful. He's also a Brazilian Jiu Jitsu black belt, pretty high level, and he competes. So Tom Hardy will just show up at jiu jitsu competitions as Tom Hardy as himself, and doesn't hide from anybody. Just gets on the mat and smokes dudes. He's really, really good. The second part of that is the Marvel Universe, compared to the DC Universe, really sets up this type of story. So all the Batman villains, if you think about them, they're all struggling with some kind of mental illness. So the Joker movie with Joaquin Phoenix was excellent, because you could believe that part, you know, significant parts of that could happen. You could believe that someone could turn that crazy and do this kind of a thing. I think the the sequel for that movie is going to be hot garbage. I don't even know if I'm gonna go see it. The Joker, the Riddler, the list goes on and on, right? They're all they're all disturbed. So to take one of these characters that like, like you said, came from being just this beat up, broken person who's been mocked their entire lives but has an incredible intellect, and stick them in a position to just be ruthless and nasty and awful, it sets up a great storyline for what won't be it won't be some hokey comic book show. It's going to be a TV show about a guy who's just not right. And if you think about the sopranos or the shield or other things that had to do with crime and organized crime, it just sets itself up. And I am going in with my expectations too high. So I've been ever since I saw this this morning, Mike, you got to calm down. You're, you might be expecting too much from the show, you know, let's just, let's just go. It's Colin Farrell, right, that's playing the penguin, correct? Yep, yeah. So I'm sure he's going to be great. And I'm, I'm really looking forward to it. Doug, so maybe next week we can talk about what we thought about the first episode.
Doug Draper 21:56
Yeah, and hopefully our listeners aren't rolling their eyes right now, with a bunch of middle aged men talking about comic book movies, well,
Pete Mento 22:04
I always do it. You're the one usually rolling your eyes at me. Doug so, very true.
Doug Draper 22:09
Very true. All right. Well, that was halftime. Brought to us by CAP logistics. Check them out. We appreciate what they do for us every single week. Topic number two, can remember who got started? You want to run with this one? Oh, you're going, you're okay, all right. So this one, you know, usually, like I said, a transportation This is a double whammy with specific global trade. And I saw this on this newsfeed that I just subscribed to, and it caught my attention. So it talks about Chinese private sector, VC, kind of money and how they're the financing of creativity, primarily around tech and other growth sectors in China, has basically been snipped, right? And it's interesting to see what happens. It's been so here's a stat before I go into into things here. So in 2018 right? Pre, pre pandemic, there were 51,000 new companies started in China. Keep in mind that's over a population of over a billion in 2024, Pete, 260 that's it. There's just no more money porn in there. It's, it's the real estate collapse, state focused control, where you really got to prove your worth and your value. And entrepreneurs are like, I'm not putting my house up on the market to start this company, type of thing. They want to go find money. And people are not investing into Chinese businesses anymore, so it's primarily around emerging tech and other growth sectors like that. So part of me is like, okay, China's shutting down as far as creativity and entrepreneurship, is that good for the US? And the answer is yes and no, so the S is short term, right? It's diverting funding back to the US, and some of the talent is coming here, so people in money are getting redirected the United States and other countries, right, not just the US. So I think you're going to see investment into creativity in other other countries across the world. So I guess that helps the US gaining more control and having the creativity and the growth sector is really popping up long term. I don't know, as crazy as this sounds, I'm not sure we are in a global economy, whether we like it or not, anything that other people do across the country or across the world impacts us, maybe not on a daily basis, Pete, but certainly with strategy, you know, government affairs, government affairs moving forward. So it's kind of a unique thing that we kind of need each other in a strange mix, and we're almost like frenemies, right? Which is a reference to, um. Friends, we're kind of like frenemies. So long term is TBD, short term? Yeah, we'll probably a benefit to it. But I don't know it sounds awesome, but we need to take a look at this and see what's going on over there, because I think it will impact the global economy and creativity. I don't know if you heard about this, or do you have any comments? Yeah,
Pete Mento 25:19
so a couple of comments. One, money's too expensive to borrow these days, and that's a big reason for what we're seeing. You know, you used to be able to go to Japan and get a massive loan for like one and a half 2% and that's not the case anymore. You're also seeing people that have gotten burned on those huge investments. The pool of money in China is not what it used to be. We believe there's $17 trillion of off the books lending right now in China. So that means it's not on government paper. And when you think about numbers like that, it makes your head explode, right? So the availability of cash, you know, of liquidity to go into these mergers, acquisitions, purchases, startups, it's just not there, and it's evident also in their unemployment numbers. You're seeing that unemployment number rise and rise and rise and rise and rise probably well above 35% for people between the ages of 18 and 28 and why invest in businesses when those people aren't going to be consuming just the the economy in China is in absolute Shambles right now, and this is a great indication of just how bad it's gotten. Think Americans are very myopic, and we don't consider what you just said, Doug, these two countries need each other. We need to find a way to get back to collaboration, where we're buying goods from them, exchanging services and ideas and back and forth, but we don't want to put ourselves again in a position where they're taking advantage of us by stealing technology, allegedly, and, you know, coming up with non tariff barriers to entry. So Doug, it's an excellent topic. I think it'd be fun for us six months to now, from now, to take another look at it and see what it looks like. Because if it isn't getting better, I think that we're seeing, you know, the even deeper economic turmoil that I predicted about a year and a half ago. Yeah,
Doug Draper 27:00
interesting. All right, hold on a second. I'm writing that one six months
Pete Mento 27:08
in the globe, in the global trade this week, the future calendar, you know, the the family calendar on the refrigerator. You check this a couple months
Unknown Speaker 27:18
yeah and
Doug Draper 27:20
yeah, we still have one of those at my house. So anyway, yeah, all right, wrap it up, bring us home, my friend, buddy,
Pete Mento 27:28
this topic made my head hurt. So Saturday night I had a wild weekend. Doug wild weekend. I flew back from Chicago on Friday night. I sat on the couch in Virginia, I watched like eight episodes of The League. Excellent show, by the way. You ever watch it? Doug
Doug Draper 27:49
never heard on it. So now
Pete Mento 27:53
it's so funny. It's, it's a bunch of friends in Chicago that have a fantasy football league, and they're just awful to one another. It's very, very funny. So I watched that. Saturday, I woke up and I went out with my daughter, hung out with her for a little bit, and then I came home, you know, he didn't make myself a nice dinner. Had some nice grilled chicken, you know, some broccoli rabe. Washed it down with about a dozen Diet Cokes. And a friend of mine called me and said, Are you coming out tonight? And I said, No, I'm not. I'm standing he's like, I got to talk to you about this trade stuff. Now this particular friend of mine is an economist who does work for the Trump campaign, and he said, Why do you keep saying that the Chinese don't pay the tariffs they do? And I said, No, they don't. American consumers ultimately pay the additional cost of importing because, well, what if they didn't? I said, I don't know a method or mechanism to do that. He goes, Well, hear me out. What if you force Chinese companies to pay a tax to export goods to America, where they would have to have a document that was electronically generated, serialized and kept track of by the US government, and when you made entry, you had to have proof that that tax had already been paid. And I said, Okay, that's crazy, because there's no mechanism to do that. Don't even know if it's legal. It'll really make the WTO angry. And I said, ultimately, wouldn't that just end up being wrapped up into the cost of production? He said, Yes, but you're an importer, which means you get to negotiate it, so they're going to eat part of that cost. I said, it's possible, it's possible, but not necessarily, entirely. No, there's some people that don't have the negotiation power to make that happen. And I said, and nothing like that exists. And he says, Well, it might. And that got me thinking like, I mean, I spent hours with this in my head, Doug ping ponging around like a squirrel, you know, all over my brain. Just thinking about this, it harkens back to the old days of quota. Most people who watch the show are too young to remember what quota is. But. You were allowed to import a certain amount of stuff from China. Let's say it was socks or underwear or T shirts, and when you hit a certain threshold, you couldn't bring in any more. Or for some quota, you could bring in more. You just had to pay a higher duty on it, and there was a document that had to be prepared prior to entry. So that might be a way to do this. I don't know that it would really stop all that cost coming to the American consumer, but I will tell you, it'd be a cash flow nightmare for the Chinese, a nightmare because they don't get paid a lot of times for 90 days, and you've got all that time to produce it, all that time for transportation. You put a 60% tariff on stuff, you're going to put these guys in a really tough situation. So I'm fascinated by this idea Doug. I don't know if it's possible, but I think it's an interesting take on a way to punish the Chinese on certain types of imports.
Doug Draper 30:55
Yeah. The immediate response is, what does it matter? The money is going to be captured in the cost of goods or things of that nature. So, and I still think that is very valid, right? You're just moving money around, absolutely, origin to destination to consumer pockets, right? So I think that is going to happen regardless. But you know the art of the deal, the one thing that caught my attention is your buddy works for the Trump campaign. I know negotiation is a big deal. If anybody's seen the apprentice, there's negotiations going on in that that show all the time. So the concept of negotiating duties on products or at point of origin is interesting. Might create another level, but it would create the sense of winning right, like, hey, we beat these guys because they're having to outlay money, like you said, in the cash flow situation at origin, would be kind of crazy. So other than a sense of we won and they lost, right? It doesn't really matter it's wrapped up. Doesn't matter where the money's coming from. You and I are ultimately going to pay for it. It's just a matter of how that cash flow is managed during the cycle of the transaction. So I love the creativity, and maybe there's something there if you poke around with it. So anyway, bonus points for creativity with your friend there, Doug.
Pete Mento 32:21
I think ultimately, if they were to do something like this, the big winner will be India, because you can probably get the same cost to produce right, but there's not that additional cost, and the Indian company's not carrying that on their balance sheet, which allows them to borrow money and do more creative things. I think that this kind of a move, if it was done correctly, could have an impact on shifting production. I think no matter what, if you put a tar flight out on Chinese good, it's going to shift production. But if you did it in this way, it would make other countries be in a situation, financially, on their balance sheet where they could be more aggressive than their Chinese competition. That's interesting. It's interesting. I don't know if the transportation cost would stop you from doing it from Vietnam, Cambodia and Indonesia and Malaysia, but it's a place to start.
Doug Draper 33:12
Yeah. Well, it's all about chasing labor. That's how we ended up in China decades ago. Absolutely.
Pete Mento 33:18
Bud, good. All right, Doug, will you bring us home? You close it out?
Doug Draper 33:22
Oh, that's right. There was that dramatic pause, right there. I forgot. It's like 27 minutes into the show, or 30 minutes. And I always forget who opens and who
Pete Mento 33:32
closes? We get wrapped up, Doug. We get passionate. We get very excited about
Doug Draper 33:35
talking. I know, I know. And unfortunately, that's the end of the show. We want to thank Catholic gistics again for making this thing happen. It doesn't matter day or night, weekdays weekends. We're going to make the show happen as much as possible every single week with the forward leaning. Take this week, we had the forward lead on almost all of our topics, but there's still much up in the air, so we may have to revisit these at a later show date. So again, Pete, your travel schedule in the next seven days is insane. Stay healthy. Enjoy and before we go, tell us about Thursday's webinar again, yep, hit me up
Pete Mento 34:16
on LinkedIn. I will have the invitation up there at some point today, we'll be doing a presentation on the de minimis rules effect because of the 301 change. So if you are in any sort of retail or E commerce, you want to take a listen, and there will be a session at the end of it, probably about 10 minutes for questions and answers. So please do register. If you register, you will get the link. Even if you can't make it in person, you can watch the video afterwards. Awesome. Space is limited, and when it you know, 800 people might not sound like it's gonna go away, but it will.
Doug Draper 34:46
Yeah, good. All right. Excellent way to end the show. Pete, travel safe. Thank you, my friend. We'll talk to you later. All right,
Pete Mento 34:53
take care. Bye.
Transcribed by https://otter.ai