Kenneth Raposa
speaker
133 appearances
2 recordings
1 series
first heard Feb 2025
last heard Apr 2025
Kenneth Raposa’s voice in public audio — every appearance, attributed to the second.
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Appearances
Well, the positive side is that you are going to entice companies to manufacture goods in the United States. And that might mean that they're investing in new greenfield manufacturing plants, like we heard recently from Hyundai when they said they would invest in steelmaking in Louisiana. That's unheard of. They're only doing that because of the tariff threat. Also, maybe a gesture of goodwill's
to hope that the Koreans weren't going to be tariffed, but that's another story. So that's one reason why you do it. And if you and I, let's say, here's another reason. If you and I, other than the Greenfield project, right, this would be a brand new manufacturing plant to make whatever it may be, Starlink satellites. You and I have a factory. We spent millions of dollars to build this factory.
We built it in 1980s. It got all the good equipment. It's ready to roll. We can make 100 widgets a day at this factory, whatever the widget may be. But we only make 60 widgets a day, maybe as low as 50. And the reason why is because import penetration from all these countries that, I wouldn't say abuse the United States, but think of the United States as their country, as their market.
So you and I that spent millions of dollars on this factory floor and all this equipment, we're not firing on all eight cylinders. We're firing on maybe four. So what happens is all of a sudden, you and I are starting to get orders from Boeing and Ford to make that widget. And now we're hiring a third shift. And now we're putting those machines back to work. And so that's the good thing.
That's the best case scenario, right? That's the best case scenario that would happen with tariffs. You have to keep them permanent in order to make that happen. Businesses, like markets, they need certainty. So Trump can't be willy-nilly about this.
He can't say there's going to be a tariff on Monday and then on Friday he says, oh, I changed my mind because so-and-so country said they're going to import more chicken. That's not how it works. So you have to be very serious. and show these countries what's going to be permanent.
So let's pretend we're at Walmart. Everybody knows what Walmart is. And Walmart has to fill its warehouses with goods that you and I buy. And it's springtime. So of course, since the end of the holidays, they've been buying patio furniture and things like that. So they are calling up They're factories that they work with in South Asia, obviously, Southeast Asia and China.
And they're saying, I need 100,000 orders of this Adirondack, plastic Adirondack chair. Okay. Well, that plastic Adirondack chair used to cost $10 for Walmart to import. And now with tariffs, maybe it costs... Let's say all things being equal, it's 20%. So let's say now it costs 12, right? So 20% of 10, that's a $12 tariff. So Walmart might say, oh, that's too much money.
Actually, Walmart will say that because Walmart just wants things cheap. And Walmart's going to say, I don't want to pay that. And then the Chinese or the Asian company that makes that plastic adder on that chair is going to say, well, a deal's a deal. And then Walmart's going to say, well, instead of me importing 100,000, How about if I import 150,000 of them instead? Can you give me a deal?
Oh, yeah. Okay. I'll lower the price 10%, right? So, the tariff, in other words, what I'm trying to tell you is that $100 chair tariffed at 10%, just to make it very simple math, does not mean the chair costs $110, right? That's not what it means. Because of what I just explained to you, Walmart can set prices. Walmart can force its clients to lower prices.
They can also tell their clients, I'm going to buy more, increase volume. Can you lower price for that reason? So there's many ways that the price change. So it's not a direct percent. It's not like $100 becomes $10 more out of your pocket. That's not how it works. But not every company is Walmart. Not every company is Walmart. So now let's look at the small company.
Let's go back to you and I. You and I have been at our widget-making factory. We need to import a whole bunch of- We're widget kings, buddy. That's right. We're the widget.
We're a widget dynasty, man. And we got to import some things from- From, let's not say Mexico, because that free trade deal looks like it's been untouched, except for steel. We're going to import some stuff from Vietnam. And it used to be 3.5% duty. And now it's a 46% duty. And that was $100 good. So now for us, it's going to be a problem because we're a smaller business.
And we're not going to be able to make that kind of deal with our supplier. So we're going to have to be very creative. We might have to say, oh, no, I don't have the money to do this. at the moment, so I'm in trouble. That is very possible.
Or you might say, I'm going to work what's in my factory for now until I can find new suppliers and maybe those guys are in Mexico, maybe I can find guys in Mexico because again, the free trade deal in Mexico seems to be intact.
Or maybe I say, which would be Trump's dream and hope, that you and I call our friend that we haven't spoke to since college and he says, Ken, you didn't know that I made this widget too? And Okay, it's going to cost you $10 more a pound, but hey, at least you know you can get it. Whatever you want, here's the price, deal, sold. And now that's what's happening.
So otherwise, again, you and I are going to have to pay that price. And however we talk to our suppliers about it, that's what we end up getting the final price tag of. But there's going to be some suffering for sure. But look... Life is not easy, man. Life is not easy, man.
The reason why you and I aren't generals in a war is because we're probably sitting there and we're thinking of all the worst case scenarios and we're pining over what could possibly go wrong and who's not going to like us anymore and who's going to be mad and we're not going to get anywhere and then we're just going to go years and years into the future and no change is going to be made.
We're not going to take any risks because we're too busy worried about what might happen. Well, that's not what leadership is. You have to take action. If this is a complete disaster, which I don't think it will be because the China tariffs were not a complete disaster, you can reverse it. This is not open heart surgery.
If all of a sudden the market goes down 80%, which it's not going to do, and people are being laid off left and rights and there's bread lines being formed, you can say, okay, we're all done with that experience. Experiment. Let's go back to the way it was before I came up with this idea. I mean, that's the worst case scenario.
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