Born Scrappy
The go-to podcast for scrap metal exporters and traders
Born Scrappy
Staying resilient through market uncertainty - ReMA Atlantic City Panel
In this week’s episode, I chatted to Brian Shine (CEO at Manitoba Corporation), Sam Desai (VP at RM Metals) and international trade attorney Camelia Mazard (Partner at Doyle, Barlow & Mazard).
This episode was recorded at the recent ReMA Joint New Jersey, Mid-Atlantic, & New York Chapter Atlantic City Meeting. It was my first time attending their chapter event, and it definitely won’t be the last time! I’ve added it to my list of must-attend annual events and if you’re doing business or looking to break in to the region, then so should you.
The panelists shared their experiences, challenges, and the strategic adaptations needed to navigate the unpredictable trade landscape we currently find ourselves in.
In this episode, we talk about:
👉 Importance of incoterms
👉 Free trade vs fair trade
👉 The case for lobbying
👉 Taking the loss
👉 And more!
Listen to the full episode. Wherever you stream your podcasts.
Born Scrappy. Brought to you by Buddy.
The only marketplace and trade OS built for scrappies, by scrappies.
https://www.linkedin.com/company/tradewithbuddy/
WHO IS STU KAGAN ANYWAYS?
27 years in the metal recycling game and still learning and growing...
I learnt from the best and worked my way up from yard labourer to Executive Director of Trading and Operations for the largest metal recycler in sub-Saharan Africa. Responsible for 4,500 employees, 85 sites, and the overall profitability of a multi-billion dollar operation.
I brought my breadth and depth of knowledge to bear and co-founded the fastest growing, most-loved, and most awarded metal recycling company in New Zealand. No small feat in a country where people are outnumbered 4:1 by sheep (spoiler alert: sheep don’t produce much metal waste).
I thought it was time that tech worked for our industry, so I took all of my experience as an operator and trader and leveraged that to build THE killer scrap app, Buddy. That’s right - built for scrappies, by scrappies.
Father of two crazy-awesome boys. Husband to Lisa. Under 9 rugby coach. YPO member. Lifelong learner. Mentee. Mentor. Chief dog walker. Committed Stoic. Undefeated dance-off champion.
COME SAY HI ON LINKEDIN
Hi, I'm Stu Kagan and welcome to Born Scrappy, the podcast for scrap net exporters and traders. Join me in conversation with some of the most experienced traders and operators that have helped shape this incredible industry. In this special live recording from the Rema Atlantic City meeting last week, I chat to Brian Schein, Kami Azar, and Sam Desai about all things tariffs. We got through a lot of hard topics in this one, and it's worth the watch with all the changes going on right now. In today's episode, we talk about taking the loss free trade versus fair trade, the art of the deal, the case for lobbying and much more. So let's jump into it with the panel, but first intro. Okay, can everybody hear me? Is that coming through the speakers? I guess it is'cause everybody stopped talking. That's fantastic. Um, okay guys, you could have seen, um, we are gonna have a, a one hour conversation. We'll give some people some time to trickle in if there's more coming. A lot of people mentioned they were interested to hear these three talk, not really me, but, um, we'll get a whole lot of juice outta these guys. Michael, Michael wanted to speak first. Do you still wanna speak first? That's all right, mate. No problem. Don't say I don't invite you to anything. Alright, so, um, we're gonna get stuck into it. First thing we're gonna do is, um, do some introductions so we can contextualize exactly who we're speaking to and why we should maybe have a listen to their opinions. So if we can start with Brian, um, give us an idea of, of your background and, and who you are. Sure. Uh, happy to be here today, looking forward to the session, and welcome any questions from the audience. We'll certainly do, uh, the very best we can. Complex subject. Uh, my name is Brian Schein. I'm the CEO of a company called Manitoba Corporation, which has a nice Canadian sounding name, but the reality is we're US based, uh, we're outta Buffalo, New York, and, um, have been in business for 108 years at this point. Mostly trading copper. We have a plant in St. Louis, Missouri, and I'm a former REMA chairman and the current chair of C, which is the Canadian Association of Recycling Industries. Thank you. Uh, I'm Sam Desai. I am the Vice President of the Rema Chapter, New Jersey. Uh, in addition, I'm, uh, I work for a company called R Metals. I'm the vice president there also. Uh, we've been around approximately around 40 years and we're doing, uh. Exports and also imports of metal products, scrap usable products. So, and I'm Kami Mazar. I am an international trade attorney based in Washington, dc. I also, uh, dabble in antitrust law and they will all come into play together because as we know, the scrap industry is prone to scrutiny from, uh, all different types of agencies in dc. That, like to keep an eye on your imports, exports and ensure that you're not colluding. Alright. Sounds like a, a panel with a lot of information. So I'm really, I've been excited for this one for a while. Last week we did our podcast where we spoke about it, but I think the first thing I'm gonna ask, and maybe can, we made this for you, but happy to open it up, is, um. What's going on literally in the last hour? Because it's similar to the question I asked at the REMA event in Vegas last year. I asked George Adams, how many yards does he have right now? And it was like kind of'cause in 10 minutes time that could change, right? So right now with the tariffs, what's the latest news? What are we hearing currently? So at the moment, uh, there are a few pending deadlines. So the most important countries that are on the horizon is obviously China. There were additional, uh, duties that were going into place just regardless. Of the product. We have a copper on the horizon as well. Uh, the administration is very excited to get any comments. They're going to look to see whether or not any trade, what we call relief should be put into place for copper products and any copper derivative products, which would be where scrap would come into. When do we expect to hear more on copper? Copper? I believe the comment period closes in April 11th. And then the process after that, how long after the process After that is, we're hoping it'll be a notice of rulemaking, which means you actually have the opportunity to submit comments in front of the agencies. At this point, we don't know if the purview will be at the US Trade Representative or at the International Trade Commission in dc. Okay. Mr. Copper Guy, what are your thoughts on that? So, uh, one from my own personal perspective and two from my, uh, role as again, former REMA and current chair Kerry. This is really where the trade association comes in. Critically important because as a small company, um, we don't have the resources to hire attorneys to, to really fight this, or we need to be part of a, a larger group. And that's the value of ar Rima or Carrie. Um, RIMA is actively engaged with an, uh, law firm to look at, um. The real status of copper. Is there a shortage? Is there reasons that this should or should not be included? REMA has long maintained, uh, the mantra of free and fair trade, and that's been a core and critical value for REMA and carry for all of these years. It's critical for recyclers to have markets open to us, and that certainly includes in in the copper space. Obviously, if there's national security interests. Things like that, we certainly have to protect that. But in the case of copper, we as recyclers don't see that. So, Sam, can you just unpack for us, um, what's actually happening and the effect of these currently in the industry? I mean, I think that these, uh, tariffs and the uncertainty has basically slowed everything down and we see pockets of, uh, lot of activity. And then it dies out. Uh, I think that everybody's really concerned about what's gonna happen tomorrow. You got, you know, uh, all these dead dates, right? She mentioned April 11th, April 2nd is possibly the reciprocal tariffs that might go into effect. Uh, like every day there's something new. Uh, and at the end of the day, if they keep putting tariffs on raw material products, recycling products, you know that that's gonna increase the cost of the end product at the end. So can you, um, can anybody here give us actual stories of something they're aware of right now that's affecting I can, I have stories like, you know, I had some metal that was coming in. It was late by one day, vessel was late, and I got tariffed, like 20%. Okay. So what do you do? Nothing. You called Kami, but I bet you it'll be hard to settle a claim like that. I wanna just, I wanna double click. So let's understand. You had material on the water? Yes. It arrived at Country X Country. It was actually coming to America. You were bringing it in? Yes. Right. Okay. So it wasn't reciprocal. So this is material coming in. You've been a day late, you've received the material and now you're having to, it wasn't my fault. The vessel was late by a day. So the deadline was a certain date. Yeah, and it came in a day too late. I ended up paying like. Almost like$70,000. So I heard the other day people are putting it in their contracts that if that is in place, um, the seller is really bearing the brunt of it. Correct. So, so did you bear the whole the whole I I did. I did. And I have a similar situation going on right now. I have, uh, some aluminum coming in and, uh, I'm gonna be hit with all these new tariffs because they raised the tariff on, on usable products and aluminum from 10% to 25%. Uh, it's very hard to get a customer to increase the price by so much, you know, uh, and, uh, it's already on the water. Not that this really solves the problem, Kami, but is there a, an argument for force majeure? There are, if your clients have a little bit of forewarning. So we advised a number of clients when the terrorists were first announced, probably in late February. And they did use words like, you know, sort of an act of God kind of thing, that they were gonna pass on all the price increases to their customers because the tariff is imposed on the importer of record. And if you can put it in your contract, and I know the foreign producers are very skeptical of doing this, that you wanna change your inco terms. That's the first thing that we say to. DDP, which is deliver duty paid, right? Even if you pay slightly higher premium, you are not responsible if it's a day late, if it's a month late, if it's, you know, oh, oh an hour late, to be quite honest, because at 1201 is sort of when the, the time goes in and when it enters the port. And if you recall during covid all the supply chain issues, you know that. We had problems clearing everything at all the ports around the country. And that is gonna be a similar situation as people try to flood the market with imports before a number of tariffs, especially the reciprocal tariffs go into play. If we go back four months, maybe three months, um, I used to sell thousands of tons, C-F-R-C-I-F, um, around the world. Somebody said, DDP, not an issue for. Now you say that to me, it's like a swear word. There's no way practically I'm gonna supply anybody in America DDP. Correct. What, what is happening, Sam, I guess if you're, if you're even saying that to somebody now, I, I think that, you know, and, uh, Kami has, you know, you can change the terms on the contract. You can do all these things to protect yourself, but at the end of the day, it's about you and the supplier, and it's all about figuring out how to solve that or take a loss on that first shipment. If the duties do go into effect, right over time, we know that new price is gonna be with the tariff. So I'm in, right now, I have a lot of metal that's in this sketchy situation where I'm gonna have to just eat some of the losses, uh, and just worry about the next transaction because you don't want to lose your supplier. These suppliers are as valuable as customers, right? Sure. Uh, so. Brian, is it, is it really the uncertainty? That's the hard part right now? Completely. It's, it's, um, it's changed the way that we are managing our, our little business in that we're having to front load because of these, uh, extensions and, you know, you're not sure what the deadline, if it's really going to be a deadline and, and be put in place or, or not. So we have to front load. So it's changing cash flow and inventory management. Um, it's. Creating a lot of stress around, you've gotta be here on such and such a date or else, you know, we're canceling the contract. And, and to your point about the suppliers, that's a critical feature. We wanna try to support the suppliers best we can, but at the same time, we still have a business to run and, and are trying to manage all of that. So yes, the uncertainty is, is the biggest challenge on, again, off again, it's also complex because there are, as you would well know, Kami, there's really kind of two buckets of, of tariffs. There's the 2 32. Which are on finished or semi-finished goods, both steel and aluminum. Uh, scrap is not caught up in that, which is great. Uh, but there's still confusion around that because you hear tariffs are in place and they are for those goods. And then there's, uh, reciprocal tariffs as well associated with that. Uh, but in terms of scrap, it is trading right now and we're bringing it across every day under, um, the U-S-M-C-A. Us, uh, Mexico Canada Agreement. The current agreement, assuming that you have a certificate of origin on file for the goods, then it can clear duty free. Um, it can't be under the most favored nation's status, um, which a lot of people were trading that because there was no real difference from the perspective that neither one was doable. So if you didn't have a certificate of origin on file, which I think is good for one year, it's a one year filing, um, for the goods that clear from that supplier. So that's the way that we've been clearing the goods and, and it is coming through in Canada. I just, and a lot of Canadian, actually, I was teasing on our podcast the other day that in two months time I've received more phone calls and emails as Kerry chairman than I did in my entire two years as, as Rema chairman for members, naturally, because this situation is, is, you know, disruptive, incredibly disruptive to our businesses. Um, the Canadians in particular rely a lot on the US as, as an outlet. Whether that be to sell to wholesalers that are doing further processing or direct to consumers. And by the way, there was a window of time where tariffs were in place. And that was from, I believe, midnight on March 4th until March 7th when it was lifted. And I know many stories of Canadians that had goods out there and paid, you know, thousands or hundreds of thousands of dollars just like you did. Because they got caught in that, that brief window that was open. And that's really disheartening that the US has taken such a hard line stance around that and won't, at this point, I'm hoping that there'll be some relief in some form or fashion, but as of right now, there's, they're not going back. The statement, uh, yeah, it's, um, I've had a lot of phone calls from Canadians. We discussed it on the podcast and wanting to join Buddy because people, they weren't exporting at all. And I mean, exporting as in internationally a lot into the US are now all of a sudden looking for trusted buyers. And it's, it's a lot of pressure there. Um, what's actually happening on the prices though, both locally and globally. And then I wanna ask what's gonna happen in the future? So I think you're probably all gonna want to talk about prices. So, uh, happy to start with Kami, if you wanted to. You were nodding. Sure. Universally you'll see a price increasing because you have. To front load many of your costs. So first, your customs broker's gonna wanna higher bond because there's the uncertainty as to when the good will actually clear customs. And second, there's also the uncertainty on the timing and the deadline. So if you do end up caught in a situation like Sam, there are other options where you could, not for Canada and Mexico, obviously, because they're coming in by truck, but if they're coming in. By boat. We have a different number of free trade areas or free trade zones where you could temporarily bring it in or you could have right now retroactively you couldn't for those three days. But in terms of of going forward as well, you can also try to do duty drawback. There's other kinds of different provisions where you could do to try to lower the cost, or you can also try to do what we call a first sale, meaning if you know the good is going to be sold. You can eliminate the middleman. And when you clear that good, what you wanna do is on your customs form itself, you actually have a different price than, than, than the negotiated, uh, price with your supplier. It just has to be a bonafide transaction. So let's talk about pricing, you know, globally. What are you seeing? So, yeah, I mean, I wanna first talk about this, the United States over the last Yeah, sure. Month or so. You know, I. I deal with a lot of the mills. I deal with the scrap part of it, and I, I think it's a general agreement that scrap iron prices have gone up a lot this month and they're scheduled to go up even more next month. Aluminum, same thing. Stainless is starting to rise up again. Uh, and, uh, you know, the, the mills that are producing the unfinished products in America, they also have increased their pricing in all three aluminum, stainless, and steel. Significantly that it has an impact already. Internationally? Internationally, not internationally. Yeah, just for the Americas right now. Yeah. So a huge amount of volume is staying local. The mills have the capacity. One of the mills was like 60%, 65%. Uh, now they're at 75, 80% just because of all the uncertainty by American. Then, you know, you got the, uh, all this new stuff going on. So, yeah, I mean, all, everybody here knows that all the steel scrap prices have basically gone up over the last two months, a month or so. They've gone up. But there is sentiment that they will come down in the next two months when you've looked at what happened in, um, tariffs 1.0, um, there is this steep climb and then it comes off. Is it, it might be well because, um, you know, just demand can't handle the new prices, right? The manufacturers aren't gonna pay these prices. So, um, do we see that happening again or do we think that, uh, long may this live and this is gonna happen forever? I think it's gonna basically depend on what happens next, what happens tomorrow with the tariffs and any kind of news that comes out. But I mean, Brian, I don't know about you, but my business has been very spotty. Like one day I'm busy, the next day I'm not. Uh, and that uncertainty has put us all in the same position. Internationally though, looking at the prices, um, no movement for a while. Um, depressed pricing, but just this past week, all of a sudden there were some fairest trades done in Turkey where the market's going up two to$4 and that's some sort of positive sentiment. Um, globally because everybody's very worried if the US isn't importing the finished goods, all of a sudden the the, the international prices will carry on dropping'cause there's no demand for their material. So the prices are starting to increase. There is sentiment that the international price will increase over the next three months and the domestic might start coming back over the next two months. So we don't know where this is going to go. Um, but if we look at 1.0 right to the previous tariffs. Is there any, any learnings that you guys have made from that where you're kind of guiding yourself at the moment? Yeah, yeah. Uh, the reason the price is stabilized under the first tranche of Terrace was because there were product exclusions, right? So in order to actually sort of stabilize the market, you had to prove that the good was either not available to be sourced here. And so when the product exclusion process started. You started to see carve outs, right? And then there were also reciprocal agreements made with different countries, and we have not seen that yet. And as a matter of fact, they've eliminated the product exclusion process. So it's gonna be probably about a few more months of high price increases because the Trump 1.0 tariffs, the second two lists are coming up right for renewal. So right now we don't know if the product exclusion process is gonna stay in place. If it does, it's great for the scrap industry, obviously. There's a couple products that are excluded and we're hoping that it will happen in the next maybe six to nine months. From what I know, Kami isn't the section 2 3 2 exclusion criteria being reviewed in April sometime, or they're not reviewing it? They're not reviewing it. No product? No. No. Doesn't exist in Correct. Not for aluminum and steel, yes. But there could be, we don't know What's gonna happen in copper and lumber are the two new, what we call national security, uh, provisions that are still being reviewed. What are the real, and, and we all know the general threats to the recycling industry, but what's that worst case? You know, if, if, if things don't change or if things get worse with us? I mean, if you were to say to somebody who has their own business, like, be careful because this could happen and we need to plan for the worst, right? What, what, what do you see the possibilities being? And I don't wanna scare everybody, but you know, what could it look like? Uh, from my perspective, uh, much less volume. Um, because of the demand scenario. There's only so many in, in the case of the US if we become insular. Uh, there's only so many homes to melt materials, and, and those are gonna fill up very quickly. So I think we would all, I. See, and the likely outcome is that we would see reduced volumes and that would reduce probably staffing requirements and, um, it would change the dynamics of the business. You say reduced volumes, you mean that intakes, um, that the consumers can take in? Are you saying yes or are you saying actual availability of metal? Uh, more so that intakes, I think there'll be plenty of material available. Um, high prices tend to bring material out even though. For the last, I dunno, six, eight months, people were saying there's, in the case of copper, there's not that much out there. Well, all of a sudden we start roaring up in Comax and I, I'm being offered copper every single day. Multiple, uh, suppliers that, you know, are new to us. And in, in normal times, you'd, you'd love that, you know, it's making a new relationship. It's, but you can only, you know, your resource constrained, your building can only hold so much your, your cashflow requirements, especially copper at these kind of levels. Um, so we're, that's the challenge is that we're seeing demand decline and it's uncertainty related and it's, it's, um, economic related and the uncertainty of what's gonna happen within these tariff context and, and just how it's gonna go. But I mean, economics 1 0 1 tells us that supply and demand, if there's not much demand and there's oversupply, surely the price should be plummeting. And I think, but the price are flying at the moment. I think it will. This is really anticipatory. This isn't true supply demand. This is getting out in front of this. This is speculators and drive really driving up the price, in my opinion, um, as opposed to, um, real supply demand fundamentals underlying that we're not seeing. And one of the ways, you know, that is because we're starting to see the spreads widen out like they haven't since. Uh, for a long time now, for a long time. Okay, but this, sorry Sam, the scariest thing that can happen to a market is speculators. Yes. Like literally what everybody should then be careful of is make sure you are covered on your sales, because definitely the market that's sitting above$5 right now, you know, could crash overnight to below E for sure. And if you're holding on, you know, waiting for 5 10, 5 25, the reality is you may not get there anyway, even if the market does, because those spreads are gonna keep opening. So yeah, you're better off to turn it as you accumulate it. Yeah. Best you can. Sorry, Sam, you wanted to say? Yeah, I was gonna say that as, uh, as Brian's mentioned, people are building up inventories to a point, right? If you don't have any stock of something, you want to build it up and then, you know, as you see the price goes up, then you get kind of cheap. You can sell it for more. Yeah. So as long as the price goes up, yeah. But then you, not enough, you want a relatively, uh, stabilized inventory. You don't want too high. You don't want too low. Um, but because you don't know, tomorrow may drop. And if something that goes up too fast, I always think it's gonna come right down. And for, and for now, you only have a month, right? For that, you know that the U-S-M-C-A provisions are carved out, which is why, as you were saying, it is important to lobby. It is important to get your thoughts out in front. It's important to speak to anybody in the administration or the agencies, whether it's the Department of Commerce, about how important and valuable. Jobs are because it's a carrot and a stick approach. The whole goal is to try to get production here and to try to, you know, increase jobs here. So if you also show the impact, you as a US importer are part of the US industry. We were talking about the copper prices, but I mean, have you got any input on the aluminum prices? Yeah, aluminum price. We've seen enough. Could increase a very significant increase. But is it also based on speculation or are there, is there actually a real demand? I, I think it has to do with the, the Canadian, uh, Mexico lack of potential tariff. That's, that was there before. And you know, the fin, a lot of finished product comes from these countries. Uh, that's why we think that that's why it's gone up a lot. So there is the demand, there is, so on aluminum and Ferris, there is a demand, there is a inventory buildup, demand, I would say people are building up the inventories to a point. And I did the same thing. But, uh, after that you're gonna slow down the demand. I think it's pretty flat. I don't think the demand has honest demand. I don't think it has gone up much. The demand hasn't gone up, but the price, uh, that's much, I don't think so. It's the stockpiling, you know, and then it also leads to higher prices. I always try to tell, maybe, can you put it in a customs bonded warehouse? Right. But then they, everybody starts increasing the prices to the point where you either need to start doing what they did. During Covid where you sort of make a makeshift chassis and the container sort of sits outside with your product, but that's what's going to happen in terms of stock filing. I guess to um, explain it in another way, if you think about the metal market prices, it seems to be sentiment driving the prices at the moment. Um, people speculating, it's kind of like, you know, the stock exchange, it's not necessarily on the performance of the company, it's what the sentiment is. What's gonna happen next where people start investing in certain shares. That seems to be what the last two months have been like in the US metal market. Um, and I think the next two to three months is gonna be very interesting. A lot of people could lose a lot of money. Of course on the other side, a lot of people could make a lot of money. But I don't wanna be the person taking the chance. I'd rather sleep at night. So, you know, going back to the prices, the prices were have been relatively low. All of last three, three years, they all have been doing in stainless prices have just been dropping last three years as a whole. So yeah, a little bit bump up this year due to speculation or, or inventory buildup. I think it's been a positive flow, but you know, we're, we're, we think it's gonna be pretty flat. We don't see much changes after. Things settle out. Look, I'm, I'm very pro a high price, don't get me wrong, but I think the fundamentals have to be there, is all I'm saying. Yes. Right? It's like if it's speculation, then we've got an issue. If the fundamentals are there, nickel can start getting back to some decent prices and stainless and starts increasing. Well, that's fantastic for all of us. Um, and, and that's kind of what I, what I'm always considering. If it's, if it's a real demand or if it's just sentiment in the market. Um. What about retaliatory tariffs? There's been a lot of talk about this. I mean, in February, you know, on our platform there was, we had like no one buying. Everybody was still putting out offers there to be sold, but everybody was so scared that when the material hit the water and it arrived in Country X, there was a retaliatory tariffs. What are we seeing on that front at the moment? I can speak to, uh, Canada, um, since I'm close to it. And, and it's a real concern for my company because we source about approximately 30% coming in from Canada and about 20% of our sales are back into Canada. The 30%, if there were to be tariffs put back on April 2nd that I can deal with because I can go to US buyers and or sellers, and I can, I can buy in. The sales that we have into Canada, that's gonna be a lot harder to replace and that that's gonna directly impact my business. I feel like Canada has almost no choice but to retaliate. Um, they have very few levers they can pull and in the current political environment. Particularly with the way that President Trump is talking about 51st State and all the other comments around Canada, he's really, um, catching the attention of, of the average Canadian citizen to the point where it's almost like a nat nationalistic feel in Canada. Within Canada, I. Um, that they need to, they need to think about the future and about they, they rely so much and we have such a close relationship with US and Canada all across the, the entire country. On any border city. There's a lot of trading that takes place back and forth and, um, that's under threat of course. So we're all hoping this gets resolved before too long, just on the Canada side. And then I wanna hear about the rest of the world. But on the Canadian side, I saw an email the other day for some of you software guys out there, and it was, um, the headline was by Canadian. And it was from a Canadian software provider. Yeah. And they're like, well, you know, let's keep it national. Like you said, it's a nationalist, um, view. Yeah. Very interesting. What, what about the rest of the world guys? Well, you know, uh, in terms of, uh, you look at the finished products right out of India. India has a hefty tariff on all steel, all stain that's coming into its country. They have empty dumping duties, all this, uh, but reciprocal tariffs. If I'm not mistaken, are referring more to like other items than steel and, and aluminum. They're looking at like pharmaceuticals and, and food and other products. Uh, but that will raise all the prices overall as a whole. Uh, because I, I've, I've tried to study about it and maybe you can again also guide us, but you know, I don't think it's referring to mostly not the steel because there is already tariff there. Yes. So there's already. Like he said, anti-D dumping duties. And there's already countervailing duties as well, which would be sort of an antis subsidy. What the retaliatory tariffs do affect the, the scrap industry, whereas the reciprocal tariffs do not. And so it is scary to put something on the water and not know, you know, is it gonna be 200%? Is it gonna be a hundred percent? And that is also too, other countries do have similar systems. You know, where there are free trade zones where. Back in the day, what you could do is you could divert if something was coming from China to Canada or Mexico, right? And then you could bring it in eventually. And so you need to find some kind of a system similar, because there are different duty provisions for each country in which we have, you know, what we call them, GSPs, the general system of preferences. So some countries we always try to advise that you divert if you can. It's definitely on the scrap side. I mean, I've heard the whole of February, that's what everybody was talking about when they were trying to buy material, they weren't willing to take the chance of it arriving and there be being some sort of retaliatory um, tariffs. But what is quite interesting is, and you guys touched on it, I've been reading a lot about this, is that there are already tariffs on metals in other countries. You just touched on India. Now not everybody knows that. And everybody goes, oh my god, America doesn't wanna do business with the rest of the world. And, you know, they're ruining their relationships and. As soon as then you look at it, you go, well, hold on, India don't want you to be able to sell any finished goods into India. They make sure that they have tariffs in place to do it. So tariffs isn't a swear word. It's very much how the world does business. Yeah. So, you know, internationally, what do we, you know, so India, India's a perfect example. Do we think that there could be a chance of them increasing it on the scrap side? Um, or do you think that what is in play already, that's not gonna change? Didn't. India just eliminated. Right? They did. They did eliminate. Maybe that's because of what's going on now. Yeah. They had, uh, discussed, you know, sort of eliminating trade barriers in the past and I think this just advanced the process when he came to the White House. And, you know, I think it's, it's sort of a how you can advocate your position. If you open up this, we'll do the same thing. All countries use trade, you know, in terms of a trade barrier, it could be a carrot or it could be a stick. And it's generally, you know, the developed countries that use it. Very, very sophisticated. So if you look around the room or if you just look at anything, we love to use, uh, the trade laws to stop you from doing anything that we think that we can do better. But other countries, you know, once we foreclose our market, usually they go to Canada or Mexico. The eu. But now Australia, China is doing a very good job on the anti-dumping. Not quite as many cases, but in the past, I would say a year or so, they probably had about 21 successful orders. On. On stopping you from bringing things in, including, is that, is that Australia and China? Did you say? Australia is, well, Australia has its own system, but China is just learning through their, their mofcom how to do it successfully. Because you can bring a case, but you also have to prove, you know, different effects. They weren't having high success rates in the United States cases successful, brought about 90% of the time. So what you're saying is with India who've brought down their tariffs, which is now creating better free trade or freer trade, maybe these tariffs aren't necessarily so negative. And I keep hearing on every podcast I listen to that, you know, are they not just a negotiation tool, right? Is he, is he not just bringing people to the party to, um. Create better opportunities for America? I mean, what are your thoughts on it being a negotiation thing or do you think it's, it's there to bring income? Is it there to change the way we trade? Oh yeah, definitely. Income is a big part of it because when Section 2, 3 2 came into place in 2018, they had said that, Hey, we're gonna, if we close this down, we'll give back the money back from all these. Yeah. And, and that's never happened. Right? Even if you, something was cleared up, they never gave money back. The income has generated since then till now. It's enormous that they have even stopped the exclusion criteria at this point. Right. And now they, everybody has to be the tariff, the money generation has been significant. Uh, in addition, right? You have, uh, uh, the new, the administration now is trying to even increase that by putting more tariffs out. So I have maybe a question if it came, if I could subdued coming. I'm trying to take your job, but, um, no, my question is related to, to exactly what you said in that it felt like as a casual observer, that the, um, that President Trump went after fentanyl and illegal aliens crossing both Mexico and Canada as opposed to having to go through Congress and make an economic value proposition. In order to levy these tariffs, he did it on the basis of national security. So a long-winded answer to your question is it feels like, you know, there's been a lot of reference to his, uh, book Art of the Deal. That's what this feels like. I mean, this feels like a master class in negotiation and, and he's trying to get to a, a better place. And whether that be, even though he's the one that most recently negotiated and signed off on this, um, MCA. It feels like he's either not satisfied with it or, or maybe they miss some elements or, or maybe just feels like it's time to try to do better and that's what it feels like. Yeah. Historically, you know, the Democrats were for what we would call free trade. So the prior iteration of the U-S-M-C-A was the, was nafta, the North American Free Trade Agreement, and then in general, republicans like to say fair trade. So, for example, when Bush came in, there was a, a huge. Huge, uh, quota system that was put in on steel, if you recall, from around the world. And then, you know, we went through the global economic recession and then you decided that you can't have these global safeguards because it doesn't enable you in, in a pincher moment of crisis to have adequate supply. So the goal here is to renegotiate U-S-M-C-A, which has also started, and it's also to try to enter into good free trade agreements that are balanced. On both sides, and my understanding is that both China and I believe Canada have brought cases in front of the World Trade Organization about the tariffs, and it's a question of whether or not Mexico will also join. That being said, the US generally does not comply with any world trade organization decisions, so I'm very curious to see what happens. What sort of pivots or strategic decisions have you seen, um, metal recyclers making over the last few? I think they're, they're basically have kind of slowed down to an extent to just see what's gonna happen because as you know, the risk costs are very high. And, uh, you know, it basically comes down to the end of the, uh, what your company is, is in for, in terms of how much risk they wanna put out. Right. And. I think today everybody would be more conservative than ever before. I'm, I'm not going to, um, argue with you, however, I've heard the complete opposite. I'm hearing from metal recyclers right now who are trying to buy every single kilogram they possibly can, or pounds. Sorry, I. That they possibly can. They're bringing in commodities that were never brought in before because of this massive demand and the spread that's available right now, that there's material coming in, and, um, they're more aggressive than ever before. They realize it won't, it will be short-lived and they're making sure they hedge their position, et cetera. But I'm seeing certain metal recyclers going for it. Going for it. Yeah. Yeah. We've been trying to be conservative on Yeah, yeah, yeah. You, you wanted sort of reshift, so you reclassify. Right. Something that might be lower. So we had a Canadian client who was actually trying to import from Mexico, but when Mexico and Canada were announced at 25% from Trump won, the product was only at 7.5%. So it actually made better economic sense to start resourcing from China. And then when you add on the 10%, you're still better at 17.5%. But then you wake up on March 2nd and it's now 27.5%. So should you have just. Stayed with Canada and Mexico. So you really have to think globally, but at the same time, the entire goal is to buy domestic, right? So you have to really think about can I either source it here and, you know, think about your supply chain as a domestic, at least for the next three years. Hmm. So I, from my perspective, I can speak to the Canadian dealers a a little bit. Um, I'm obviously not one of'em, but I'm representing them in the form of, of carry. They are in a really, uh, strange spot right now because they were so heavily reliant on the US and to your earlier point, they're having to consider alternatives, including exporting to Europe and, and Asia and, and other places. Uh, they further have a complexity and that that Pierre Trudeau is no longer in, in place as their, uh, premier and they have a new premier that's been appointed and likely are on the verge sometime this year of a, of a new election. So they've got that complexity as well. And, and anybody that, that steps in, uh, to lead Canada has gotta represent Canada, of course. And with, again, president Trump. It's, it's going to be a, a challenge, I think to demonstrate to the Canadian people that they're representing the Canadian, uh, country and yet still work with President Trump. So it's gonna be interesting negotiations and, and dialogue that comes outta this. It's created a lot of uncertainty. Um, we hope, uh, this on again, off again, thing is, is extremely difficult to manage because you just don't know from one month to the next and people don't want tariffs in place and for sure, obviously they can't be passed along. They can't be absorbed. I, I appreciate that your company chose to do that. That's. Impressive. Um, we would be hard pressed to do that in copper, uh, with each load being 200,000 and putting another 50 on top or whatever. I mean, it's just not, there's no margin there. Oh, come and there's no pa. Yeah. Ray, come on. Well, for you, uh, there's no pass along. So, um, any case, a lot of uncertainty. The bottom line is people are scrambling trying to figure it out. We spoke to Kevin. I spoke to Kevin earlier up here and he was talking about a strategic change and having the ability to, because he can now do a lot of rail cars on his side where he was doing majority export and now he's been able to slow supply, um, local demand. I know my good friends at a ward in Auckland, New Zealand, or getting heaps of phone calls from Canadians right now who are looking to export and they need, um, filters to be able to pack. I saw AJ's and get all excited there with the container tilers going into Canada for exporting. Um, but one of the things I was, I, I liked, I, I remember putting out a post on LinkedIn when this first came into play, and there's two personalities. There's the ones that roll over and they go, oh fuck, I was gonna swear. Oh fuck, this is the end. What do we do now? My business is in shit. There's other ones that go, hold on. There is an opportunity here and where is that opportunity and that, and there I think about the people that I spoke to lately who are now bringing material in, making more money than they were making previously. Right. I was in South Africa, and I'm not sure if a lot of you guys know this, but South Africa has had export duties for the last maybe 15 years. And what they did was there was a government organization called iac. I was running the largest scrap metal company in Southern Africa at the time, so it was a huge impact on us and I was a part of the discussions and IAC overnight passed a law. That if you, now there're a majority exporter country, not a lot of mills there, so they export a hell of a lot. Um, if you wanted to export, you had to apply for a permit to be able to export out the country. And when you applied, the government then sent it around to any melters in the country. And if a melter wanted it, they could buy your scrap at a 20% discount. I'm sure you'd absolutely love that. Oh, right. Yeah. So, so copper processes was obviously a really great opportunity, but now we had the majority of the scrap in the country, in fact, in all of southern Africa. And I remember walking into, um, an executive meeting, um, that evening over a lot of whiskeys and some of them smoking lots of cigars. And woe is us. We, we have all the scrap, we're in trouble. The consumers can now go direct and we'll buy all of our out, all of our contracts. And for whatever reason, I'm like this crazy optimist. Um, some say it's toxic, but basically I'm like, hold on, there's a massive opportunity here. We have all the money, we have all the scrap, let's go and buy the copper foundries. We went out, um, in the next week and we bought four copper foundries, and it's currently the most profitable part of their business in Southern Africa. And my point is that if you sit here and you go, I'm gonna let the tariffs happen to me, and I just have to kind of like, ugh, strategically now I'm gonna buy less. I'm gonna be a little bit conservative and not sure what happens next. Whatever. There's a lot better angle, which is go out there and try and find the opportunity in your region. Like there will be opportunities because with uncertainty, muddy waters, you know, uh, it often creates the best opportunities for you. Definitely. Yeah. So I don't know if, um, and I, I think I asked you this on the podcast the other day, but can you think of anybody in particular right now that you've had a phone call with? You actually probably speak to a lot of people being with Carrie, um, that are thinking out the box or woe is me, like doom and gloom because they're in non Ontario. Ontario and they don't normally export and now they're in trouble. Right. So I've, so I've heard both. Um, and, and that's understandable. I mean, so, you know, it depends on your nature, your personal approach to the, the business. Um. A lot of people are afraid of change, and so they tend to want to do the thing that's, that they know that's worked. Um, and when that thing gets thrown off, that's the normal, natural kind of first reaction for some people. Um, you're, you're rare and, and, and special in that way, but the reality is there's many people within our industry, very entrepreneurial recyclers, they figure it out. So their initial reaction might be, oh. You know, complain to Carrie, to Rema to go to anybody that'll listen. But it doesn't take long and, and you figure it out. I mean, you have to, you know, we're, we're a group of survivors. Um, the recycling industry is challenging. We've ups and downs all the time, and somehow we, we continue to fight through and, and figure it out. So I think it's both and I think both happen. Um, some people get to your, your stance and your approach quicker. Um, but eventually we'll get there, I think, and we will, I think I'm hearing a lot of like Canadians. Who now looking at maybe granulating because materials crossing the border, right? So you could send cable across and it was because it was right on the other side of the border. Now it's like, well actually there's a massive opportunity who puts in the first granulator in my area and therefore I start making all the, you know, take that opportunity. So I have heard quite a bit of that as well. Definitely. Yeah, that, uh, that's the tendency you want to put more things in your control so that you're not subject to relying on others that could be across the border and already have invested. You want to do that, so, yes. Correct. And I guess with my experience, the difference was probably the biggest difference was that it was carved. And so, you know, it was carved out there, right there, from this date, going forward for the next 20 years, this is the law here. The problem is, do you wanna go buy a granulator if all of a sudden next week it opens up again and everybody goes, and now you're competing with the US granulation plants. Right. So the chopping lines, like that's I think, one of the hardest parts of making a decision right now. Right. So, yeah, especially like now, the way this. Administration has made changes every so often. That's what I mean in terms of like surviving, I think that everybody's gonna survive because this is the scrap industry. Everybody survives at the end. Yeah. But if, like, you know, for example, Brian talking about scrap going back to Canada, right? Your business in America is gonna increase if, if there's a duty going across. Or coming back for the finished product, so, right. Yeah. So everyone's gonna make it, but just that the uncertainty right now is there. Yeah. Cost of buying machines a granulator is, is not a cheap item. Yeah, absolutely. So like, yeah. So we all have to make decisions wisely about how much expenditure of, uh, resources we can do. Are you seeing any change to the trading lanes and what can we expect with trading lanes? I mean, people were bringing a lot of material in from the US materials coming in. Where do you, who's gonna benefit here if these, if tariffs do come into play and they seriously, which country out there is going, well, let's hope they do this.'cause I'm gonna buy a whole lot more material. So in terms of the finished product, right, uh, I gotta say that the prices do adjust over time. These countries who are getting tariff, they may lower the price cus the clients here may increase the price. We saw that back in 2018 with the, with the, with the tariffs back then. And we're starting to see that slowly right now. Like I had a situation where I'm buying metal at the old price now I had to pay a tariff on it. They did not discount my price on my existing order, but the next order, they reduced it down like 10, 15%. So I'm kind of gonna break even at the end. So I think that it's just a matter of time. Europe, for example, will reduce the amount of imports they do into America, but over time I think it might adjust itself to a point. I think Vietnam is gonna benefit, Thailand will benefit. These countries have already been paying all these extra tariffs. If Ventura's gonna come in here for slightly cheaper, that's gonna affect the scrap price. Because now their sales price has dropped, therefore the scrap price, the input has to be reduced as well, which is now a scary thing. So I didn't think necessarily much would come in. Um, but I guess there is a demand that has to be met somehow, and even if prices, um, kind of other way to do it. Have you had any, um, actual impact other than the one that you've had now when you're having conversations right now about deals going forward? You know, we were speaking about putting it in your contracts. Yeah. What is actually the sentiment when somebody's doing a deal with you now? Oh my God. So the whole idea is how to protect yourself. Yeah. The customers like, we're gonna just protect ourselves. If any change has happened, it's on you. And I tell'em that. It depends on how much the change there is. I mean, if it's gonna be a significant, we may not, we may just call it first majeure, or we may not do it. Like if it's a hundred percent tariff. Right. If it's a small amount, I said we should, we can have a discussion and work it out. And that's the general conversation I'm having, having with anybody. We just can't be guaranteed to pay all of it. Right. There's no such thing nowadays. And if we, even if we agree to it and tomorrow it goes up 200%, we can't. We can't do it. Yeah. And buzz point, I mean, we survived the early aughts, right? We survived Covid. So this too shall pass. If you are sort of a, a big mattress supplier, for example, and your customers are Best Buy, target, Walmart, you can put that in your contract if you have, you know, sales, if you're sort of the economic power. But if you're selling to smaller companies, then this is sort of your bread and butter. Then you need to make sure you have really clean customs documents because. If you look at the harmonized tariff schedule, that is what is gonna carry the day, right? So you need to ensure that it says no product of aluminum. You need to make sure it says no product of steel. And before, like you said, you didn't always have clean customs documents'cause it didn't matter. But at the end of the day, your trade documents are going to matter going forward. You're talking about, um, in a negotiation, it's all about who has the power. And that's on a daily basis. We're all dealing with that. You know, who needs it more? Do you have only one market you can sell to? Do you desperately need to buy this material? You know, who has that power? It kind of then makes me think about the president and you know, I think it was just the other day when Canada put on tariffs for power, wasn't it power? And then all of a sudden it dropped off the one day because Trump just doubled the tariffs. So it was so, it's like, who's in control here? And I think it's always important just in general for you to know. When you're in a position and whether you have the power or you don't have the power and where to kind of position yourself. You know, if you're desperate to buy somebody's material and he's got many options, you can't just say to him, well, I'm gonna cover myself here and I'm gonna put this all in the contract.'cause he is gonna go, well, I'm gonna just sell to somebody else for the same price who isn't putting that in his contract. Or it's a different market who doesn't have that issue. And that's the hardest part. Even in the product exclusion space, you're always going up as a small supplier against either Cleveland Cliffs or whoever. It is. And they say that they can do everything, but can they really? No. Right. And and you know, you always say, oh, I could open or I could do that, but they never really opened a lot of the, the mills too. Right. And the issues coming back with the neon steel you're reading now, potentially Trump may let parts of that deal go through with minority investments. So it depends on that as the most powerful company. Right. Those are the big three still. Providers, if you don't, you know, count the mini mills like SDI or Nucor. Right? And what they have done though is, you know, they've integrated right when SDI bought OmniSource, so you have your own source of scrap to, to do your things. But yes, it depends on who's the most powerful player in the room. And I, I, I think that you are, you're right, the government has a lot of power. But if you look at it like just two weeks back, right? The three auto manufacturers got together and wrote a letter and they stopped the tariff for a month. One month. One month. One month. But if you get together as a group, like Rema for example, right? You have a lot of power. You have some power at least. Yeah. Yeah. No, no question. But yeah, it's like the people versus the government. One more thing to say about these tariffs and you mentioned like overseas, all these countries have some kind of a tariff or, or some kind of duty structure. And you know, the buyers overseas, they've been dealing with this, you know, we sell scrap overseas also. And they've been dealing with this for so many times, right? But they're still buying, right? It's just a price driven market. Uh, but there has been definitely changes, and I'm sure Brian has seen it too overseas, has been a free fall or free or rollercoaster or price structures based on the new. Duties and tariff, which they change it every quarter or something. Yeah. But I think there's more, um, you know, I, I've been selling the global market for a while. There's more certainty. Yeah. So it's like they expected, right? India might put something in and it's like, that's in now. So now we've got a, but then it's just that change. And that also gives you notice like Pakistan changes their rules quite a bit, but even when they change it. You announce it every year maybe? Yeah, every few years. Like something happens. Whereas what's going on now, it is really wild. You could change any minute and really hard. So I think what the outcome we want, I think for everybody is make a decision stick to it. Let us be able to plan our lives accordingly. Alright guys, thank you so much for being on the panel. That was awesome. Yeah. Thank you. Thank you.
