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Hello again, dear readers!

Depending on the results of November’s election, tariffs could soon be front-page headlines once again. You may have watched Trump and Harris clashing on tariffs during the presidential debate, each attempting to brand the other’s approach as economically and politically dangerous. But what did we learn from the last tariff war in 2018? Is it good or bad for consumers, businesses, importers, and the nation? Check out the data below. 

Also, I dig into the data from a major report from Workday on the remote working trend, along with some interesting insights into effective hiring practices. 

This issue features the usual bunch of AI Insights and recommendations for the week's podcasts, books, shows, charts, and tweets, followed by a final chuckle. 

Let’s get going.

Industry Highlights: The Tariff Tango

If you work in procurement, supply chain, or operations, you no doubt paid attention when the Trump-Harris word salad (debate) turned to tariffs. 

First, Harris tried out a new attack line, claiming tariffs would equate to a 20% “Trump sales tax” on everyday goods that people rely on,” and suggesting the policy will cost middle-class families $4,000 per annum. 

Trump shot back with the claim that consumers will not see higher prices. “Who's gonna have higher prices is China, and all of the countries that have been ripping us off for years,” he said. 

For context, Trump has proposed a blanket tariff of up to 20% on all imports, with additional tariffs of 60% to 100% on goods brought in from China. The Biden-Harris administration has kept several of Trump’s tariffs in place while bringing in several of their own. 

Recent experience - backed up by data - tells us that both politicians are wrong.  

Remember that a tariff is a tax on imports, not one the exporting country pays, as Trump frames it. If you’re a U.S. company seeking to import goods, you must pay more to bring them in. This serves two main purposes: first, to protect domestic industries by making it more expensive to import products, thus preventing foreign firms from undercutting American prices. Second, it generates revenue for the U.S. government, although tariffs haven’t significantly contributed to federal revenue for over 70 years.

Now, about that claim that foreign producers will absorb these costs. It’s a nice thought, but let’s not kid ourselves. While they might try to hold prices steady for a while, they can't maintain that in a competitive global marketplace forever. Rising production costs will eventually squeeze their profit margins, forcing them to pass costs along to importers, who hand-ball them to consumers. As George Ball, chairman of Sanders Morris, said, “Ultimately, the cost of tariffs will be paid by us, the consumer.”

Let’s look at the case of the 2018 washing machine tariffs. What’s striking in this chart is the sudden divergence between the price increase of laundry equipment and other appliances without a tariff hike:

And let’s not forget about supply and demand dynamics. When tariffs create scarcity, prices climb. If there’s high demand for a product but limited supply, consumers are likely to pay more. Check out how our domestic washing machine producers reacted to a tariff on foreign producers back in 2018:

Two of the best sources of data about the impacts of the 2018-2019 tariffs hikes are research by the Cato Institute and a paper from the National Bureau of Economic Research. The NBER authors tell us their research indicates a “near complete pass-through of the 2018-19 tariff burden to US consumers” … costing US consumers and import firms an additional $3 billion per month in added tax costs and $1.4 billion in “deadweight loss”, or lost income. 

So, how much higher could prices go? This is where things get tricky. While it’s difficult to pinpoint exact figures, the non-partisan Peterson Institute for International Economics puts the yearly cost at approximately $2,600. While it’s way less than Harris’s $4,000, it’s still a significant hit to your wallet. 

What bothers me most about politicians’ claims that consumers won’t pay an extra cent for foreign goods is that they’re missing the whole point. If prices aren’t passed on to the customer, what’s our motivation for swapping from a foreign to domestic product? Don Boudreaux, an economist at George Mason University, sums up this fallacy neatly:

A protective tariff serves its purpose only if the importer passes on at least part of that cost to its customer. The very purpose of tariffs is to increase demand for domestically produced goods by raising the prices that consumers pay for imports. A tariff that doesn’t raise prices paid by consumers doesn’t protect domestic producers.

It’s like bringing down inflation with interest rate hikes - hitting consumers where it hurts (their wallets) is the deliberate goal. Tariff hikes need to make foreign goods more expensive for consumers to change behaviors. 

In the end, while it’s comforting to think tariffs won’t impact consumer prices, the economic reality tells a different tale. The evidence suggests that when tariffs come into play, consumers are usually the ones left holding the bag.

The Future of Work: Hybrid working is becoming business-as-usual

The Workday Global Workforce Report has been released! I always watch for this one because I find it to be one of the better pieces of research regarding methodology and insights. 

This year’s report contained plenty of interesting data points you’ll undoubtedly see repeated around the talent market for the next few months. There were few surprises for me, but it’s always good to see my assumptions and observations as a recruiter confirmed by solid research. 

Two areas that caught my attention were Workday’s tracking of the hybrid working trend, and their research into impactful hiring practices. 

First, hybrid work. Workday found that 59% of respondents said flex/hybrid work has had a positive impact on their organization within the past 12 months. What surprised me is the ‘meh’ factor: a huge 28% believe it has no impact on the organization, which suggests that for many, it has become business-as-usual. Only 14% told Workday that flex/hybrid has a negative impact. 

Opinions vary by department. You can see below that IT has seen the largest positive impact, followed by Finance. Less than half (44%) of Operations agree that it’s a good thing, but this department also has the highest percentage (41%) of workers who see no impact from hybrid work.

Workday used its own experience for a case study about its flexibility program, “Work From Almost Anywhere,” where employees can spend up to 30 calendar days per year working from a domestic or international location other than their normal office. WFAA is balanced by a requirement to spend at least 50% of their time in the office per quarter. The response from participants and managers was overwhelmingly positive, with 87% reporting no disruption to participant’s productivity. In fact, 13% reported an increase, while only 5% reported a decrease. 

So, if you allow 100 employees to spend their working hours on a tropical beach somewhere, only five will spend their time gazing at the ocean instead of at their laptop screens. 

The WFAA program also resulted in an 86% improvement in well-being (as observed by managers). One interesting point was that employee collaboration was seen as crucial for productivity and employee well-being.  

Next: hiring practices. Hiring demand is up by 7%, and applications have shot up by 31% year-on-year. However, the number of job offers has remained flat, which signals a more competitive landscape for candidates and a focus on quality over quantity. Indeed, hiring managers have reacted to the increase in applications by raising the bar for qualifications and experience requirements, with 72% seeing positive results from this strategy. 

Referrals, which are a near-guaranteed source of better-quality candidates, are apparently gaining importance. Referrals accounted for a 30% increase in hiring, and referred candidates are 45% more likely to meet or exceed job requirements than non-referred applicants. This shows a growing reliance on employee networks, so whether you’re an employer or a candidate, you must spruce up your LinkedIn profile. If you need help on this front, hit me up!

Now this is interesting: 75% of industries are experiencing voluntary turnover of high-potential employees; aka top workers. This could mean that with economic uncertainty beginning to ease, employees who have felt “stuck” and unwilling to risk leaving their jobs are now feeling more able to do so. The first to go, it seems, are the top performers who feel more confident than others in their ability to land a new role quickly. Or perhaps they’re more willing to respond to taps on the shoulders from recruiters. Either way, retention remains the focus in many organizations, with Workday suggesting the best ways to retain star players are to make work meaningful, build trust, and personalize employee experience efforts based on tenure. Easier said than done, I know. 

The use of AI and ML for hiring efficiency is picking up, with only 16% of surveyed companies not currently using these technologies. 89% expect moderate to major efficiency gains using AI/ML to screen resumes, automate repetitive tasks, check references, and improve D&I.

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AI Insights

• Jony Ive is building an “Ive Hive” in San Francisco: The legendary Apple designer, whose departure in 2019 resulted in a $9 billion stock loss for the company, has spent tens of millions buying up nearly a whole city block in Jackson Square. It’s unclear what he plans to do with the iconic neighborhood, but rumors are swirling. 

• Silicon returns to Silicon Valley: AI and its thirst for ever-more powerful computing has brought chipmaking back into the heart of computer technology. But chipmakers need new ideas to maintain exponential computing gains and overcome souring energy usage. 

• AI companions really do help make people less lonely: A team at Harvard Business School tested thousands of AI companion models to discover if they can really reduce loneliness, with positive results. The companions can respond in a sympathetic, realistic way when people share their problems, and can role-play by pretending to be your partner. 

The Supply Aside

📕 Read - Reagan: His Life and Legend

As someone who came of age in the Reagan era, I learned so much more about our 40th president. It's a hefty read that does justice to the personal and professional sides of this oft-mentioned President. You may have heard more than one political commentator note that understanding Reagan is key to understanding our politics today.

What Else I’m Reading

• India: Tata Sons is modernizing fast: The holding company of the $365bn Tata Group is moving to cut debt, improve profitability, and shift from traditional businesses such as steel and power to new ones, including electronics manufacturing and semiconductors. Tata is pivoting to electric vehicles, renewable energy, online products, and embedding AI in its internal processes. 

• China: Chinese overcapacity is crushing the global steel industry: At 1 billion tonnes, China makes as much steel as the rest of the world combined every year. Most of it is used within China, but exports have recently surged 35% to reach 90m tonnes in 2023. What is this doing to US steelmakers, and how is the government reacting? 

• USA: Why get an MBA? There’s been a lot of MBA bashing recently, which is probably why Bloomberg has published a series promoting the benefits of this postgrad degree. This article, written by recent MBA grads, argues that developing a strong sense of purpose and well-defined career goals are worth the expense. 

📺 Watch - The Menendez Brothers

“Everyone asks why we killed our parents. Maybe now, people can understand the truth.” Currently serving life in prison for murdering their parents, Lyle and Erik Menendez give their version of events in this documentary examining the shocking crime and ensuing trials. The documentary comes hot on the heels of Netflix’s true-crime drama series, Monsters: The Lyle and Erik Menendez Story.

👂 Listen - Behind the Memo with Morgan Housel

How should we think about debt? How does debt impact an investor’s endurance? In this episode of Behind the Memo, Howard Marks is joined by Morgan Housel, the bestselling author and partner at the Collaborative Fund. They discuss ideas from Howard’s recent memo “The Impact of Debt,” inspired by Morgan’s article “How I Think About Debt.” They explore the relationship between leverage and longevity, and the nature of risk.

💡 Think - The back-to-office saga continues

Amazon's mandate for a full 5-day return to office has set the business world abuzz. As someone who's seen workplace trends come and go, this was a doozy. 

Jassy's push for "startup culture" in a behemoth of over 1.5 million employees is bold. But here's what's really got me pondering: Is this the start of a broader trend, or will Amazon be an outlier?

Employees are fiercely opposed, with concerns about commutes and work-life balance. According to Flex Index, only 7% of large tech companies require employees to be in the office five days a week, compared with 33% for all U.S. companies. This is all the more reason why Amazon's move is a real departure.

Naturally, many will wonder if this is some subtle way to trim the workforce without announcing layoffs. Could other companies use similar tactics to force attrition among those unwilling or unable to return full-time?

As we continue to navigate this complex issue, one thing is clear: the debate between and remote work is far from over. It's a topic that will continue to shape our professional landscape.

📕 Be sure to check out my book: Fire the Boss, Keep the Love: 10 Jobs, 10 Exits, 10 Lessons.

Whether you're starting your career or a seasoned pro, this book offers fresh perspectives and actionable advice to help you level up. I delve into my own personal career story and career wisdom from top executives to explore topics including:

• Career transition strategies

• Building lasting professional relationships

• Tips for thriving in diverse corporate cultures

Fire the Boss, Keep the Love is a must-read for anyone ready to take charge of their career journey and forge an authentic path to success. Get your copy on Amazon!

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Charts of the Week

Quote of the Week

Tweet of the Week

The Final Chuckle

Thanks so much for reading. I’d love to know what you think about this issue and how I can make it more useful to you.

If you have suggestions or topics you want to see me address, email me at [email protected]!

Want more?

If you’d like to read more of my writing on the supply chain, entrepreneurship, or the future of work, check out my website.

For timely updates, follow me on LinkedIn and Twitter!

Happy reading this weekend!

-- Naseem