Trade, Tariffs and the Current Climate with Erin McCoy, Dave Bestwick & Josephita Harry

In this episode, I host a live panel discussion diving deep into one of the biggest forces shaping the scrap industry right now: Tariffs, trade policy, and global market dynamics.

Joined by industry experts, the panel unpacks what’s actually happening beneath the headlines, covering recent tariff changes, shifting trade flows, and the real-world impact on recyclers, traders, and operators.

From 10% global tariffs to 50% steel and aluminum duties, and everything in between, this conversation cuts through the noise to focus on what really matters for scrappies on the ground.

In this episode, we talk about:

👉 What happens when rules change overnight
👉 Why compliance is getting heavier
👉 Freight, conflict, and rising costs
👉 How traders are managing risk
👉 Who tariffs are really helping
👉 What’s coming next
👉 And much more!

If you’re buying, selling, or moving metal across borders, this is a must-listen to understand the current climate and what might be coming next.

Born Scrappy.

Brought to you by Buddy.

The only marketplace and trade OS built for scrappies, by scrappies.



https://www.tradebuddy.io/

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.

I thought it was time that tech worked for our industry, so I built THE killer scrap app, Buddy - built for scrappies, by scrappies.

Father of two crazy-awesome boys. Husband to Lisa. Kids rugby coach. YPO member. Founder. Lifelong learner. Mentee. Mentor. Committed Stoic. Aspiring cowboy.

COME SAY HI ON LINKEDIN

https://www.linkedin.com/in/stukagan/

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Transcript

Welcome from Stu

Tariff Landscape Overview

2025 Market Data Snapshot

Key Policy Shifts

Who Really Benefits

Aluminum Scrap Shock

Canada Border Window

Tariff Compliance Basics

Contracts And Risk

Five Year Outlook

Operational Changes

Freight And War Impacts

Staying Sane and Informed

Policy Watchlist Ahead

Equipment Buying Window

If Tariffs Vanished Tomorrow

USMCA Risk Planning

Audience Q&A

Steel Tariff Direction and Defense

Why Export Controls Scare Me

Tariff Clarity and Capital Plans

Controlled or Free Markets?

Panel Thanks and Signoff

0:01

The scrap metal recycling industry has always run on hustle, trust, and sharp instincts. This is the podcast for traders and operators who want to get sharper without losing their scrappy edge. I'm Stu Kagan. Bringing you insights and stories from the people shaping the future of our industry. This is born Scrappy. Alright, guys, um, let's cut the music. It's gonna get a little bit more serious than a bit earlier. So we are gonna kick off this talk and obviously there's panels about tariffs, and I'm pretty sure this isn't the first tariff panel you've listened to in the last year or two, but hopefully we can go quite deep on certain topics and there's a whole lot of new things that have been happening as well in the last few months. So hopefully we give you guys some, uh, knowledge you might not have had before. That's really the aim here. So before we get, oh, we've already been scored 10 outta 10, thank you. Do you see? Look at that. Wow. Where's that? There we go. Thanks George. Um, fantastic. Oh, 11 lemon test. Wow. Okay, so. I think to give us some context, Erin's gonna kick us off. She's got a few slides she'd like to run us through as well to put some context around all of this. And then we'll kick into, um, the panel questions. Erin? Yeah. Thank you. Um, I just wanted to kick off with a little bit of an overview of just. Some of the issues we've been dealing with this year. This definitely does not cover at all. Um, many of these are new just in the past couple weeks, but I just wanted to go over it because I'll be walking around afterwards if anyone has questions. We cover a lot of this on our monthly trade and tariff talks that me and my boss Adam do, but. We have seen an expansion of tariffs in all of these sectors. A steel and aluminum, copper. We now have new investigations into industrial machinery, labor, excess capacity. We also have a brand new 10% global tariff of the past couple weeks, and we have the US Canada, Mexico Agreement review that's happening in July, uh, which will greatly impact our industry. So these are just some of the things we might touch on today, but again, please find me if you have any questions. I wanted to just show some data of what 2025 looked like for our industry. I am gonna actually start over on the third kind of panel there that is Finn Steel, um, that is being. Import it into the United States, and you can see the tariffs are working. Uh, we are down quite a bit from the year before, but you can see for our industry, recycled steel consumption in the United States is great. Domestic consumption is doing really well. We are exporting, um, we're down 19%, which means all that recycled steel is. Being consumed here in the United States and that the market is very healthy, and we always do watch pig iron on the end there as a substitute. As you can see, the imports are growing. It's something Rima keeps its eye on. But yeah, I just wanted to put this up there as an overview of kind of where we stood at the end of last year. Thanks Aaron. Um, just so you all know now, at the end, we're gonna try and leave about five to 10 minutes for some q and a. So during this panel, if you think of any questions, maybe write them down and when we call you up, there's a microphone there later for you guys to hopefully ask the panel some questions. But let's jump into it, um, with you, Aaron, because there's been a lot of tariff announcements, pauses, revisions, and even court rulings lately. From the association's perspective, what are the two or three developments in the past few months that actually matter most for how scrap is moving? Well, I think the biggest one was the Supreme Court ruling on IEA, which is the emergency Tariffs. It IEPA just basically stands for the authority or the law that he enacted them under. Uh, those were overruled. And so we are currently in this kind of waiting phase of issuing refunds and also he is now rebuilding the tariff regime. So that is probably the biggest thing in the past couple months. This is a very unique time where every single country has one tariff rate, 10%. Uh, last year that was not the case. We had some countries as high of 40, 50%. Others, you know, as low as 10. So I will say this is a great time. If you need to import something, it's 10% across the board. Um, for those countries that had higher rates, we expect for those to go back up at the end of the summer once some of these investigations are over and he rebuilds some of this tariff authority. So, uh, it, it's a very unique time compared to last year. I think secondly, the biggest thing was we saw steel and aluminum tariffs get vastly expanded. They're at 50% currently for many derivative products, including a lot of equipment I know all of you use every day. And calculating that tariff, the steel and the aluminum, the amount that is in the product to then calculate how much your tariff would be is very difficult. And it's something we've been conveying to the administration because it's nearly impossible to comply, and we know compliance costs are. Very high right now. So they are trying to find a new way to off ramp some of those products and figure out an easier system to calculate those tariffs. So I would say those are two of our big priorities is, you know, figuring out this new tariff regime that's gonna be coming out this summer and also working on getting some of this equipment exempted. Um. So just the other day I was in the BIR and um, George Adams got up on stage and told everybody that the tariffs are the best things to happen to America. Um, which was very enlightening and uh, really enjoyed the talk. It was brilliant and it was great to hear somebody on stage actually talk like that. But let's remove politics right now. And I wanna ask you the question'cause you just said something. Tariffs are working. Which is not something I often hear, so can I ask all three of you, has anybody benefited from the tariff so far as a business? Has anybody benefited so far? I think the steel industry has definitely benefited. And you heard that from George Adams on how it's working and the data shows it's working. I believe the US government has collected over 150 billion in tariffs. Now they have to figure out how to refund it. If this were to go through, that's over several million entries, so it's gonna be a period of chaos. The lease. Let's stick to who's benefited. Yes. All politics. Who's benefited to you saying the government's brought money in and you're saying the steel mills have benefited? The steel mills have benefited. Okay.'cause there's has been better consumption. But on the non farer side, I wouldn't say that. Um, no one anybody has benefited. I would argue the other way. I mean, we saw at the beginning of the year, the, the consumers that we primarily utilize our, our sales to, we all thought both the, the consumer and the processor that the 2 32 increase in, in semi-finished stainless slab coming into the United States would go down and therefore our utilization rates in our stainless mills in the US would go up. Right. That just makes sense. And, and we've seen the opposite. The data tells us opposite. I can give you my personal opinion. My personal opinion is that there's countries, governments that are subsidizing their steel mills and paying the additional tariff for them. They allow them to keep dumping their slab at a much cheaper price in the United States of America. So from our standpoint, nobody has won in our industry from the increase in the the 2 32. Maybe if you want to get into the weeds a little bit, you could argue. The iron component of stainless steel is up a little bit because steel pricing has been up a little. I, we could get into the weeds with that, but in a, on a macro level, I, I would say it's not working. Yeah. To clarify when I say that the tariffs are working, I'm saying for finished steel, that these tariffs have been in place since 2018. They are working in the sense of it is combating some of that excess capacity. However, for our industry in Rema. We don't support tariffs. We don't support export controls. We believe in a free market. We think products go where they're most needed. And often what you're seeing with stainless, right? When you try to control where those flow and where they go, it's something called the control reversal theory where it actually has the exact opposite impact. And we're starting to see that. I think the administration is slowly starting to realize that. You cannot build up your manufacturing base without some key inputs and equipment, and we don't make everything, we don't have all the processing capabilities here in the United States yet, but. Look, coming from somebody who's experienced, um, real, real export controls in South Africa, trust me, I have the same opinion. We need a free market, absolutely vital. But I'm looking from the outside end where I have no skin in the game, and I see the steel prices domestically higher than they've ever been compared to Turkish exports. So I'm thinking that if no one's benefiting, surely the local scrap markets that are selling Ferris into these mills. Surely they're benefiting compared to what they were maybe doing and sticking it into Turkey before. I don't trade steel. I, I, I often hear my friends say that the delta between number one bushing and HRC is. Is actually widening, but I, I don't know that game. Right. I just, I, I talked to a lot of people, so I just want to, I, I want to give it the, the context from the scrap yard. Make sure that like,'cause I think when George got up, a lot of people were like, yeah, well if you're doing the Ferris volumes he's doing, of course you're benefiting. Mm-hmm. So I'm just trying to like, try to understand it, um, from that time as well. Josepha, let's go to you now for a while and talk us through an experience that you've had where tariffs directly. Affected the economics of a trade that it was already in play, you know, what was the material, what changed, uh, and how did you kind of adapt at the time? So, um, in 2018 there were tariffs on, um, Trump 1.0. There was tariffs on aluminum and steel, but it did not apply to scrap. Um, so we're thinking Trump 2.2, it's. Probably not gonna be impacted either. So if history is any direction to how things were and what it's gonna be expected, no one expected that aluminum scrap, for example, would be impacted. But since the beginning of last year when the IE Pura went on, there was at least a baseline of 10% that was applied to aluminum scrap. Now our businesses doesn't work on 10% marginal. We can't just overnight assume that 10%. So any aluminum scrap that was coming into the United States from many other country besides Canada and Mexico. We're subject to those tariffs. So instantly without any warning, that is something we have to assume or we have to work around. That was one immediate impact that we all, all of us as an industry, um, were faced with, uh, tariff is. Only one of many trade barriers that our industry faced last year. As we saw in the previous slide, there were a lot of 2 32 investigations and there was also some 3 0 1 investigations. Um, 2 32 is the national security and 3 0 1 is, um, unfair trade, unfair trade practices, and one of them was on China ship building. What that entails was the investigations result came back with, we don't make ships or vessels in the United States. So all the material that we move to and from the US are going in vessels that are made directly in China or by a Chinese zone company. And that investigation, uh, proposed that we might. Be hit with costs of thousand or$2,000 per vessel, per port call. Um, so sometimes a vessel, let's say it goes to New York and then it goes to the next port and the next port. So every time the vessel goes to a port, we were gonna be subject to all those costs. So we have one direct tariff, 10% at the very minimum for aluminum, and the potential at that time proposed 3 0 1, um, shipbuilding costs. So if you start factoring in all these costs. It just doesn't make sense to do the trade anymore. And you know, we were in a very uncertain time, but big part thanks to Rema and Adam and Erin and the entire team that worked so tirelessly in trying to submit public comments and get back with some clarity. And thankfully the administration made a different decision. And so now we are in a place where at least the 3 0 1 ship building cost is not there. And. I wouldn't say we can work with 10%, but that was an instant change in economics that we had to deal with and decide what direction does material go now? Does it make economic sense to make the trade happen? So that's, and Dave, yep. You're buying, I think you mentioned you're buying quite a bit from Canada as well. We buy, yeah, the US Canada. Yeah. Yeah, exactly. North America. Um, what's actually changed for you operationally in the last year? So is it just affecting on the price, you just offering different price? No, no change at all. No paper would change nothing. Just one time. Just one time. Did it change? No, the, the U-S-M-C-A has, except for 70 hours, right? There was a 70 hour gap where we got caught. The U-S-M-C-A has stayed in effect and the administration has not tariffed scrap metal movement across the border, back and forth from Canada. Awesome. Um, just one time. Just one time. And it was only 72 hours or something he said. Right. So if, if, let's just make up a story. If you had rail cars of three 16. This is a true story. If you had rail cars a three 16 loaded and you thought, well, they're gonna ship in plenty of time and cross the border and clear customs, we'll be fine. And, uh, they get hung up at a switch, which happens a lot with the rail. Uh, and those, those rail cars crossed the border during that 70 hour window. We did get hit with a pretty hefty, uh, it was, it was, it was a significant Okay, tear. Aaron, you guys are dealing with, you know, everybody from the industry on the ground at the ground level. What do most recyclers, um, misunderstand most often about tariffs? So what are kind of the questions you're getting? You're like, oh wait, you've missed something, you don't understand something. Well, understandably, it's usually I'm importing this, what is the tariff? Because every country had a different rate. Um, and you know, some people, like Dave for example, does mostly Canada, so he knows to claim origination and that it's covered under U-S-M-C-A. What if it's your first time doing that, you might say, oh, well I see a 35% tariff for Canada. How do I claim origination, which is why that agreement is so critical for this industry and we are watching it very closely as the review comes up in July because that has really saved us this year that we've been able to get, um. Products from Mexico and from Canada. But I would say that the claiming origination, there's a lot of questions on that. Um, tariff stack, a lot of tariffs, you know, some 2 32 stack, some don't. The I EPA tariff stacks with certain things, uh, 3 0 1 stack. So how do you add up all of those? We, for example, like shredder wear parts has now a 50% tariff, a 2 32 from every single country. However, we have gotten. The 3 0 1 tariff from China exempted. So, you know, it's just a lot of, it's a lot of compliance and it's a lot of extra cost for everyone having to hire a customs broker and a trade attorney and be a member of REMA to, to get all of this information for it to make sense. Kind of happy I'm not, um, on the ground anymore, especially not in the us. Joe, talk to me about how contracts have changed. You are buying constantly in the us moving material around the world. Have you actually made any. Changes to your contracts? I would say we haven't really made any significant changes to our contracts. Um, before we conclude business at both ends, we evaluate what's at risk, take calculated risks, and agree to terms ahead. It could be, or the terms different. So what I mean by that is are you now taking all the risk as a broker, are you taking the risk and saying, if a tariff comes in, it's on me, or are you actually putting a clause there that says if, if a tariff is incurred during this period, while your material is in the water that is paid by you. I'm gonna pause for a second before I answer that question. I, I think we've talked about a lot of things. Tariffs, stacking 2 32, 3 0 1. So let me just break it to this room if you're not already aware. Tariffs don't apply to anything in the annex two list of HDS codes and products. That means if you're bringing in, um, zinc for example, or a stainless steel or a titanium, one of these, uh, materials or products, recycled materials, there is no on those. So there is no question of what do we have to pay or what do we have to include? So. That makes it easier and we don't have to negotiate terms on Yeah, exactly. For those products. So it helps to know what those products are. Um, copper was also in that list, so brass and many of those things. So that made it easier. In the non ferrous list, the only things where we had to be really concerned about tariffs was aluminum and steel. Yeah. Um, the highest out of the two, we don't deal in steel and in aluminum we just limited. Um. What we brought in, for example, there are countries that has only a seven day transit time to the states. So we can easily accommodate anything within 15 days to a 30 day period. If something's gonna take 60 days or 90 days, we'll probably just ship it to a different part of the world rather than bring it to the states and undergo, um, contract renegotiations or things like that. Yeah. Okay. The, you know, that answers I, I've heard in the market of people changing their contracts with what's coming in, um, and being the consumer. So, so whatever's coming in. Correct. So the mills that we deal with that are signing a, a, a longer contract, what used to be eight point font, is now 800 point font. DDEP. Right. So it's, it's all on us that, uh, it's delivered duties paid. That's what DDP is. So the, the mills. Not, we don't broker anything. We handle everything we buy. So I don't know if it's changed for that'cause I don't do it. But from what we do actually, physically buying and selling metal, scrap metal, that part of the contract is in a much, much bolder detail. Yes. And Dave, with you bringing in material is, is there anything you've changed in your contract or the way you handle it, just in case something you had that 72 hours, you probably paid a lot of money that we haven't changed anything in your purchasing agreements? We have not. Okay. A lot of what we do is on a handshake though. I mean, it's Sure. I mean, our, our contract is, is one sentence. It's, it's not, uh, crazy. We agree to things. We stand by it. Correct. No matter what changes in the market or tariffs or anything else. A war on one side and freights go up. If we've made a deal, it's a deal. That's right. We stand by it. And this last two weeks, I would suggest we've seen that a lot, right. Lenny? Where's Lenny? Lenny said earlier about diesel prices, so stuff that I bought, FOB. I get a trucking rate today versus two and a half weeks ago. It's almost double. Right. And I don't think the trucking guys are trying to put it to me, but they're up against it too. It's just, it, it's, it's amazing. And to Joseph's point, what we eat that Dominion nickel eats that'cause we agreed to buy it picked up your door. That's that's on me. Right. For all of you. If the market stays exactly where it is right now, where we kind of think of, maybe it's a, it's a decent space right now. What happens in the next five years versus if it goes back to what we experienced previously? Well, it is gonna go back for sure. I can confidently say that because basically we're in a holding pattern because of the law. You know, we're in this five month, 10% area because. He doesn't need congressional approval for that. However, these investigations have, you know, we're gonna go testify, we have to submit public comments, they have to do a few things, check the boxes, and then all of those rates, I think will go back to where they were, if not higher. Um, and I'm just saying that,'cause that's worst case scenario, maybe they'll be lower, but I, I do think they'll be at least where they were under a EA, um, and I do think possibly many of them will stay from the first Trump administration. President Biden kept many of those tariffs in place. He kept the section 2, 3 2 on steel and aluminum. He kept the section 3 0 1 on China. So these can be passed from administration to administration. So it really depends, you know who, who's our next president, what's their agenda? The first year was really focused on bringing manufacturing back for the American jobs, the American worker. The rhetoric has really changed given current events to defense national security, and our industry is. I, we just submitted comments today for a critical minerals. They're trying to do a critical minerals agreement, and you know, me and Adam are reading it and we see metal scrap listed as a critical mineral, so. Our industry is seen as a very essential industry and they wanna control it and nationalize it more and more, and we are trying to ensure that that free market stays open. But I think five years down the road, it's really gonna depend, you know, what current events are going on, you know, what's going on in the world, because that has really shaped like the rhetoric around the tariffs and what they're being used for. Joe, have you guys changed anything in the business where, you know, you've had to take tariffs into account? As in, have you got somebody full-time? I think it's kind of you, but is there something you mentioned earlier, Erin, about like having to hire people. Have you found that it's had an impact on your business where there's a lot more time spent on that? Maybe there's some form of different structure. Maybe there's a Monday morning meeting every week. What changes actually happen operationally in the business? We look at the data, we look at it more closely than once a week. Um, more optics, more detailed optics. For example, we don't know when an announcement's made. It doesn't go into effect 30 days from now. A lot of things just go into effect from Monday or within a week. So we need to know, we've loaded containers. Did it really sail? Is it arriving in time? If it arrived in time, is it custom cleared? There are so many information. We would initially only look, look at, okay, we've loaded it. ETA is this. We didn't look at so many other optics in the middle, so now we're measuring as much as we can and we can only manage what we measure. So. Far more measurements and at any given time, having access to data is the key to managing, um, whatever comes from the administration or changes in rules or a war on one side is delayed, um, arrivals to the states and things like that. So yes, we make sure we have data available at any given time in order to make the decisions. Dave on your side, I wanna ask you something similar. Mm-hmm. But I know you spend a lot of time in the association, so you're actually quite close to it. But do you find that there's anything in your business that kind of people are on top of it? Weekly meetings, monthly meetings, data that they're pulling from certain? The reason why I am asking you guys, this is hopefully, you know, either in the crowd right now or listening on the show, um, these are things that other people can implement. So what are the kind of things that you think you've implemented or somebody else can that just wants to make sure that they're ahead of the game? And like I said, I mean I remember going through the COVID period, um, and I had four yards at the time in New Zealand and we had like a weekly meeting. Granted it was almost daily in New Zealand, but like there was a weekly meeting. It was just about how were we dealing with, who knows what's coming next, who's heard anything? Is there anything you guys are doing in particular you think guys could do? Not in particular. No, I mean, just as a broad statement, it just takes up space in your brain. I mean, we overcome obstacles. That's what we do as recyclers, right? It, it never goes according to plan. We all have the end goal. We all want to get to the finish line, but there's always a variation in the path to get there.'cause whether trucking, whatever it is, international conflict. So it just takes up space in your head. So what, what do we do about it? I mean, we're, we're definitely, and I am plugged in, so. Our ownership group really appreciates that. I'm constantly feeding them the information that our, our trade, our trade team, and our representatives are, are, are feeding us. So that helps a lot. I think information is power. I think it, like she said it well, how do you, how do you measure what you don't track, right? Mm-hmm. So we, we track things differently. We're measuring variables differently, but day to day, we haven't brought on new staff to do that. So, no, I don't have any. Take a deep breath and keep moving would be my advice, right? It's the extra couple minutes every day, a couple of hours every day in your brain. Mm-hmm. Go to sleep a little bit later, a little bit harder to fall asleep at night. It is harder to fall asleep at my desk after lunch, but I mean, I still find time to do it. So that's, that's a lie. I'm sure it's still very easy for you though. Um. I just wanted to remind everybody that, um, we'll give 10 minutes at the end, so probably in like 10 minutes time or so, if you've got any questions for the panel. Um, we will give you guys some time to ask those questions. Um, Erin, I wanted to ask you from the policy side of things. What developments are coming in the next six months or 12 months that we should be looking out for? So we spoke now about, you know, are you keeping an eye on things? How is your team looking at things? What is there that we must make sure we are listening out for, whether it's from the association or whether it's in the press, or whatever it's gonna be. What are those things that the recyclers should be looking out for? Well, the US Canada, Mexico agreement, like I've said, president Trump really likes to negotiate bilaterally, so he's currently negotiating with Mexico. They met last week. He has not opened up dialogue with Canada, which concerns us. He likes to do it bilaterally for more leverage, but it is a trilateral agreement. They are definitely going to tighten the rules of origin, which means claiming origination is going to be harder. You're gonna have to go deeper into your supply chain. To claim that because some parts from China and non-market economies, as we would call them, are still getting in. So that's gonna be an increase in compliance. Also, if you're working with the eu. Um, CAM, the carbon border adjustment mechanisms are slowly rolling out this year and the next three years. Uh, that's going to be a new compliance issue because it actually puts American recyclers at a competitive advantage. But we will need to provide more certification. Um, that this is where it came from and this is how it was produced to be able to export it to the eu. So there's a couple things coming in the next couple years that are just going to make things a little more difficult. Um, and also we're gonna be closely watching the steel and aluminum tariffs to see if they are expanded again or if there is an off ramp for certain equipment. We're always watching those and. Hoping that, you know, like shredders, we don't wanna see that stuff on there because it's a very steep tariff and they don't go away. It's very hard to get rid of them. Um, because I don't have yards anymore. I don't have equipment guys phoning me every single day. But is there currently this window that equipment guys are going by now because it's only 10% instead of the 40 or the 50? Like, is this a window they should take advantage of? If you're buying equipment? If it's not 2 32, that stays in place. But if it's a piece of equipment that's not on it. It's coming from like Vietnam or Brazil. It would be a great time to order it. Um, but it needs to get here in less than five months. And there's usually no on water exemptions anymore. That is a brand new thing. Usually there would always be, mm-hmm. Like a two week period or a window where you got an exemption. We're not seeing that anymore. Like he puts out the executive order and that is it. So yes, come talk to me if you have a specific country you're wondering about, but it is a very unique time right now. Okay. For all of you, what happens tomorrow if all tariffs disappeared? What would actually physically change in our industry? Another for For us? No, for you, Joe. Probably more aluminum imports, which is probably hindered since the tariffs, so I think that would change the direction. Just, and for the metal recyclers in general? No, no. My job security, I'm, but I, yeah, you would sleep better in the day, I'm sure. But, um, I think, I mean, for some people it, like it won't impact them, right? Because it's either exempted on annex two or it's coming from Canada, Mexico. For equipment providers, service providers, uh, yeah, they'll go to bed very happy because some of them are paying 50 to a hundred percent tariffs on things right now. So it really depends where you're working and, and where you're getting your materials. I think you'll see things change in July from, from, from our standpoint, we're more worried about what happens in July. Dominion. Nickels more laser focused on what happens in July if this agreement we have with Canada and Mexico blows up. My personal opinion is there's a reason he hasn't engaged Canada yet. I don't think he will. So what happens? Blows up happens. That changes. Everything we do. So you think there might be, the outcome of that is a 50% tariff anything coming in from Canada? I, I, I'm not on Twitter anymore, so I'm not sure, but who knows, who knows what happens. I don't think there's a, a great relationship between PM Kearney and United States President Trump. I, I, it's, it's just not a good relationship. So, I mean, in July, are you expecting that there is actually a date? So it's like we will know on this date? No, because weeks before that, do you stop buying from Canada in case something's on the way? No. You were speaking earlier about exemptions. Um, now if you read the agreement, it just, it just continues on. Right? So I'm speaking for Dave Pesto. I'm not speaking for Dominion or the Fleischer family. I would suggest that the position is gonna be to let it go. Every, every month. You might see a, a comment or a a. A, a statement released, but I think there's gonna be tremendous leverage applied through that agreement, especially if he can get something with Mexico first. So Dave, I'll go back to, you know, a question maybe from a little bit earlier. How are you going to strategically plan for this? Because if you've got a thousand tons that you've purchased, I'm just making up a number and all of a sudden that comes in overnight, that could have a massive impact on your business. Sure. So your previous guest, you asked about. Inventory and positions. And if, if you don't like inventory, you would not want to tour our 26 acres. We always have a a, a pretty good position, right? So we're very long term focused. We, we marry you kind of person. We're not, we don't jump from, from home to home. The change in policy in Europe right now is greatly impacting what is going on in the United States, north American stainless steel market. I would, was just factor. A lot of the reason we saw pricing jump over the last two and a half, three weeks is because the European mills are coming into our markets, to our guys, to our processors, to us, and saying, what do you need? How many containers can you give me when, just name the price kind of thing. And obviously that puts pressure on the domestic mills for pricing, right? So, um, if you're chasing the market, that's probably not good. If you're in a position, it's not a bad thing, right? So, uh, a thousand tons. That really isn't gonna change the way we operate. Yeah. But I'm talking about, okay, so let's say it's 50,000 tons. Mm-hmm. And it's orders you've made from Canada over the last three weeks. Mm-hmm. And all of a sudden 50% tariffs come in. Is that something that keeping you up, I would say, at night, but keeping you up in the day and like kind of, you've gotta always be thinking about that and closer, we get to July. Are you gonna buy more domestically in the US versus Canada just in case. It takes up space in your brain. I go back to my earlier statement, I can't control what happens in Washington DC but you can control the strategy in your company. Absolutely. So is it something that you would have to consider? Yes. Yes, exactly. Yeah, I thought so. We would have to find new homes. That's a huge impact. I would suggest. That's a big impact. Yeah. Okay, I, I wanted to keep at least 10 minutes because a lot of people have got a lot of things to say about tariffs. So hopefully, um, some people have thought of some questions. The microphone is right over there in front of Jason, so I think Sam might be coming up for the question. If you have any question, if you can just kind of like come around there to give us an idea of, of more questions to come. Don't be shy, please. Thank you for doing this speech. It's pretty good. Uh, I had a question. Uh, we, we do a lot of container shipments overseas and we also bring in containers from overseas regarding trade tariff. What do you think in terms of the cost of freight going overseas and coming back, especially with these wars that are going on, uh, what is the impact? I remember from many, many years back, um, where there was a war going on and the US government took over. Many of the containers going from here to other parts of the country are the other parts of the world. So do you think that's gonna be a impact this time, or do you think that the rates are gonna, I mean they already are going up right now. And what's your general thought? I know Josepha actually sent this to me not long ago, but there are increased rates if things are moving through the Middle East right now. I don't know if you remember the exact amount, but it, it was pretty steep for things moving through. Um, the rates keep changing every week since. The disruptions in the Middle East, um, what we know for certain is there's definitely a rate increase, um, lesser for 20 foot containers and a bit higher for 40 foot containers. On the export side, it's a hundred to$200 in that range. On the import side, it is 3000 to$4,000, so we're looking at an imbalanced rate increases. Uh, depending on the direction it's going and the route it needs to take, um, this is, as of this week, things could change next week if things compound. We don't know if it's gonna be a set in stone, but for now, one thing we know for sure is there's definitely gonna be a rate increase and we need to brace for it. Yeah, I think I heard, um, anything going through the Straits of humus, you're looking at like a$1,200 increase. Exports through there as well. So freight's definitely impacted. But Sam, I think you, uh, some questions around tariffs as well in that, or was it just particular freight right now with oil? Uh, yeah, it's indirectly, uh, the freight. And in terms of the tariff, do you feel that maybe in six months or in a, so the tariff, because I read articles from both sides where they're talking about steel tariffs coming down. There's many articles that they're going up. There's no real answer and we can't figure it out. Yeah. The, so the articles you're reading about them going down are kind of what I was discussing with the, uh, the seal and aluminum derivatives. They are trying to find a way to either off ramp them or lower the tariffs on those derivative products. Now on just. Steel and aluminum coming in. I, I don't see that going down. Those have been in place for a long time, but they did quickly realize that it's very hard to calculate the steel amount and the aluminum amount in a product and to comply with that. And so they are making some changes. They are not being super, um, forthcoming with us about what those will be. So the minute we know, we will definitely be putting information out about it. Um, also in terms of like defense and what's going on in the Middle East, we've seen, um. The defense department a couple weeks ago released that they're increasing their metal stockpiles. So nickel is one of'em. It, it hasn't made its way to recycled steel or aluminum, but I could see it expanding. And those are just stockpiles. They keep, in case of wartime, um, they also have this new critical minerals agreement they're trying to negotiate. To keep critical mineral supply chains here in the United States, and Metal Scrap was part of that conversation. And all of that has to deal with defense, national security, keeping things here in case it's needed. Um, but a lot of it is just currently in the works, so we will definitely make sure to, to let you know when we know more. Thank you very much for your answers. Thank you, Sam. Um, I just wanna give you. Some context from my point of view, and I'm gonna say something pretty radical, but I hope tariffs stay in place. I hope that they are a locked in amount over a long period. So it's easier to, um, change your business accordingly. And I hope the original plan works out. Now, lemme tell you why, because I believe if it doesn't, what we have coming is a lot scarier than what you see right now. I lived through export controls. Um, in South Africa, which was a huge exporter overnight, the government passed a law that if you want to export any scrap metal, you had to get a permit. The way you got a permit was you applied to export material. We were the biggest exporters by far in Southern Africa. You had to apply to get a permit, and in order to get that permit, every single melter of that commodity had to turn it down, but they were allowed to buy it at a 20% discount to export. Now that affects this industry. Like you don't understand, like there is excess material in this country for almost every commodity. If all of a sudden you have to get a permit and everybody domestically can buy a 20% discount to export for scrap, which think about what those numbers look like on copper. All it does is it moves our profitability straight onto the consumer. And I experienced that. We went out and bought copper foundries and I experienced firsthand how much more profit a consumer can make. But it's all taken from the scrap deals. The loss of incentive to recycle is there as well, because now all prices are dropped drastically. Um, so less material gets exported. But now the reason why I say I want tariffs to work is'cause I believe that the pressure that this originally come on. From all of our consumers, we'll carry on. It's not gonna stop. It will carry on coming on. And if tariffs don't work and everybody overturns tariffs, there will be something else. And I fear that the something else is a lot scarier than what we're experiencing right now. I had a great conversation with Andy Golding just the other day, and the reason why I'm saying this is he actually asked me to be vocal about what I experienced in South Africa. It will ruin the scrap metal industry throughout the entire country if export controls are put in place. Hi. Thank you for being on the panel. I have two questions, one for Aaron and Dave. Mm-hmm. Aaron, you mentioned something before about nationalization in terms of the United States, and I'd like you to comment on that. And Dave, I'd be curious to know your opinion if you were a company in the United States and not Canada, and how your opinion would differ on tariffs. So my, my opinion on tariffs is, uh, irrelevant of where my owners are located. I wanna be calculated in my response, so I, um, I don't know that I'm as frustrated Dave Beswick speaking with the tariffs as I am with the lack of clarity behind them. One day they're 20%, and overnight they jump to 45%, and then the next Monday they drop to 12%, and then the following Friday, we're back up to. It. I mean, if you charted it, it would literally go like this. So when I owned a business, I don't want to deploy capital. When I don't know certainty, I don't, I don't feel comfortable in the market. Right? And I think we'd probably all nod along with that. We got a lot of equipment guys sitting in the room, right? Who, who wants to go buy? We're looking at buying a new bailer. So 12 month lead time on a bailer. They're not cheap to bale stainless steel. Who wants to lay out that kind of capital when you don't know what it's gonna cost to get it to you? How do they know what they're gonna pay to put the parts together? So, so my position on tariffs is irrelevant of the fleishers living in Toronto. Um, I'm an American first. Uh, I'm a pretty proud American actually. Um, I, I think there's imbalance in our world trade, but I, I, I would suggest that that's because of decades of inaction from. A whole lot of elected leaders, right? And I'm just not a kneejerk guy. So to try to kneejerk that in 12 months, I think is really hard to absorb as a business owner. So I would like to see personally, a more calculated, inclusive kind of conversation where the players are all at the table and it works for everybody. I think it's here to stay. Personally, I don't think we get away from tariffs. I would just love to see it be thought out and set so that we can all plan our businesses around it. If you tell me the rules, I'll play the game. You can't change the rules when I'm on the 20 yard line, the 30 yard line, 40 yard line, 20 yard, it just makes it really, really hard. Did that answer your question? I don't understand your question. I, I stand with Stew as a, as a scrap dealer based in New York and the United States. And yeah, this is an individual selfish view, but tariffs have been good. For my company and my industry and the people that are in it. So from that perspective, I misunderstood that perspective. When I hear a company based in Canada talking about tariffs, I think that you have to have a much different view being from Canada than me being in the States. So, so the tariffs haven't affected us. Mm-hmm. So, so our view was neutral. We have no view because it, it, it, it did for that short window, and I'm not gonna lie to you, we were. Pissed, right? It was a big number. Our lawyers tell us that's coming back so. As of last week, everyone's breathing a lot better, but I think, I think you'd sleep better at night if you spoke less to lawyers. But Erin, I would love for you to comment on the nationalization. Yeah, so, uh, I mean, I'm just using language that administration uses. Um, you know, we obviously have tariffs, but as to saying expert controls is something we're fighting right now because it, it is coming. There's been a couple proposals for aluminum export controls. The Copper 2 32 resulted in. We fought off expert controls, but it, it's requiring that 25% of high. So how does that fit, sorry for interrupting you, but how does that, that's a nature and habit of mine. How does that fit into what you're saying? Into the definition of nationalization? Because to me, I mean the definition means that the United States government is taking over sau. Yes. And so Exactly. That's why when we say at Rima, we. We believe in a free market. We want things to move where they have to go. But when you control the exports and you control the tariffs on what's imported, and the administration uses that word multiple times when they talk about how important certain industries are for manufacturing, um, this industry is top of mind for them. We, we meet with them every single week. They want things staying here in the United States, and they want to control. If they leave or not. And it is something that it's coming down the chain and it's why we're fighting so hard to make sure that you have access to export markets. Um, because if there's too much here, right, you, you don't wanna lose your customers abroad. So yeah, there's been an extensive amount of work and cost and study done for availability of raw materials. Copper, aluminum, did I say that right? The right way is aluminum. Oh, copper, aluminum. Nickel and stainless. Right. The, the, the trade association, the non Farris team have put a lot of time into that, and a third party has proven that we have excess recycled material. We have excess scrap metal in the United States, and we can argue about export controls and 25% of this and 10% of that. That, again, to measure the data, the black and white, without emotion, which is hard, I get it, but to look at the data, the data proves that we have excess material in the United States. And, and, and Reba's position is we should have market access wherever that market is. Right? I agree. But I would suggest that REMA could use less toxic language. Nationalization seems to be more of a word to incite things than it is about the reality of things, and that's why I hung on that word. But thank you very much and I appreciate you all attending. Thank. Yeah. Thanks Kev. Um, good point around, I guess using the right language. Sure. Um, especially when we're up on stage or, or putting things out on social media as well. Um, unless anybody has any other questions, I think we're done here. So I'd like to thank the panel. Thank you guys for joining us. I think that was really informative and you all did brilliantly. And thank you guys for joining us as well. Cheers. Thank you. That's it for this episode of Born Scrappy. If you have any questions, stories, or topics you want us to dig into, send them my way. Until then, keep it scrappy.