Morning Brew Daily - Trump Budget Bill's Tax Impact & Lululemon Sues Costco Over Dupes

Episode Date: July 7, 2025

Episode 620: Neal and Kyle explain what the Trump budget bill's impact on taxes will be. Then, Lululemon is suing Costco over dupe clothes and teenagers are having trouble finding work this summer. Then Neal and Kyle share their winners of the weekend, which include how to be "cool" and swimmers are back in the Seine. Finally, a look at the week ahead. Meet your local home loan expert at https://mortgagematchup.com/?utm_source=morning_brew&utm_medium=podcast Subscribe to Morning Brew Daily for more of the news you need to start your day. Share the show with a friend, and leave us a review on your favorite podcast app. Listen to Morning Brew Daily Here:⁠⁠ ⁠⁠https://www.swap.fm/l/mbd-note⁠⁠⁠⁠  Watch Morning Brew Daily Here:⁠⁠ ⁠⁠https://www.youtube.com/@MorningBrewDailyShow⁠ Learn more about your ad choices. Visit megaphone.fm/adchoices

Many employees can't afford a hefty medical bill that pops up out of the blue, but it happens. And employees who are financially stressed are, understandably, more likely to be distracted at work, costing their employers greatly in lost productivity. Luckily, AFLAQ plans help with out-of-pocket expenses not covered by health insurance and can be offered at no direct cost to businesses. Learn more at aflac.com slash morningbrewerdaily. That's aflack.com slash morning brew daily. Good morning, Brew Daily show. I'm Neil Fryman. And I'm Kyle Hagey.

Today, how Trump's big bill will and won't affect your taxes. And why you're out of luck if you're a teen looking for a job this summer, it's Monday, July 7th. Let's ride. Good morning. Thank you, Kyle, for filling in for Toby today. It feels good to be back. And welcome everyone back to the work week. Well, unless you're Ben Shelton's sister, then you have a few more days off. Here's what happened. After winning his third round match at Wimbledon on Saturday, the American tennis star used his microphone to issue a public plea to Morgan Stanley, where his sister Emma works.

Calling her his good luck charm during his Wimbledon run, Shelton asked the bank to allow her to stay in London instead of returning to her desk in the U.S. on Monday as required. The request was apparently approved by HR. H.R. hours after Ben's public appeal, Emma posted Thank you MS and return flight canceled. Kyle, he's a good kid, but in light of this news, I really wish my brother practiced tennis more. And imagine being Emma's manager and seeing Shelton on live TV being like, she's going to get the day off. And you're like, approved, okay. Like, have your good luck charm. So at least he's looking out for a sister.

What about the people on our team who have to do a little extra work? Yeah, they probably are cheering for Shelton's opponent. Who is Lorenzo Sonegio? Shelton's playing should be around 9 a.m. Eastern today. It would be kind of a bad look if he lost this match, but he's the 10th ranked player in the world. He's on a heater right now. So we're absolutely rooting it for you, Ben and Emma. And now a word from our new sponsor, Mortgage Matchup.

Kyle, you know that feeling when you're trying to make a decision, but don't even know where to start. Funny you say that, Neil, because this past weekend, I simply could not decide what to eat at my 4th of July picnic. Hot dogs, hamburgers, chips, coleslaw. It was just so much. Exactly. And if you think that's overwhelming, where do you even start when, you're going to start when, buying a house. I actually have an answer for that, Neil. Just use mortgage matchup powered by United Wholesale Mortgage. They help borrowers connect with independent mortgage brokers in their area.

Cost savings, expertise, local and accessible. Mortgage Matchup helps homebuyers work with a local mortgage broker regardless of where they are in their home buying journey to help them feel comfortable and confident throughout the process. Could not be better. Meet your home loan expert at www.mortgagematchup.com. Disclaimer, United Wholesale Mortgage LLC, Equal Housing Ler, NMLS number 3038, license in all 50 states and the District of Columbia. You tell yourself, no one wants your college-era band teas, but on Deepop, people are searching for exactly what you've got. You once paid a small fortune for them at merch stands. Now, a teenager who calls them vintage will offer that same small fortune back.

Sell them easily on Deepop. Just snap a few photos and we'll take care of the rest. Who knew your questionable music taste would be a money-making machine? Your style can make you cash. Start selling on Deepop where taste recognizes taste. At the White House's 4th of July picnic on Friday, President Trump signed his multi-trillion dollar tax and spending bill that Republican majorities in the Senate and the House approved, giving him his signature piece of legislation that will transform the economy in the years to come.

We've talked a lot about the macro effects of this bill, from Medicare cuts to rolling back green energy incentives to raising deficits, But you're probably also interested in the micro. How will this bill affect you, your taxes, your investments, your savings? A key piece of this law is that it extends Trump's tax cuts from 2017, leaving many pieces in place that we're going to expire at the end of this year. The tax brackets you've become used to for the past eight years are going to stay the same, ranging from 10% up to 37%.

The standard deduction, which was nearly doubled in 2017, is also being kept. and it's become very popular. Before the previous law, about 30% of individual filers itemized their deductions to squeeze the most juice out of them. Now, it's less than 10%. The law also makes the child tax credit permanent and will raise it from $2,000 to $2,200 per child, then index it to inflation going forward.

So, Kyle, for people thinking about how this bill will impact their finances and taxes, the main thing to understand is that, broadly speaking, it keeps the status quo going, because that status quo was going to be blown up at the end of this year without an extension. Still, there are some key changes in this bill. There's a lot of talk during the campaign and during the passing of this bill about overtime pay. That's going to offer a maximum 12,500 above the line deduction for overtime pay.

And there's some kind of technicalities with that. Salt, state and local tax deductions were also a massive issue when they were trying to pass this bill, which basically helps, I would say, high earners in blue states who pay a lot of, state and local taxes, they can deduct that from their federal taxes. That's going up from $10,000 deduction to $40,000 deduction. So if you are living in the suburbs of New York City, New Jersey, Illinois, there is something called the Trump Baby accounts, which again, some details still need to be worked out, but starting in 2026, you might get a one-time $1,000 deposit from the federal

government that will grow kind of as your child ages. No tax on tips was also a massive thing that was talked about. There's going to be a temporary deduction for tip income, which will be in place for 2025 through 2028. More details to come about what that, who classifies for that. And then the last thing I would call out, Alaskan Whalers. So you might notice in this bill that it allows whaling captains to deduct up to 50,000 of whaling related expenses on their taxes. This is how the sausage gets made for some of these bills. Lisa Murkowski, who was a key vote in the Senate to get this passed, represents Alaska.

You could connect the dots of how the Alaskan Whalers got. some benefit from this tax bill. One other aspect of this I want to talk about is the people who are thinking about buying a car, maybe an electric vehicle. Well, under this bill, this $7,500 tax incentive for buying a new EV that's been in place for a couple of years now is going to expire on September 30th. So if you want to take advantage of that, get to your dealer. Now, I will say, looking at some of the prices for EVs. Companies have dropped them to rock bottom prices to move these things ahead of this incentive expiring. The Wall Street Journal found this Hyundai dealership in New Jersey that's selling an Ionic 6 sedan for $169 a month for a lease. Kia is also leasing out its Nero

EV SUV for as little as $129 a month. These auto companies hope that people will start to buy more EVs because the growth of the EV industry is slowing. In June, sales were 6.2% lower. The third straight monthly decline for these battery powered cars and this incentive is going away in just a few months. So we'll see whether auto purchases, EV purchases, take up as this tax incentive sunset. That's right. A lot of people might be rushing to the auto dealer. The one thing I will say, too, is I think for these tax bills, it's important not to just think about the headlines, but also look into the specifics. You mentioned about 70% of tax filers

take the standard deduction. When you hear no tax on tips or you hear some of these overtime pay, some of those you only can get if you itemized. So for most people, you hear, oh, no tax on tips, that's great. It might not actually affect how much tax you pay because you don't qualify based on those constraints. So important to actually get the details.

New York Times has a great tool that I was playing around with last year where you can actually input your specific items. I would say my last point, The real winner of this tax bill is an Alaskan whaler who works overtime, is paid in tips, happens to be 65 plus, and is set to inherit a large estate. There's like one person out there that's like, wow, this was a massive win for me. And another pert development that has sprung up from this bill over the course of the weekend. We do have to talk about this is more of a macro thing.

But Elon Musk, who has been a huge opponent of this bill because of how expensive it is, when interest costs and likely extensions are included, this legislation is going to be more expensive. than the combined cost of the first term tax law from Trump, the 2020 COVID stimulus package, and President Biden's 2021 stimulus plan. That is according to the Manhattan Institute, a center-right think tank. So he has been railing against the expense of this whole thing. He has said he is going to create a new political party for the, quote, 80% of people in the middle. It's called the America Party. Mark Cuban has endorsed this.

He has not released any details or filed any paperwork on, you know, actually, you know, creating this thing structurally, but this guy is so much money. He was a huge force for Republicans in the last election. Tesla is also down 7% pre-market because whenever Elon Musk dips a toe into politics, then he's taking his mind share away from that company that's struggling and needs a turnaround. Correct. The Trump Musk saga will continue. Our next story, Lulu Lemon has officially entered Warrior Pose as it gears up for a fight with Costco. The athlete's retailer filed a lawsuit against the wholesale giant, alleging that Costco was selling copycat versions of its athletic wear under the Kirkland label at a significantly discounted

price, potentially misleading consumers, and infringing upon various trademarks and patents. In addition to Lulu's scuba jacket, the suit alleges that knockoffs of other popular products, including their ABC pants and define jackets. Now, this case draws on various legal frameworks, including design patents, trademarks, and trade dress protections that give cover to big brands over certain product designs and packaging rather than purely functional components. Lulu is going as far as to sue over the name Tidewater Teal, which it is accused Costco of using to promote its own version of similar products. Now, Lulu's legal team is locked in, probably wearing those ABC pants because they have a track

record of litigating against copycats. In late 2021, they filed a similar lawsuit against Peloton. and in 2012, they filed a lawsuit against Kelvin Klein. Both of those lawsuits resolved in settlements. Many legal experts are saying that the outcome in this case, because of the size and nature of Lulu and Costco, could create some new precedence in fashion IP. Neil, are you rocking the Lulu joggers or the Kirkland Signature Joggers?

I mean, if you look at the price, it's not really a question. What is it, a sixth of the price for those ABC Dube pants? And that's what I kind of want to talk about is this, dude, this word, dupe. Now, maybe in the past, knockoffs have had maybe a sour reputation for people, but as clothes have gotten more expensive, inflation is hitting people's wall. It's dupe culture and fashion has become huge, and it's something that is celebrated. People go on TikTok, you know, showing off their dupe collection, the fact that they're getting similar products, maybe not the best quality, but not exactly the name brand, but you're still getting, you know, a very quality

product at a much lower price. This is only bolstered Costco's business in a rare turn of events for this lawsuit. People are saying, oh, wow, Costco is selling these similar pants for a fraction of the price of Lulu. That's great marketing for them. I'm going to go to Costco instead of Lulu. Yeah, I think you're spot on with this kind of dupes are cool. And particularly with inflation, as you mentioned, people are looking for bargains,

not brands. And it's tough for Lulu, who has dumped a ton of money into IP, into research and development. They have literal patents on their pants. They're kind of the R&D laboratory for Costco in this setting where Costco, you know, I don't want to say steel because I'm not a litigation expert here, but they're being inspired by these pants. They look pretty close. There's tons of Reddit threads. There's a wirecutter article saying they look pretty much identical. They're 85% of the appearance for one six of the cost.

And Costco then can, you know, take that design, sell it for a lot less. And that kind of is Costco's business model with its Kirkland label. It gets so much data on what's popular. And then it can turn what's popular into a Kirkland brand and their margins go up. So really interesting. The one thing I want to mention is this is a perfect example of the Streisand effect where bringing attention to something, sometimes backfires. People are now, I had no idea Costco at great clothes. I'm like, I got to get to the closest Costco ASAP and get me some joggers.

Meanwhile, Lulu's business is not doing. well. So maybe it's doing this from a point of defense. It had a 7% rise in sales in the first quarter, but it's stock tanked after it reported those earnings because it cut its guidance for the year. Its stock price is down about 30% year to date. We'll see what happens from the outcome of this trial. But it's certainly raising awareness about all the lower cost goods that are made in the Lulu Lemon style, but don't cost $128 like Lulu Lemon's pants. I think Lulu needs to go on the effect. and start duping Costco's hot dogs and selling them for 50 cents in Lulu's stores. Go on the attack.

All right. It's been a right of passage for American teenagers to get a summer job working as a lifeguard, an ice cream scooper, or manning the rinky dink roller coaster at your local amusement park. But in the midst of a slowing labor market, those jobs are drying up. Teens are projected to gain just one million jobs in May, June, and July of this year, which would be the lowest count since 2010, according to the employment firm Challenger. gray and Christmas. In May, teen unemployment climbed to 13.4% up from 13% the month before and 12.4% the previous year. The trends are not going in the right direction, and economists chalked

up to a number of factors. One is that as the job market cools across the board, teens are often seen as expendable, the first ones to be cut, the last ones to be hired. As competition heats up for fewer open positions, older, more experienced professionals are winning out in this game of employment musical chairs. Another factor is the slump in the type of industries teens often work in during the summer. Leisure, recreation, tourism. Spending from international visitors in the U.S. is projected to fall by $8.3 billion this year, forcing hospitality companies to tighten their belts.

And another variable could be automation as self-checkout and other technologies replace cashier or clerk jobs that teens used to fill. Kyle, I'm curious what you make of this, but first, what was your summer job as a teenager? I was going to ask you the same question. My summer job as a teenager was I reft like third grade basketball. Okay. And I feel like you learn a lot after getting yelled at by parents who have third graders and feel like their kid is the next LeBron. So it was a lot of development for myself personally.

I was a baseball. Okay. And the parents, yeah, they're very intense in Longmeadow Little League Golf. I was a camp counselor for many years. Yeah. And that's why we have such great character that we have is those teen experiences. Yeah, I mean, it's not good to be a teen today. You called out a few industries that I want to double down on.

Tourism is one. Kind of a concrete example. The Times interviewed Muddit Sachtav. He was a franchise owner of Camp Bow Wow. Tourism is down. Less dogs coming to this daycare facility. What is Camp Bow Wow? It is a dog daycare and boarding center for people that go on vacations.

So he hired 12 teenagers last summer. He's hired five fewer this year. And so, you know, take that and scale it across the entire economy. You can see how tourism going down affects teens. I think also automation is massive, right? You go into a target. No one's checking out anymore. You're going to self-checkout kios machines.

I think that's in general good for the entire economy. And you often hear that automation allows us to do higher level, more strategic work. But for teens who are still developing their skills, still trying to socialize, it feels like there's no path into work for them. And I think that's a real concern. You don't just earn a paycheck, but you're also learning how to socialize with adults. I think it's a pretty important skill to develop for teens. Very interesting to go into our time machine and go through teen employment during the summer for the past few decades in the United States.

So go back to May 1979, a summer job was very, very popular among teens. 55% of teens worked or were job hunting for the summer back then. As the decades progressed, maybe you needed to bolster your resume. maybe didn't need to get some volunteer work or leadership seminars or other types of things to, you know, have a good application for college. So the share of teens that were working or looking for work for a summer job doubled to about 32% to 34% through the 2010s. Then COVID came and all of those industries that were closed in the leisure and recreation. And as the economy was opening out, remember there was that huge worker shortage right after COVID, 21,

2022 teen employment shot right back up during the summer. And then now that that's where not we're seeing another slump and it go back down into the gutter. Yeah, I think the, you know, an element you just mentioned, the intensity of college and the requirements to get into the college of your dreams have only skyrocketed. So it feels like life or death if you don't get the perfect job or the perfect volunteer opportunity as a teen. Coming up next, how to be cool according to science. Study and play.

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Don't miss the return. of Marvel Television's Daredevil Born Again. So what's next? I'll be liberated. We're to take this city back. All new season, now streaming only on Disney Plus. They're hunting us. It's time we started hunting them.

I can work with that. This should be tons of fun. Marvel Television's Daredevil, Born Again, now streaming only on Disney Plus. Welcome to Winners of the Weekend, the segment where we pick two things that will ask you about your Fourth of July, only so they can brag about theirs right after.

We all know those kind of people. Kyle, you won the pre-show lightsaber battle, so now I'm down one arm and you get to go first. Yes, my winner of the weekend, Neil, is the 2024 French Olympic team. They finished the last Olympics with 16 gold, 26 silver, and 22 bronze medals, but they've notched one major victory since the Olympics wrapped up last year. A clean river. Yes, you heard that right.

The Sen, the major river that flows through Paris, is now clean enough to swim in in select spots. in no small part to the $1.5 billion investment to clean the river to make it suitable for select Olympic events. But in order to get the public on board with this pre-Olympics plan, government officials promised that the work would continue after the 2024 Olympics. And this Saturday, they delivered on that promise, opening five dedicated bathing sites in Paris and the Paris metro area. Now, swimming has been banned in the river since 1923 for good reasons because of boat traffic and pollution. A study in the 1990s classified the stretch of the

river running through Paris as having one of the highest levels of heavy metal in the world. So this is quite the turnaround for the river. Officials say the sites are safe to swim in about 80 to 90% of the time, promising that number will continue to rise with the ongoing efforts. Neil, actually the photos of this were super fun to see families swimming in the river, having a good time. It feels like local government actually worked in this case. Yeah. We got to get the East River clean in New York City. I have a swimming partner.

What did this take $1.5 billion? I think that would take $150 billion. I'm starting to go fund me then. But it is, you're right, it is an example of government doing something good and maybe hosting the Olympics, which has been much maligned for its cost, actually leading to long-term positive changes for the host city in the years after it has hosted the Olympics. It's really cool, especially in Paris, because the sand goes through the heart of the city Notre Dame, Eiffel Tower, all of those amazing buildings, all that architecture is right on the

banks of this river. So to be able to swim in that and see the city from a different perspective is super cool. And I think cities with active rivers where people are in them and doing things on them, rafting, swimming, whatever, just adds to the quality of life there. I've been to like Bend, Oregon. Okay. The river. Everyone's in the river and it goes right through the city.

And it just makes for just a more vibrant thing. and where else, you know, there's a bunch of, in Asheville, there's the French Broad River where people are always wrapping. So I'm sure a lot of you are thinking about, oh, well, you know, rivers do kind of, not just rivers, but rivers you can be in kind of certainly lead to a better quality of life in this city. We'll see what happens with the send. When it rains, the wastewater and sewage adds to the bacterial levels. And they're going to fly a green flag when you can swim and a red flag when you can't swim. Yeah, they have a 17-person team monitoring the water quality every two hours for the reasons you just listed. But it has been cool. This has been kind of catalytic and there's now delegates from other states and other cities around the world coming to Paris to learn how they reclaimed their river so they can bring it back to their own locality.

I don't know what's going to happen here any time soon. Okay, my winner is anyone who's dreamed of being cool because for the first time, we now know the secret sauce. A new study published Monday in the Journal of Experimental Psychology discovered six specific traits that cool people are seen to have. They are extroverted, hedonistic, powerful, adventurous, open, and autonomous, which oddly enough is exactly how people describe me. No, I'm not cool, but what was interesting about this study besides scientists looking into the concept of coolness was the attributes associated with being cool were universal. It didn't matter where you lived, how old you were, your income level, education, or gender. and these researchers got responses from a lot of different people, nearly 6,000 from 12 different countries around the world. What was a limiting factor was that anyone who participated in this study had to recognize the word cool in English. It couldn't be whatever the version of cool is

in their native language. But given that so many people from non-English-speaking countries did understand the term cool, the researchers said a major takeaway of this was that it reflected America's success in spreading its culture from music to movies around the world. Kyle, after learning what makes people cool, power, doing things your own way, extroversion, adventurous, which you say you qualify? Dude, I'm an introvert, man. My introverts are in shambles right now. I think they forgot one important trait, which is having a podcast. I've heard that makes you super, super cool. The one interesting part I'll comment on is the research team that did this study, they asked their question, so they asked the question, so is coolness actually worth

pursuing? And they said, you know, I actually doubt that, that the people who pursue being cool and adolescents typically involves risk taking. Sometimes those behaviors don't lead to productive adult development. And so it might not actually be cool to be cool, which I thought was really interesting part of this study. But they also said that having cool people in your society was important because these are the ones pushing the boundaries, creating cultural innovation. And, you know, I'm thinking about certain cool people. They also tried to distinguish between what makes people cool versus good. They found some overlap. But certainly the Venn diagram wasn't a complete singular circle.

I'm thinking of anti-heroes in our favorite TV shows, Walter White, Tony Soprano. These are people that we worship for being cool. Are they good? Certainly not. So a very interesting study. Maybe the first of its kind looking into the concept of coolness. Okay, it's Monday. So here are the major events you need to know about in the week ahead.

Rescue efforts have entered their fourth day after catastrophic rain and flooding in central Texas last Friday, killed at least 82 people, including 28 children, making it one of the deadliest floods in the U.S. in the past century. Ten girls and one counselor are still unaccounted for from Camp Mystic, an all-girls summer camp that was overwhelmed after the Guadalupe River it sit next to rose 26 feet in the span of 45 minutes Friday morning. Even as rescuers continue to scour the damage, locals are raising questions about the lack of preparation, alerts, and monitoring systems in a central Texas region that is the

most flash flood prone in the entire country. And the economy, get ready to hear a lot more about the trade war again because that 90-day pause on reciprocal tariffs Trump announced in April is ending on Wednesday. And like everyone else in your inbox this week, the tariffs appear to be circling back. To recap how we got here, Trump announced tariffs on every country in the world on April 2nd, Liberation Day, that in some cases reached as high as 50%. But the stock and bond markets revolted, so one week later, he paused tariffs for 90 days to give a window for countries to make deals with the U.S. That hasn't happened. The only agreements or frameworks that have been reached are with China, Britain, Vietnam.

So Trump is changing tack. Starting today, he said he'll send letters out to different countries with tariff levels they're going to face, and they can, quote, take it or leave it. Treasury Secretary Scott Besson said countries that don't make trade deals by August 1st can expect their tariffs to return to the original liberal. day rates, which indicates there's a possible extension here. It's all very confusing. We'll bring you more as we know it. Tomorrow, business moguls in the 0.0001% will head to Beautiful Sun Valley, Idaho for the annual Allen & Company leadership retreat, or as it's better known, summer camp for billionaires. A who's who of tech and media executives are expected to attend. Met is Mark Zuckerberg, Apple's Tim Cook, Alphabet's Sundarpecheye, Netflix's

Ted Sturandos, Amazon's Andy Jassy, probably open AIs. Sam Altman and many more. And while fishing and biking and making s'mores are surely on the itinerary, so is talking business. Sun Valley's famous for being the origin of many mega deals in the media industry, such as Disney buying ABC, Comcast and NBC Universal, and AOL and Time Warner. And we also just heard that teens need jobs. They often work at summer camps.

Sun Valley has a great opportunity here. Hire some teens to help out at the Sun Valley Conference. In sports, the field is narrowing at Wimbledon ahead of the finals this upcoming weekend. The big story has been all the upsets so far due to to the player's lack of experience on grass, but not Ben Shelton. The Tour de France will also run all week in case you want to watch freak endurance athletes do their thing in gorgeous scenery. And soccer's Club World Cup is nearing the finish line. The semis are on Tuesday and Wednesday.

And the finals are on Sunday, all at MetLife Stadium in New Jersey. I'm excited for tennis. I'm excited for biking. I'm excited for soccer. Neil, I need some football back, though. You are a Midwestern football fan. Not too long, maybe a couple months, six weeks until we get football back. Let's roll the credits. Emily Milliron is our executive producer. Raymond Lue is our producer.

Our associate producers are Olivia Graham and Olivia Lake. Hair of makeup is taken a dip in the Sen. Devin Emery is our president and our show is a production of Morning Brew. Have a great week, y'all. Aw. Pay off your home, travel for life. Drive a Ferrari. In celebration of the world premiere of the Monopoly Big Board Bucks slot machine by Aristocrat Gaming, Yamava Resort and Casino at San Manuel is giving one person a $1.6 million dream package. The biggest prize in Yamava's history.

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