Flexport CEO Ryan Petersen on the state of trade under Trump’s tariffs

To many watching from the sidelines, it can feel as if the global trade landscape is completely upending on a daily basis with no sign of slowing. To shine some much-needed light on the discussion, Flexport CEO Ryan Petersen assesses the biggest myths around trade and tariffs today, shares advice about avoiding jail, and gives insight into China’s ability to weather volatility.

This is an abridged transcript of an interview from Rapid Response, hosted by former Fast Company editor-in-chief Robert Safian and recorded live at the 2025 Masters of Scale Summit in San Francisco. From the team behind the Masters of Scale podcast, Rapid Response features candid conversations with today’s top business leaders navigating real-time challenges. Subscribe to Rapid Response wherever you get your podcasts to ensure you never miss an episode.

Myth No. 1 is, Don’t act on tariff announcements too quickly. Policy could shift again. I remember you telling me about Customs and Border Protection finding out about changes on Truth Social. Things just keep changing.

We have a Supreme Court case that’s coming down the pipeline and it may, actually all the tariffs might just get refunded. And we’ll find that out in the next couple of months. And then, by the way, for sure the administration will claim that as a victory because the stock market’s going to go way up.

But when you’re talking to clients, are they like, “Yeah, we gotta do things. We don’t have to do things”?

Sometimes the best thing is to do nothing. You might say that’s actually an action. It could be a radical action to just say, “Hey, we’re going to stay calm.” Some changes in a supply chain take many years to play out, if you’re going to move your production to a new country. We’ve seen this where people said, “Oh, okay, China doesn’t work. We’re going to set up production in India.” And it turns out the tariffs on India are just as high as on China right now. So it is very difficult to make long-term decisions in a policy environment that changes so quickly.

Are they looking over their shoulder at each other and saying, “What’s that one doing? Should I be doing that? What can I do differently?”

Yeah, there’s a lot of that. It’s been very interesting. So we’re a customs broker to help companies figure out what duties they owe and pay them. And it’s a really complex world as you can imagine. There’s every variety of product out there. I’m used to being the expert when I talk to my customers. But now, the CEOs—they have to know their product at a level that I don’t. I don’t know every single product and every rule. And then I’m just like, I smile and nod, like, “Yeah, yeah.” It’s been really tough for us to be at that forefront trying to monitor what’s happening and interpret it for our customers and . . . give them advice: What decision should you make?

Let’s move to myth No. 2: The government has a plan. Don’t worry, they know what they’re doing. Everything’s going to turn out great.

It’s difficult to say. I think there’s maybe a plan. I don’t know if it’s a good plan. The reality is there’s actually some pretty good reasons for us to be concerned about the lack of industrial production in the United States. And one of the problems in life though is you get a bunch of people in a room and you say, “Hey, we got this problem, we gotta do something,” they’re going to do something. And it doesn’t always mean they’re going to do the right thing. Like, yes, tariffs may be an effective way to stimulate manufacturing. [But] the way they’ve been done so far, actually, I’ve met more companies that are shifting production offshore as a result of the tariffs because you have to pay duties on the components that are coming in and on the machinery that you use.

These sorts of unintended consequences. Second-order impacts, maybe?

Typical. Economies aren’t meant to be centrally planned.

All right, let’s move to No. 3: China’s in a better position to adapt to trade volatility than the U.S. And I have to say that I’ve heard this exactly the opposite way too. I almost wrote this the other way, that the U.S. is in a better position to adapt to trade volatility than China is.

Which is very illustrative that you could have written it both ways and it does illustrate trade is a positive-sum scenario. Both parties do trade because they’re both made better off by doing it. And this idea that you can win a trade war is sort of inherently wrong. You win a trade war by just not having one and doing trade in both parties.

That said, the United States does depend on global trade less than China does. We’re self-sufficient in food and energy and they’re not. And that’s a big deal. They import, I think 80% of their energy. They import a lot of food from around the world. So if you’re talking about subsistence level, who’s going to survive in a terrible situation? We do depend less on trade. But that said, I think both parties, definitely both parties are going to lose.

You have a lot of communications, you say, with CEOs here. Is there communication or information that you’re getting from contacts in China about how the trade war is impacting things there that maybe we’re not seeing as much?

The thing that we’re seeing—and it’s not just China; you see this on a global basis—is when you jack up duty rates the way we have, you just create this huge incentive for fraud.

For fraud?

Yeah, for cheating. And it’s quite simple what’s happening. And it’s happening en masse. We’re spending a lot of time in D.C. trying to help them understand how this happens. The United States is the only country in the world, the only major country in the world, that allows foreign companies to import goods into the country without any kind of legal entity, physical presence, employees, bank account, nothing. You just, as a foreign company, fill out this form and you just get approved and you can start importing from overseas.

Well then you just . . . mis-declare, you say the products are worth $10,000 when they’re worth $100,000. You just reduce your duty rate by 90%. And it’s very difficult for customers. We don’t have enforcement agents in other countries for trade compliance. We do for terrorism, for drugs, but not for trade compliance.

Because it hasn’t been measurable, it hasn’t been worth it?

Yes, exactly. And now the incentive is there. . . . There’s a bill in the Senate that’s being talked about and maybe Executive Order we will see to make it much more difficult for this type of fraud. But it’s not China-specific. I think this is like anyone in the world if you’re in a foreign country.

You can take advantage of this.

Don’t do that by the way. And if you’re an American company that’s buying from those people on those terms and they’re importing for you, you are committing fraud. And I only have one rule in life: I’m never going to jail. I don’t have the personality for it.