ExclusiveLogistics Industry Sees Chinese Imports Plunge | Business Matters (April 30)

Okay, let's go through today's business matters. The summer travel season just weeks away and the Federal Aviation Administration says it is working to develop a playbook to avoid flight cancellations this summer. So air traffic is expected to grow in the coming weeks, the FAA says. To avoid traffic jams in the skies, it wants some planes to fly higher than usual and to keep aircraft moving. The agency wants planes to use alternate routes. That's the effort to reduce the congestion at some crowded airports like New York, for example, Chicago and San Francisco. A key economic measurement just came out this morning. According to the Bureau of Economic Analysis, the economy declined 0.3 percent in the first quarter, down from a 2.4 percent expansion in the previous quarter. This was the first quarterly contraction since 2022, but it was better than some forecasts had signaled. Imports are subtracted from the GDP calculation. That figure surged more than 40 percent in the first three months of the year, as businesses were front-running President Trump's tariffs. According to the GDP data, the decline is also a reflection of lower government spending. In the January-March period, government spending fell 1.4 percent, with federal spending plunging 5.1 percent. President Donald Trump has modified previous tariffs on the automotive industry in an effort to increase domestic production. This comes ahead of a new 25 percent tariff on imported auto parts, which goes into effect on May 3rd. Trump signed an executive order and a proclamation on Tuesday to allow domestic carmakers to get reimbursed when importing parts. The maximum payment will be nearly 4 percent of the value of cars made in the United States. The cap falls to 2.5 percent in the second year, with a phase-out after that. Vehicles made with a combined 85 percent of parts that align with the U.S.-Mexico-Canada agreement and made in the U.S. President Trump's 25 percent tariff on imported cars will continue. Stellantis slammed the brakes on its profitable growth forecast for this year. The carmaker said it's too tough to determine how the Trump administration's tariff policies will affect its bottom line. In February, Stellantis officials said they expected to come back to profitable growth and cash generation in 2025. But during a presentation today, they said those predictions were based on the trade rules and tariff levels that were in place at the time. General Motors cited similar reasons when it said yesterday that it isn't standing behind the guidance it gave for improved profits. President Trump signed an executive order to mitigate the impact of automobile tariffs. The order will provide tax credits to automakers assembling vehicles in the U.S., potentially offsetting the costs of imported parts. Earlier, I spoke with auto industry expert Lauren Fix of Car Coach Reports for more. How significant do you think is this executive order in terms of easing the burden on U.S. automakers? I think it adds up over time. It is really confusing for the average person to read this policy. I have read it a few times myself, and I happened to be in an automotive event where we had a pretty hefty discussion about it, because there's a lot of confusion. Initially, there's a 25% tariff, and that's also on aluminum and steel, which is what vehicles are made of, for the most part. The thing is they were afraid of layering. In other words, you're paying the 25% on the aluminum and the steel that's not from North America. But then in addition to that, there would be a 25% tariff on vehicles built out the country. So what this does is eases that. There's no stacking, and I think that's the first thing to know. So in other words, you're not getting double tariffed. And by the way, there's billions of dollars already been taken, I think $150-plus billion in tariffs. So that's a lot of money that will help ease some of our debt. But on top of that, what we're finding interesting is this 25% tariff on auto parts will remain. So what they're doing is year one, starting April 3rd, so it's going to be retroactive. Let me just give you an example to make it easier to understand, because it took us a while to. If a car's sticker price is $40,000 and they can import that in, with the 3.75% on that 40,000 without paying the 25% extra percent tax, they pay about $1,500 less per car. Now you may think, oh, that's not a lot of money. It is when you're selling 10,000 cars. Do the math. It adds up quite quickly. So when you start looking from that, then year two, that will reduce down to 2.5%, which is $1,000 on a $40,000 car. In year three, that completely disappears. But there's more to this, because you've got auto parts coming in. For example, a car's being final assembled in Birmingham, Alabama. It's a Mercedes-Benz. The driveline comes from Europe. There'll be tariffed on the cost of that part coming in, which is 25%. And that is based on the cost of the motor. But when the first part of this is where it gets confusing is because it was off the list price. In other words, the price that's on the sticker. So we all ask, so what happens if there's a discount? You go to the dealer, you negotiate a discount. Well, that money's going to be paid up front. Yeah, Lauren, I was reading about this too. It is a little bit complicated. But the bottom line is, talk to us about what it means for consumers. So for consumers, the average cost of an electric car is about $47,000 right now. I think what you're going to see is some incentives. They're going to try and get people to buy the vehicles that are sitting on the lots that are definitely not tariffed. Once those vehicles are gone, which predictions are around the end of May, early June, that's when all those 3 million cars that have been sitting around that didn't sell because sales were off, people are going to start thinking, you know what, I do need a car or my lease is due. I'm going to do that now. You're going to see higher priced vehicles. And it could go anywhere between $3,000. It could absorb it all. You could hear like Ferrari, prices are going up 10%. That's not going to impact their sales at all. And Porsche is going up 7%. Again, people that are buying Porsches, they don't care. And so when you start looking at the full package, the full impact to consumers, you'll probably see some vehicles go up in price. Many manufacturers like Hyundai has said they're going to absorb the pricing until June. Ford is starting to bring more production back to the U.S. versus Mexico and Canada. The whole goal in all this, which is interesting, is to bring Canada and Mexico back to the table for USMCA. Well, okay, Lauren, we're out of time for today. But again, thank you very much for coming on. Good to see you. Good to see you too. Social media app Snapchat is worried that its advertisers could disappear. The Snap company chose to withhold a second quarter guidance over the uncertain macroeconomic environment. Snap explained that macro conditions could impact demand from advertisers. Advertising spend is a key component to its revenue. Despite withholding its guidance, Snap reported ad revenue grew 9% year over year during the quarter. It also shared revenue growth up from last year to nearly $1.4 billion. Snap also saw the number of daily active users increase from the previous quarter. The company's lack of transparency into the second quarter weighed on its shares. Snap's stock was down over 12% at today's close. Starbucks needs an espresso shot, it looks like, after a little caffeine crash over its second quarter earnings. CEO Brian Nicol acknowledged the downbeat results, calling them disappointing. U.S. comparable store sales fell for a fifth consecutive year. Fewer customers are visiting its stores to buy drinks, but those who are are spending more, Nicol says. Behind the scenes, the company has made a lot of progress on its turnaround, which is back to Starbucks plan. Now, job seekers in the U.S. have had less options over the past few weeks. According to the ADP National Employment Report, private sector businesses added 62,000 positions in April. That's a sharp drop from the 147,000 that were added in March, and much less than what many analysts had expected. Among the areas that experienced layoffs were education and health services, information services, as well as professional and business services. On Friday, the Bureau of Labor Statistics report for April will be released. Partnership plans grounded twice. Now, the third time could be the charm for JetBlue. Its leaders have made it clear it needs a partnership to better compete with larger airlines. JetBlue's president said it's getting ready to announce a new partnership with another U.S. airline with a larger network in the coming weeks. And this comes after the Justice Department blocked JetBlue's planned acquisition of Spirit Airlines and the Northeast Alliance with American Airlines collapsed. Calling to the stand Google Chief Executive Sundar Pichai, the search engine giant is in the middle of a remedies trial. This is a follow-up after U.S. District Judge Amit Mehta ruled last year that Google has an illegal monopoly over online search. As a solution, the Justice Department proposed forcing Google to sell its Chrome browser and require it to share user data like search histories with rivals. Pichai described the proposal as far-reaching and extraordinary. With the data sharing, he said this could allow rivals to effectively build the Google search engine from the outside. Google has long maintained it competes barely. Mehta is expected to rule on the case by August. Europe's second-largest equipment supplier for semiconductors is investing in its U.S. production. This is in response to recent tariffs. The Dutch company has started manufacturing some tools for customers in the U.S. But ASML International has long had a presence in Arizona. Of its European peers, ASM is the most exposed to the U.S. market. U.S. sales accounted for more than 20 percent of its revenue last year. ASM also competes with major U.S. players. Analysts have warned that ASM is at risk of losing market share to them. Samsung expressing worry over future sales performance. It says economic uncertainty could affect its chip business. Here's more. Samsung has dropped its earnings outlook for the coming months amid global trade turmoil. The South Korean tech giant said Wednesday that U.S. tariffs could cut demand for products, including smartphones. It also said it expected its key semiconductor business to face greater uncertainty. The world's largest memory chip maker reported a small rise in first-quarter profit as customers rushed to stock up before U.S. tariffs kicked in. Operating profit hit just under $4.7 billion, up 1.2 percent on a year earlier and in line with the company's estimates. Earnings at its mobile phone unit jumped almost a quarter, helped by the launch of new AI-enabled handsets. Shares in the firm traded roughly flat following the numbers in line with the broader market. Though the levies have mostly been suspended until July, the company says it's thinking about relocating production of TVs and other goods to reduce the impact. AI continues to be a headache for Samsung, partly due to U.S. restrictions on sales to China, a key market. The firm has also struggled to supply high-end silicon to U.S. AI chip champion NVIDIA. Local rival SK Hynix has streaked ahead in that market, last week reporting a 158 percent surge in quarterly profit as a result. Next, tariffs on China up, imports to the U.S. down. Retailers continue to warn that there could be product shortages as numbers across the logistics industry show a sharp plunge in Chinese exports. Here's the story. This is usually a busy season for imports in the U.S. In fact, ocean freight company Flexport says it normally sees an increase in bookings since this is when fall items start to arrive, like for back to school and Halloween. But the firm says it's seeing container bookings from China to the U.S. down as much as 60 percent. Shipments are also down at the port of Los Angeles. Executive director Gene Sirocca said, quote, essentially, all shipments out of China for major retailers and manufacturers have ceased. As it stands in trade war between the U.S. and China, U.S. import duties on Chinese products stand as high as 145 percent. U.S. products in China are subject to tariffs of 125 percent. Retailers of all sizes warn there could be product shortages and or price hikes. Executives from Target, Walmart and Home Depot met with President Trump last week to discuss tariffs. Target and Walmart released similar statements after the meeting, describing it as productive. Logitech International will shift some of its production away from China, including its well-known computer mice. This is to mitigate the impact of U.S. tariff policies. The U.S. is the company's largest market, accounting for 35 percent of its sales. But all of the company's products are manufactured outside the United States. The Swiss American company currently makes about 40 percent of its U.S. products in China. Logitech now hopes to reduce the proportion of Chinese-made products shipped to the U.S. to 10 percent. The company is looking to shift more of its product and production to Vietnam, Taiwan, Thailand, Malaysia and Mexico. Other moves include raising U.S. prices by about 10 percent to compensate for the tariffs. Meanwhile, Walmart is launching a program for American small business owners. It's called Grow With Us and aims to teach entrepreneurs how to grow with Walmart, as well as avoid the usual pitfalls small businesses encounter. NTD's Shaw Marshall has more. Walmart is launching a new program aimed at expanding its support of American small businesses. It's called Grow With Us, with the U.S. in capital letters, and is designed to help U.S.-based entrepreneurs bring their made-in-America products to a national state. Walmart says that when their suppliers grow with them, everyone benefits, including the community. As an example, Walmart tells the story about Milo's Teas, which just opened its newest manufacturing facility in South Carolina last week. The business, which was founded in 1946, began hand-delivering Milo's tea to a single Walmart location in Birmingham, Alabama in 1990. Milo's has now grown to include four manufacturing and distribution facilities, over 1,000 local jobs and placement in nearly every Walmart store across America. Walmart's Grow With Us program has four steps. Step one, learn. Walmart Supplier Academy offers a free 30-module e-learning course to help small businesses succeed in Walmart's U.S. stores and online marketplace. Step two, get discovered. Businesses can showcase their products through Walmart's product discovery opportunities, which includes several tools and pathways. Step three, mentorship. Select participants are matched with experienced mentors to help navigate the retail landscape. Step four, financing. Eligible small businesses can apply for financial support through Walmart's early payment program in Bridge Marketplace. Walmart's new program is designed to help small businesses at their most critical time, when they're just starting out, and could use mentorship and resources. A 2024 study by the University of North Carolina found that about 79% of small businesses survive their first year, which means only 21% of small businesses fail in that time frame. Where things get tricky statistically is within the first five years, when more than 50% of new businesses fail. If the Grow With Us program sounds like something for you, you can register your business at walmartsmallbusiness.starssmp.com. Sean Marshall, NTD News. And just quickly before we go, U.S. stocks rebounded today with the Dow and S&P 500 closing higher despite earlier losses. Consumer spending in March jumped 0.7%, and that's indicating continued strength, but labor market growth slowed sharply. Inflation cooled, easing stagflation fears. Investors now expect Fed rate cuts, but officials remain cautious. Earnings reports, especially from AI-heavy tech firms, are being closely watched amid signs of slowing investment. S&P 500 and the Dow fell for the month, however, reflecting ongoing market volatility 100 days into Trump's second term. And that's it for today on Business Matters.