And the more than a year long trade war between the U S and China. Last Thursday was one of the few good days. Story of the morning, US security futures jumping after China's commerce industry saying the U. S and China have agreed to phase out the tariffs that were imposed during the trade war. Stocks rallied on the breakthrough,
but the euphoria didn't last for long. Just the day after, China said the two countries agreed to roll back tariffs on each other's goods, which, by the way, US officials echoed to President Trump himself came out and denied he's agreed to anything. This left down that they couldn't even agree on whether there was an agreement. It was just one more reminder that this trade war is far from over. What hangs in the balance is, of course, the health
of the entire global economy. It was about seven hundred billion dollars in trade between the US and China last year, but with numbers that big, it's easier to forget that this is about more than just geopolitics or foreign exchange rates or corporate earnings. It's also about the lives of a lot of people around the world. Whose jobs and
businesses depends on the two countries getting along. For them, this last year has been their own personal nightmare, a lot of sleepless nights considering an uncertain future, caught in the middle of two quarreling superpowers breaking tonight, serious punching and counterpunching taking place right now in what has become
a full fledged trade war between the US. Today, in the show, reporter Shelley Banjo brings us the story of one such person, an American named Michael mcgliny, who sells espresso makers manufactured in China to American customers on Amazon. Michael bet his entire career on the idea of global trade and the hope that technology was making the world an open and interconnected place, only to watch all that unravel in recent months. Amako, you're listening to Decrypted Stay
with us, Hey, Shelly, welcome back to the show. Thanks for having me. You know, you found a really interesting guy for today's episode. How did you get to know him? Well, the trade war was in full swing and we started to wonder what was happening to e commerce sellers who had kind of built these big businesses on Amazon making stuff in China. And selling them in the US, and so I wanted to find someone who could really tell us about what that was like. So tell me about him.
Michael grew up in Hartford, Connecticut, to a blue collar, working class family. Michael had to work his way through high school working at grocery stores. Then he worked in a machine shop with his uncle. I was interning in a machine shop in Connecticut where I grew up at Hartford, and I was getting shut down. I mean I was there. Was like a smart guy, Alex, and he says, you know, everything is going overseas. I don't know what we're gonna
do here. And uh. He went to New Jersey for college and ended up getting a job on Wall Street in New York working for Deutsche Bank. But you know, the one in the Wall Street wasn't necessarily for him, and he kind of for fun starts this bartending supplies store called New York bar store dot com, where he would sell things like um cocktail shakers and beer pong
accessories on eBay. I was really having a lot of trouble trying to buy from China walls on Wall Street, and I remember being on Skype at like ten eleven pm on my fifth floor walk up. But you know, we were just felt a huge disadvantage. I'd wait like a week or two weeks for a sample to come, you know, and they spoke English, but he didn't understand. So in March two thousand and seven, right before the
financial crisis, he decided to quit his job. Then he decides, you know what, I'm going to go to China and kind of find those factories that are making these beer punks accessories and bar supplies and kind of figure out how to turbo charge that business. So I just felt like I needed to go there because I felt like all of the knowledge and information is getting sent there. And I was like, yeah, I just let all of our technology, let all of our money, just send it
all to China. What does outsource everything? So this is right before the financial crisis. I remember it was a really different time back then. You know, the consensus in Washington was very pro free trade, generally receptive towards China, and it was just a different mood. That's right. China was opening up to Western businesses. There was this general feeling that China was the future. But Michael felt a lot of resistance when he justified this move to his family.
I spoke to Michael's uncle, Gary Garno. Michael had worked with Gary in a machine shop in Hartford. Gary now lives in Florida and he's unemployed. I knew America was dying, you know, we were losing all our industry. China was was was was heading up. You know, there aren't learning up swing, you know, And here's what was happening. And during that time, in my opinion, we were shutting out factories all over the place, and we were sinking hundreds
of billions of dollars into China. What was your first thought when when Michael told you that he was going to move to China. I was kind of hate losing him, really. I didn't want to see him leave, but I figured he knew what he was doing. He's pretty smart guy and he likes to sell stuff, and I guess China is the place to go. He told me to get a factory in China. I don't fit in with the rest of the family. They're not so supportive, honestly. I uh my mom cried about it, but they just feel
like they're much more patriotic than I am. I'm not like anti American I'm just more people are humans. I mean, all these borders just don't make sense to me. Okay, So Michael gets to China. What does he do there? So Michael immediately starts to hustle. He's dabbling in and out of e commerce. He meets his wife who's Chinese. He sets up a consulting company that focuses on cross border trade, and then he starts a business manufacturing old
school Italian espresso coffee pots. These are made in a factory in China, and then he sells them on Amazon to US customers. And when is this So this is right around the time that Donald Trump gets elected. We can't continue to allow China to rape our country. And
that's what they're doing. It's the greatest And of course Trump campaigned on very anti China, anti trade rhetoric, right And among the voters who voted for Trump was Michael's own uncle Gary, who you know, saw jobs moving from his hometown of Hartford to China, and he agreed with Trump, we gotta start protecting America. Don is right, we gotta bring back that industry's gonna keep you gonna bite us. But you know, the Trumps presidency starts in that's right.
And at first Trump and President Chi Jimping of China are really getting along. They share chocolate cake, they visit each other's countries, and they make this plan that they're going to resolve the whole trade difference in one days. But near the end of the U s starts implementing tariffs on steel and solar panels. These are two major industries that China is really proud of, and so China hits back and puts tariffs on cars and agricultural goods
from the US. What does this do? We're now seeing the United States made a move and now overnight China has made a move, and the trade war keeps escalating. Businesses are scrambling to try to figure out what to do next. I don't want to use the word because it's a highly respected show, but they are taking advantage of us. Okay, I'll use a different set of words. They are taking And what's Michael up to during this time?
About a year and a half into Trump's presidency, Michael, his wife, and his two kids decided to leave China. They end up settling down in Thailand. I mean, I could feel that China wasn't welcoming foreigners anymore. Honestly, I could feel it even then. I'll say, you know, from the US, and I'll say, do you like do you
still like Americans? You know, I'm just afraid to refresh to news sometimes, especially when I'm inside of mainland China, because you never know, they decided that they no longer actually had to be in China to run the coffee pot business, and things just weren't as comfortable any more for Michael to be an American in China. And he decides that this would kind of hedge his bets against China, kind of create another life in a different country. We'll
be right back, okay. So before the break, Shelley, you walked us through the worsening relationship between the US and China and the toll that takes on Michael. That gets us to the beginning of Well, earlier this year, it seemed like again we were getting close to another deal. But then March came, and then April came and there was still no deal. And then in May Trump rips off a tweet, of course, saying that progress is going
slowly and China is renegging on earlier promises. So Drump's had it at this point, and he threatens to increase tariffs up to the US decides to ban American companies from doing business with Huawei, China's biggest tech company, and the trade war kind of explodes. Quick check in the market. You'll see the Tao is plunging. It's a response to the escalating stakes in this US trade war with China. Yeah,
this is when things are looking really bad. I think a lot of the sellers are like, like me, we're just still waiting. We're still kind of in shock, or we're still thinking. Maybe there seems like there's still this negotiation, always this and that thing, and um, I feel like we're all still kind of waiting. So this is when
I met Michael. It was a right around the time of the G twenty summit in Japan last summer, when Trump and She were about to meet in person, and Michael and probably everyone else around the world was on pins and needles to see what would happen. And the much anticipated meeting the twain the Chinese and US presidents is just a few hours away at the j twenty of And I never even really pay attention to T twenty. I've heard of it and obviously this year was more important.
So yeah, I was definitely like, Saturday morning they will be meeting, and it was Japanese time. I'm rose Osaka, so I'm like, it's a little bit ahead of you know, where I was in Thailand, So you know, of course, I'm like kind of refreshing the news waiting for the update of his meeting. The US and China agreed to restart trade talks, but it's certainly not a done deal, and at this point, Michael needs to make a decision
about Christmas. Christmas is super important because it's when he brings in of his sales, and he's ordering goods from a factory in China. It takes a few months to make the coffee pots and then ship them all the way to the US. Other Amazon sellers are ordering less stuff, but Michael holds off. He ends up taking a big gamble. He decides not to change his coffee pot order, and he figures he'll just eat the cost of whatever tariffs might hit him. What is the other option, like, kind
of make it in America. Um, from what I saw involved in making these products, I don't think I could make it in America. At least I guess I could fly there to try to teach somebody how to do like all of this again, but basically there's no I feel like there's no other options. So what that means is everybody in my market is buying this from China.
Maybe in the long term, somebody will win that could beat me by being making it somewhere else, but nobody's gonna be able to make it somewhere else and before at least for Christmas maybe, So I think you got to say in the game, if you run a stock, you're basically giving up. So, um, what do you think it's going to happen in six months? I think Donald Trump is probably also realizing he's going to shoot himself in the foot. I do feel like American economy is
based on the important cheap Chinese goods. I feel safe for Christmas. I don't think he's gonna screw it. I don't think he's a mess with chrisma us. I think he's going to just keep extending this and and uh, I hope he doesn't because he wants to get reelected. So what happens next? And then all of a sudden on August first, welcome back to some dramatic breaking news
on tariffs. Trump starts tweeting again about more tariffs. And these are the tariffs that really worry people because they're on consumer goods like electronics and clothes and things that are really going to hit retailers and consumers where they hurt. Right before Christmas, right, people start talking about Trump destroying Christmas exactly. So this is when things are starting to
look really bad. Yeah, and it gets even worse when the US declares China currency manipulator, which is kind of an official way to accuse a country of cheating on trade. So I started thinking about Michael, and I give him a call because I'm wondering what Michael's thinking at this time.
So turns up, Michael has big news. He decides, you know this, these tensions and this back and forth is just really getting too much for him, and he decides to actually sell the coffee pot business, uh to a company that kind of rolls up other Amazon businesses, and UH join that company, so it kind of spreads out his risk. Wow, I can't believe he sold his business
because of the trade war. You know, I don't think it was just the trade war, but I think he can kind of feel these growing tensions between the US and China that you know, he doesn't want to build and keep his whole life tied to China. The bad thing about America is you can't play long term. We don't know how long Donald Trump will stay. You know, Um, the policy just changed, Like Trump comes in and reverses what a whilement something Obama did, and then maybe the
next person comes in and changes what Trump did. You know, I think even China's waiting it out, you know, I think China can wait until the next president. So in September, the tariffs that Trump threatened over the summer come into effect. These are tariffs on consumer goods like footwear, TVs and of course home goods. And does this include coffee pots? It does. So even though Michael sold the business to a fund, now that he works for the fund, he's
still keeping tabs on the business. How much does that hurt Michael? The coffee pots go for about on Amazon and Michael makes seven dollars on each pot. So this new tariff eats into the business, but it doesn't wipe out the margin altogether. So, um, did you raise your prices on the coffee pots? We haven't raised yet, but we it's the scary thing. Well, we've we've taken a hit so far and have other have competitors raised their prices,
It seems just stated about stable honestly. Wow, So everybody's kind of just absorbing, holding their breath. So, Shelley, there's been so many developments to keep track of with this trade war. I'm sure you've been very busy. What's the latest? Who? It changes day by day to make it more manageable. The US and China have agreed to break up the trade deal into phases. Phase one actually looks to be gaining some traction. And what's Michael up to? Michael's done
watching the news. He's really struggling with this roller coaster of tariffs, and frankly, he just seems really down. I'd rather know I'm gonna have to pay more or more and then just be done with it. It's like it's kind of like the boyfriend girlfriend thing where you break up and you get back together like multiple times. Like for me, I just yeah, I want closure. I just want to know, am I gonna have to pay a
lot more? You know? How do you manage the anxiety while you're searching for these opportunities meditation, Um, remembering this not just me, that everybody's facing this, whether you're a small individual seller or a multi million dollars seller. I mean realizing I'm I'm flexible. Um, I adapted, I adapt so I and I believe I'm more willing to take risks. I'm more willing to do what it takes to stay in the game. But he doesn't want to move all
is manufacturing away from China altogether. For the coffee pot business, it's just impossible. The only place in the world at the moment that makes those coffee pots are in China. So he did look into the US. You know, Uncle Gary has said to Michael, why can't you make your products in the US, And Michael's tried to explain to him that that, um, you know, factories don't make those coffee pots in the US, or in Southeast Asia or
really anywhere else. And the trade deal do you think that will help that that will help bring more jobs back to the US. We have to do something, man, because all the products are made over there, and it's not the American people's fault, it's it's these cooperation. Michael said, for example, that he can't make his coffee pots in America. But nowhere in America he couldn't even find a factory to make them because they're all going to got moved out.
It's it's we've lost a lot of our capacity. It's very disheartening, you know. So what do you do? Like, let's say you're Michael and you want to keep your business growing, and you you know, he said to me, I would love to make these coffee pots in the United States. Like, what do you do if you're him? The word a precarious situation? Man, we really are. I agree with you, and I agree with Mike. It's sad,
you know, there's no simple solutions. There isn't. I think the politicians in Washington, these ridiculous people, puppets that they haven't Washington. Uh, they don't understand the value of jobs. They let all these jobs leave the country. People have to have jobs. What would you do with our job? Man? What would I do? What our job? We have to have jobs. So, Shelley, what did Michael end up doing
about the coffee pots? It took a lot of agonizing on Michael's apart, but in the end, he decided to raise prices to recoup some of the costs of the tariffs, and so did a lot of his competitors. You know, I'm sure this whole ordeal over the last year so has been so stressful for him. What does he make of all of this now, Well, Michael seems a bit lost. You know. He moved to China for the promise of this globalized world, and that world started to deliver at first.
It brought him a lot of good things, his business, his wife, his family, and now it's threatened. What do you think is the general sense that you have now compared to like five years ago when you were living in China and really believing in this more of a globalized world. Yeah, it's really I guess I'm it's sad to me. I mean, I think with internet and technology, there's a huge opportunity for people from all different parts of the world to be able to communicate with each
other and work with each other. But it just seems like it's going backwards as far as that. And I thought five ten years ago it wasn't be more and more open, but the governments are just trying to put walls up, barriers up. I mean, the reason I came here was to try to learn and understand rather than just put the wall up and not know anything that's happening here, Like I wanted to come here to understand it.
And I have an amazing Chinese wife, and I have two children that speak English and Chinese and are going to be educated to learn the bull side, and they're going to be better people than me. Shelley Banjo, thanks for coming on the show today. Thanks Akio. Decrypted is hosted by me Ako. Sean Wyn is our executive producer. Ethan Brooks mixes Show Today, and Alistair Barrow was our story editor. Joe Leonardtine, Matt Burley, and Dex Bruce assisted
with recordings. Francesco Levy is the head of Bloomberg Podcasts. We'll see you next week.