Morning Brew Daily - Trump Drops 25% Tariffs on Cars & 'Family Dollar' Sold for $1B

Episode Date: March 27, 2025

Episode 548: Neal and Toby discuss Trump’s latest tariff order, this time a 25% tax on all auto imports. Then, Dollar Tree was sold to private equity firms for $1 billion after years of struggling. Also, Wall Street bonuses are heftier than ever, reaching a new record $47.5 billion. Yowza.Meanwhile, Neal shares his favorite numbers from The Atlantic’s bombshell leaked war plans report, March Madness, and the hottest new show on Netflix. Finally, the MLB season kicks off with some exciting headlines. 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. Learn more at sophos.com Listen to Morning Brew Daily Here: https://link.chtbl.com/MBD Watch Morning Brew Daily Here: https://www.youtube.com/@MorningBrewDailyShow 00:00 - 'The Office' Celebrates 20 Years 02:45 - 25% Car Tariffs  08:00 - Family Dollar Sold for $1 Billion 10:45 - Wall Street Bonuses  14:30 - Neal’s Numbers  23:45 - MLB Opening Day 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 morning brewdaily. That's aflac.com slash morning brewdaily. Good morning, Brew Daily Show. I'm Neil Fryman.

And I'm Toby Howell. Today, Toyotathon is on hold after President Trump announced 25% tariffs on foreign cars. Then Dollar Tree is offloading Family Dollar for $1 billion. It's Thursday, March 27th. Let's ride. In today's edition of Wanna Feel Old, the office premiered on NBC 20 years ago this week, and the nostalgia marketing is in full swing. The restaurant chain Chili's, which played a major role in the office,

announced it would open its first location in the show's setting of Scranton, Pennsylvania, on April 7th. But it won't be any old Chili's. It'll have chalk art mural decor that matches Chili's locations in the early 2000s, pay homage to the chain's many cameos on the show, and Brimbach, the awesome blossom onion appetizer that was pulled for menus in 2008. Of course, several members of the office cast are being enlisted in an ad campaign. Toby, will you feel God in that Chili's? I mean, everything Chili's touches these days turns to baby-backed gold.

Sales at restaurants open for at least year, about 31% last quarter. That is the third straight quarter of double-digit growth. Remember the triple dipper appetizer that went viral on TikTok, mozzarella sticks, pulling apart. It's still powering sales growth. And in 2023, Chili's actually brought back its, I want my baby bag, baby-back, ribs commercial. So clearly they are leading into this nostalgia vibe,

which is super in right now, and I do tell you what, Neil, I actually do feel God in this Chili's tonight. Now a word from our sponsor, Sophos. Businesses are usually told to pick one, strong cybersecurity or simple cybersecurity. But why choose? It's a catch-22. You either get expensive tech no one can manage or something easy that doesn't really protect you. Sofos ends that. No trade-offs, just real security that works. It is a perfect symphony of security, enterprise-grade tech, harmonizing with built-in AI that learns from every threat, with a 500-person team watching your back 24-7 acting as conductors. I'm actually going to push back on that last part of the metaphor, Neil. I think the conductor

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While supplies last, ends June 30th, terms at AKA.m.m.S. College PC. Hope you're either making plans to move to a walkable city or are ready to learn how to fix a transmission because it's not going to be cheap to buy a new car in the coming months. Yesterday, President Trump announced that he's slapping a 25% tariff on all imported cars and auto parts, betting that Americans are willing to stomach higher sticker prices today for the promise of the domestic auto market roaring back to life tomorrow. Speaking from the Oval Office yesterday, Trump said the move is meant to supercharge U.S. auto manufacturing and deliver, quote, tremendous growth and revenue for the U.S.

The pitch is simple. If you build in the U.S., you dodge the tariffs. Import, you got to pay up. Here is where we'll add the necessary disclaimer that, yes, he could change his mind and roll these back, but Trump did make it clear yesterday that these tariffs are, quote, permanent no matter what. Still, if you're finding it hard to take him at his word, that's understandable. the big three automakers in the U.S., GM, Ford, and Stalantis, were previously granted a one-month exemption for vehicles that comply with the U.S.MCA trade deal, a grace period that has now expired. The move will hit a big chunk of the U.S. auto market. About 45% of all light vehicles sold here

are imports, including $3.6 million built in Mexico and Canada, and another $3.7 million shipped in from Japan, Korea, and the EU. As to be expected, auto stocks slipped about 5% in after hours trading, as Wall Street digested the reality of more expensive cars and potentially disrupted supply chains. Neal, these are set to go in effect next week on April 3rd. Should we all buy a bike? I mean, I'm always advocating for more biking. Analyst at Wedbush Securities called this a hurricane-like headwind that is about to rock the global auto sector, sending the average car price in the United States up between $5,000

and $10,000. Nearly half of all new passengers. vehicles sold in the U.S. were assembled outside the U.S. and then vehicles assembled in the U.S. contained nearly 60 percent of foreign-sourced parts. So when you're talking about all those parts crossing borders from Mexican factories to American factories and back to Canada, before they're finally at your dealers lot every single time that crosses the border, that is going to get hit with a 25 percent tariffs. Auto industries, auto companies globally are set to have $75 billion in annual costs loaded up upon them, according to Bernstein, and they are going to pass along those costs to customers. Trump and the Trump

administration kind of acknowledges that there might be short-term disruption for their long-term goal of supercharging the domestic auto manufacturing industry. But that's just not how this global auto supply chain has worked over the past few decades under free trade agreements, where you have factories spread out across the world, across North America, especially. without any tariffs. Right. You're correct in the fact that the auto industry is global, and it's almost been designed like that. Certain countries specialize in different parts for different types of cars, and it has been built on this assumption that there would be little to no tariffs.

So that is why we say this is a big supply chain disruption coming, because it just undermines what has been the global norm over the last few decades. Which companies are going to be the most affected like this? You look at companies like Volvo, Mazda, Volkswagen. These have the lowest percentage of parts assembled in the U.S. And then you look at companies like Rivian, Tesla, Ford. Those are at the top end of domestic manufacturers who source and build most of their cars inside the United States. So you'll kind of see these auto company stocks, even out over the coming days.

And as the market digests, which companies are better prepared to withstand this tariff rents that's been thrown into their supply chains? Some, these tariffs did have some supporters, and one powerful group that said they endorse these tariffs is the United Auto Workers Union, Sean Fane, who's the head of that union, said the tariffs would end the free trade disaster that has devastated working class communities for decades. It ends the race to the bottom in the Andos auto industry, fixes broken trade deals. So labor unions in the United States who represent auto workers applauded this. Meanwhile, on the other side of the other side of the country, the United States, the company,

the border, Canadian Chamber of Commerce and other Canadian politicians were absolutely irate as they have been over tariffs for months. Doug Ford, the premier of Ontario, Ontario is the bastion of the Canadian auto industry, employees, a million people said he wants to inflict as much pain as possible on Americans while protecting Canadian jobs. So we're starting to see a trade war play out where the United States slaps tariffs on other countries and then they retaliate on the United States. And then finally, just to zoom out, we've said, look at that April second date.

That's the day the administration says they will unveil these reciprocal tariffs on a much wider range of imports. Those April 2nd tariffs, though, have been kind of being soft launched as not being as bad as most expect. Yesterday, Trump said the announcement would be, quote, conservative. So it seems like the White House is kind of trying to downplay what might happen on that early April date. Sometimes $1 plus $1 doesn't equal $2.

Sometimes it equals negative $8 billion, actually, which is the result of the ill-fated tie-up of Dollar Tree and Family Dollar that is now officially coming to an end. Dollar Tree is closing the chapter on its acquisition of its once rival chain, offloading the brand for $1 billion to a pair of private equity firms. Dollar Tree originally bought Family Dollar for $9 billion, looking to add scale in order to take on bigger rivals, but also to keep it out of the hands of another rival chain Dollar General a decade ago.

The plan seemed sound enough at the time, especially since dollar stores were all the rage coming out of the financial crisis in 2008, as Americans were looking to pinch their pennies. Plus, Dollar Tree mainly targets suburban middle-income shoppers, while Family Dollar is more entrenched in urban communities, so the synergies were supposed to synergize. But messy stores, rising prices, and over-expansion ended up hampering the acquisition,

leaving Family Dollar vulnerable to competition from mega chains like Walmart and Amazon. Neil, I tell you one thing, if I had a dollar for how many times I just said dollar in that intro, I could buy Family Dollar myself. You could. I mean, this sale price is much lower than what it was bought for 10 years ago. Family Dollar is just kind of a disaster of a business. It recorded an operating loss of $1.8 billion in the latest fiscal year. closed 1,000 of its locations last year. It also got this record fine from the DOJ for $42 million for violating safety standards after it was found to have sold items that were stocked in a rat-infested warehouse.

So absolutely nothing went right for family dollar after Dollar Tree bought it in 2015. And, you know, we've all felt this feeling of a weight being lifted off of our shoulders where we had a tough conversation. and now we don't have to do it anymore, and selling family dollar by dollar tree is exactly what that is. And I thought you were going to say, we all felt the feeling of walking into a dollar store and realizing that, wait a second, nothing really costs a dollar anymore. I mean, their prices range all the up to products that are $10. Dollar Tree is actually looking to boost its business by closing some underperforming stores, getting rid of family dollar, but also leaning into more pricey items that cost in that $7 range. So it's just a different industry that are a different playing field that these companies are operating in right now because there is kind of this existential threat facing this entire dollar store industry. It's been under pressure from inflation over the last few years, low-income shoppers. I've also felt a lot of pressure to just afford basic necessities and increasingly they're opting for bigger chains like Walmart.

So as low-income Americans' fortunes have kind of grown worse over the last couple of months and years, more shoppers are kind of opting to skip even on those basic necessities, which obviously proves to be not great for the business for these dollar stores. When you hit the bars with your banker friends this weekend, they are buying the first round and probably the second. Average Wall Street bonuses searched 34% to a record $47.5 billion, according to the New York State Comptroller. It's the first significant increase in bonuses since the COVID pandemic and reflects the 90%

jump in Wall Street profits last year. A bigger pie means bigger slices for each worker. The average annual bonus per Wall Street employee jumped by about a third to nearly $245,000, about three times the median annual income in the United States. This is all great news for bankers, of course, but it's also great news for finance-obsessed New York City, where one in 11 workers are tied directly or indirectly to the securities industry. Wall Street workers have to pay taxes on those bonuses, and they'll send $600 million more in state income tax revenue and $275 million more for the city compared to 2023. Those numbers are closely watched by the state's money counters because New Yorker, New York receives 19% of its taxes from Wall Street alone. Whether the good times will last is unclear. The New York Comptroller warned that, quote, increasing uncertainty in the economy amid significant federal policy changes may dampenper.

in the outlook for parts of the securities industry in 2025. So maybe you grab the third round. I do want to dig into how the comptroller calculates these bonuses because it's pretty interesting. Basically, they only are reflecting cash bonuses from 2024 and deferred bonuses from previous years that have been cashed in. So technically, the comptroller's 2024 figures are actually representative of previous years bonuses because they probably understate the total because most, bonuses as you move up the food chain in Wall Street are not paid in cash, but they're actually

paid in deferred stock. A managing director, for instance, might get 50% of its bonus in deferred stock. So by only measuring cash, you're actually undercounting a lot of what these bonuses are actually coming in at. But on the other hand, they might overstate the total as well, because as you said, bank stocks had this huge run up in 2024. So maybe a lot of these directors are looking at their deferred stock bonuses going, this is the time to cash in. I mean, P. Morgan had an incredible year last year. They're up over 50, or sorry, Goldman Sachs is up over 50% over the past year. So if you're sitting there with all this deferred stock, of course you're going to cash it in as the market kind of reaches a frothy level. So it's a little

more complex than just saying record bonuses, all these people are getting $244,000 in cash into their bank accounts. It's got more nuanced. It's got more nuance. But the bottom line is that the banking sector did really well last year and people were paid hands. for that. The question now turns to this year is, can this run last? You mentioned the banking index was up a ton last year. All these banks scored record profits, J.P. Morgan, record profits. But the start of the year has been a little slower than expected, and you have recruiters and other people in the HR industry around finance saying maybe there could be some job losses if the deal making doesn't pick up as expected. Deal volume in the U.S. was actually down.

point seven percent this year so far compared to the same period last year. If you take out Google's acquisition of WIS, which is 32 billion, the deal volume is actually down at 9% from the previous year. So investment bankers are hoping that the deal activity starts to pick up as expected this year because that will lead to even more bigger bonuses next year. Up next, we got more numbers courtesy of Neal coming your way. It's time to refresh your yard during spring backyard days at the Home Depot. Get low prices guaranteed on propane grills starting at $179, like the next grill

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Welcome to Neal's numbers, the segment where I share three stats from the week's news that will shock you more than the two brothers on White Lotus. For my first number, if it feels like everyone you know is talking about the government's signal group chat, they are. The Atlantic story describing how its editor was mistakenly included in a group chat where officials planned an attack in Yemen has easily become the top news story of the year globally, according to Axios. The article headlined, the Trump administration accidentally texted me its war. plans, has the most social media engagement of any English-language article of 2025, since it was released on Monday, likely due to its shock factor, implications for national security, and extreme memeability. It's great news for the Atlantic, the 167-year-old magazine that's had trouble evolving

its business model as the news industry went from print to digital. Well, having an article go nuclear is one way to make money. A spokesperson for the Atlantic told Axios, this story was one of the top, subscription driving stories for the magazine of all time. New subscribers probably kept rolling in yesterday because the Atlantic published a new article with more messages from the group chat after Trump administration officials claimed the text contained no classified information. Obviously, this story was a bombshell, but it is just a continuation of a pretty big

transformation the Atlantic has undergone over the last few years. Coming out of the pandemic, traffic started taking a nosedive as people just ventured out into the real world. Lorraine Powell Jobs, who is the Atlantic's owner, was ordering company leadership to basically figure it out, dig the company out of a hole. And part of that turnaround strategy was raising subscription prices by 50%, making it harder for readers to, you know, read stories without paying, which sounds counterintuitive. But they also made this switch from day-to-day news coverage to diving much deeper into stories. Couldn't be us. We are day-to-day for our life. But they were

kind of leading into these more deeply reported stories. So they saw the revenue grow 10 percent, in 2023, reached $100 million. They also signed this really great distribution deal with Apple News Plus. So all of a sudden, all these factors came together. And obviously, this story and the headline was a huge part of it. But they kind of set themselves up for success with the groundwork they laid over the previous months. For my next number, a Netflix series has broken a major television industry barrier, becoming the first streaming show to top the UK's most watch TV charts.

If you guess the show is Adolescence. Bingo, That's the One. This four-part series launched two weeks ago has taken the UK and the world by storm over its unsparing portrayal of a 13-year-old boy suspected of killing a female classmate and the role smartphones may have played in radicalizing the boy. Adolescence impact has been felt well beyond the Netflix top 10 list and during the broader conversation around kids going down social media rabbit holes. Since the show was released, the UK's Education Secretary said she would begin researching what a smart one. phone ban in English schools might look like. Prime Minister, Kier Starrmer even weighed in, mentioning that he was watching the show with his two kids at home and vowed to take action to address the, quote, fatal consequences of young men consuming harmful content online. Toby, the co-creator of adolescence, Jack Thorne, has made a couple of shows now hoping to stir

political debate. He's found that and major commercial success with this one. Yeah, this is absolutely a show that is meeting the moment where it's at right now. I mean, look at all the laws that are on the books right now in relation to children in social media. Last year, Australia banned children under 16 from social media. Denmark is also looking to ban smartphones in schools. France has already implemented a similar law in their country. So this is clearly kind of the topic de jour of the moment when it comes to, you know, kids in smartphones. And I will say, too, Britain in general tends to love taking it there, you know, how to think

from TV shows because remember in 2024 there was this show called Mr. Bates versus the post office which talked left a lot of real poster of workers very angry who were wrongly convicted of theft and that actually led to a law to exonerate them so we are seeing this pipeline of television show

comes out people in the UK react and then something happens in real world and it looks like we're seeing that pattern repeated with adolescence. My final number is a jarring indication of just how professionalized college sports has become as the sweet 16 for the men basketball tournament tips off today. Only three of the 16 teams remaining have more than three

starters who began their college careers at their current schools. And that's because NIL and the booming transfer porter are incentivizing players to switch teams so they can secure more money, similar to how free agency plays out at the professional level. In college, that means players typically leave a smaller school for a much wealthier program. Maybe Florida Atlantic University offers the best example of this. This team was an incredible Cinderella story of the 23 men's tournament, making it to the final four as an underdog nine seed. That team's three leading scores and its head coach are all in March Madness this year

just on different teams. Head coach Dusty May and one player left for Michigan, another went to Arkansas, and another decamped for Florida. Toby, this explosion in transfers is the real March Madness. By the way, it's kind of working out just fine for the NCAA. right now because the first weekend of the men's tournament, most watched since 1993, the first round of the women's tournament, second most watch ever behind Caitlin Clark's season from last year.

So clearly people are still tuning in. Everyone thinks that the beauty of March Madness lies and unknown players become these tournament legends, unknown schools who make these big runs, but also seeing major schools match up against each other in really good matchups is also very entertaining and very compelling, just based on these viewership figures. Do we really need to see, you know, St. Peter's getting blown out a few rounds later? Is that better than seeing some of the best teams in the country going up? That's maybe a pessimistic take, but it is a take that I think is reflected in the viewership that we saw.

Yeah, I guess the problem or the existential question is what happens to these smaller schools when all of the bigger ones can just gobble up all of their players after this season. I mean, the transfer portal, sorry, it's a hard word to say, opened this week in which players can announce their intention to switch schools. already, just a few days, 1,300 men's college basketball players have signaled interest to change teams. So next season, we're going to see all these players who are on all these teams switch,

and they'll probably go to the wealthier schools that can pay them NIL deals, and it'll lead to a situation right now in the men's tournament where the Sweet 16 comprises of only four conferences, which is the first time that has ever happened. I don't blame the players either.

I mean, a lot of them are not going to make it to the NBA, So get the NIL deal, you know, start your career with some money. Like there's a lot of coaches are saying this. Like we understand why you are making these jumps. But you're also not seeing a lot of major conference schools dropping down players anymore. They're more willing to ride the bench at a high major because they're getting an NIL deal rather than go in search of more playing time. So the whole landscape is shifted.

I think this tournament was finally a culmination of a lot of factors that have been kind of brewing over the last few years. Well, you finally made it to the best time of very. year if you are specifically Neil Andrew Freiman, opening day for the MLB. Technically, the season kicked off in Japan last week, but the first pitches on U.S. soil are being thrown today, and some of those pitches are being thrown in new, much smaller ballparks. Two teams, the A's and the Rays, are caught in MLB purgatory, forced to spend the 2025 season in a minor league facilities as they wait for major resolutions on a pair of real estate

issues. For the athletics, their temporary homelessness comes. after trying for 20 years to build a new stadium in the Bay Area. They couldn't get it done, and now they're shacking up in Sacramento's AAA Stadium for the foreseeable future as they wait for their new dix to be constructed in Las Vegas by 2008. The Tampa Bay Rays, on the other hand, were forced into their situation after Hurricane Milton tore the roof off their typical home,

Tropicana Field. They will be taking their talents from St. Pete up I-275 to the New York Yankees spring training facility in Tampa, but their situation is actually much worse than the A's because the A's don't have a shiny billion-dollar stadium in the works to look forward to. So while you're watching Shohei Otani and Juan Soto, mash home runs this year,

keep an eye out for these majorly downsized and intimate arenas that the A's and Ares are currently calling home. Neil, you are my baseball guy. Am I wrong in thinking that these smaller venues might lead to better atmosphere for teams that honestly had trouble filling bigger stadiums? Well, particularly the raise as a Tampa guy yourself, you know that that stadium did the TROP did not necessarily have a large crowd each day. So maybe downsizing will be good. But overall, we're on uncharted territory for MLB with two minor league stadiums being host to Major League.

And I think it is overall an embarrassing look for teams to be homeless like this. And it shows the gap between what their expectations are of public funding. of large stadiums and what the public now, after years of pushback, is willing to spend. So that's why you're seeing the A's in Sacramento for the foreseeable future. The Rays had bad luck with the hurricane, but their stadium deal is also a debacle. They are in purgatory, real estate purgatory as well. So I would say it is generally an embarrassing and not a good look for MLB to have two teams playing in minor league stadiums when they should be playing in major league stadiums

and accruing all of the revenue that comes with. ticket sales. Any other storylines you're looking at this year? I know we had a few major rule changes over the past few years. There was the pitch clock that went a long ways towards shortening games. They made the bases bigger a few years ago. They recently banned defensive shifts. Are there any rule changes on the book that you have your eye on? Well, in minor league, in the spring training this year, they tested what would be the most significant change in MLB history. And this is the automated ball strike challenge system. They've been testing this. in the minor leagues for the past three years, but soon coming to MLB, maybe not this season,

but maybe next season, they will have robot ups essentially, where if you are a pitcher or a catcher or a batter that doesn't think the human hump called the right call, you can tap your helmet and they will send it to a robot hump challenge to see if they got it right. So that of all of the rule changes you mentioned, having robot umps come into play into this game would be a massive rule change. But the biggest changes I'm expecting this year are coming in the stands. And I want to talk about the new ballpark food with you as we get into this baseball season. I'm going to all mention one of these new ballpark foods that are coming out across the country.

I want to hear your take. The first one is smores cassidias. And that's going to be at Citizens Bank Park in Philadelphia. I'm so in. That sounds delicious little chocolate syrup drizzled on top. Absolutely buying that one. In Toronto, they are rolling out cotton candy fries. I'm out.

Immediately out. Cotton candy is a no-go for me. Give me a next one. All right. And finally, this is going to be close to our home at Yankees Stadium. Helmet Tiramisu. It's Tiramisu, a giant version in a baseball helmet. It looks so good.

I've had a healing on Taramisu over recent years. I used to think it was kind of gross. The texture grossed me out. But this looks delicious. I love TeraMisu now. And it might actually bring me out to a Yankees game. All right, let's wrap it up there. Thank you for starting your morning with us and have a wonderful Thursday for any questions, comments, or feedback.

Send an email to Morning Brew Daily at MorningBrew.com. Let's roll the credits. Emily Milliron is our executive producer. Raymond Lue is our producer. Olivia Graham and Olivia Lake are our associate producers. Yucenoa Ogu is our technical director. Scoopster Daris is on audio. Hair and makeup says play ball.

Devin Emery is our chief content officer and our show is a production of Morning Brew. Great. So today, Neil. Let's run it back tomorrow. your home, travel for life, drive a Ferrari. In celebration of the world premiere of the Monopoly big board buck slot machine by aristocrat gaming, Yamava Resort and Casino at San Manuel is giving one person

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