Sent Items #179: "TARIFF TUESDAY", Mardi Gras, Tuesday, March 4, 2025

Let’s start with a post not about tariffs because the rest of this issue will be mostly about tariffs. I shared with my LinkedIn community that I am doing “Dry March”, a month-long commitment to cutting out alcohol. I’m 4 days in (err, 3…) and while NA beers and wine are just not as good as the real deal, I’m motivated by the healthy reset that’s leading to sustained energy for longer periods and increasing productivity. Any guidance, tips, advice, NA faves - feel free to hit reply!

Okay, now on to the hottest topic in e-commerce logistics - TARIFFS.

Heading into Trump's 2nd White House term global markets knew well this first phase of tariffs in some form was going to happen. What was unknown was how long it lasts and when negotiations would start to get to deals on the table with China, Canada, Mexico, and many other countries on reciprocal tariffs.

Any economist will tell you that if these 25% Mexico/Canada tariffs stay in place along with the 20% China tariffs there will be major pain ahead for US consumers and the economic foundation of the U.S. But as we navigated in Trump’s 1st White House term, I suspect this is all a game of high stakes poker to get other countries to the negotiating table and will very likely not last for an elongated period of time.

Okay so what do we know today - what is fact as of 6:00 AM Central as I write this:

China’s finance ministry announced 15 percent tariffs on imports of chicken, wheat, corn and cotton from the United States, as well as 10 percent tariffs on imports of sorghum, soybeans, pork, beef, aquatic products, fruits, vegetables and dairy products.

• U.S. imposed 10% on imports from China

• U.S. imposed 25% on most imports from Canada and Mexico

• Canada imposed 25% tariffs on $30 billion worth of goods, but did not specify which products would be affected. The tariffs would extend to $125 billion of American goods in 21 days.

• Mexico President is expected to address the tariffs at a news conference this morning. With nationalism strengthening as a result of the dispute, the Mexican leader has seen her approval ratings rise.

The administration’s latest tariffs — are likely to encourage some manufacturers to set up factories in the United States, instead of in other countries. They could also strain supply chains, add costs for American consumers and manufacturers and test diplomatic ties. Trade wars were a feature of Trump’s first term. But his latest tariffs could broaden the scale of disruption. Canada, Mexico and China account for more than 33% of the products brought into the U.S.

Sunday evening Warren Buffett made a rare comment on Trump’s tariffs, saying punitive duties could trigger inflation and hurt consumers. “Tariffs are actually, we’ve had a lot of experience with them. They’re an act of war, to some degree. Over time, they are a tax on goods. I mean, the tooth fairy doesn’t pay ’em!” Buffett has been in a defensive mode over the past year, rapidly dumping stocks (mostly Apple and Bank of America) and raising a record amount of cash. See more on Berkshire Hathaway and Buffett below.

Tonight will be Trump's first address to the joint session of Congress and detail the broader policy theme he is laying out with tariffs. We will likely learn more.

Finally, as I shared on a webinar hosted by Parabola last week, "Tell us that doomsday is coming and we'll handle it".

Not much else newsworthy outside of tariffs, but much is on my radar. So much will change in e-commerce logistics in 2025. Tariffs and de minimis will lead the way but let’s not lose sight of changes in leadership (i.e. Postmaster General) at the USPS, developments with Temu and SHEIN and TikTok. Under a pound parcel changes.

Only other story worth mentioning here is that Trump says he is considering a move to put the US Postal Service under the Commerce Department (link).

• President Trump is making plans to disband the governing board that oversees the U.S. Postal Service and absorb the agency into his administration.

• Trump has been preparing to issue an executive order to fire the members of the Postal Service’s governing board and put the agency under the direct control of the Commerce Department.

• The plans renew questions over the future of the 250-year-old Postal Service. In December, Trump said he was thinking about privatizing the agency, a move he frequently pushed for during his first term.

• Last week, Postmaster General Louis DeJoy said he would step down after five years into a 10-year term. According to two officials, the Trump White House had been considering replacing DeJoy. DeJoy set in motion his own 10-year turnaround plan, which involves shifting the agency further toward the more profitable package business as mail continues its long-term decline.

• The Postal Service has been hemorrhaging money for years because of declining mail volumes, limits on what it can charge customers and a costly mandate to deliver to around 168 million delivery addresses six days a week. Until 2022, it was also required to pre-fund its retiree health benefits.

• For the 2024 fiscal year, the agency reported a net loss of $9.5 billion, which, after adjusting for workers’ compensation and retirement liabilities, resulted in a controllable loss of $1.8 billion. With almost no funding from the federal government, the Postal Service relies on the sale of postage, products and other services to fund its operations.

Finally, Berkshire Hathaway paid a record $27 billion in taxes in 2024 — the largest corporate tax bill in U.S. history, making up 5% of all corporate income taxes collected. To illustrate the scale, Warren Buffett quipped that even if Berkshire had cut a $1 million check to the Treasury every 20 minutes last year, it would still owe a hefty sum.

More great quips in Buffett’s annual Shareholders letter which you can read here (link). Also, next time your marketing team says they need a new refreshed website, point them to Berkshire Hathaway’s corporate website. I don’t think it has changed since it was first created in the 1990’s.

- Matt

Share this newsletter with friends and colleagues (link). Hit reply with any feedback and add me on LinkedIn and Twitter.