Episode 554: Neal and Toby recap the big effects from Trump’s latest baseline tariffs on countries all over the world, mainly with everyday goods likely to see price increases. Then, Apple’s manufacturing hubs throughout Asia are hurt the most while tech stocks are suffering one of their worst selloffs resembling the start of the COVID-19 pandemic. Plus, how countries are responding to the US tariffs. Meanwhile, Amazon throws its bid to buy TikTok as the list keeps growing. Also, Microsoft turns 50 and the ‘Minecraft’ movie hopes to give the box office a jolt. 00:00 - NYC updates its subway map 3:00 - New tariffs in town 8:50 - Pricer goods coming? 11:30 - World leaders react 15:00 - TikTok deadline coming up 18:45 - Microsoft turns 50 23:00 - Minecraft movie 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. Checkout TaxAct for more! Listen to Morning Brew Daily Here: https://link.chtbl.com/MBD Watch Morning Brew Daily Here: https://www.youtube.com/@MorningBrewDailyShow Learn more about your ad choices. Visit megaphone.fm/adchoices
Chapter 1: What changes were made to the NYC subway map?
When all of you come to visit New York next, first of all, say hi to me and Toby. Second of all, you might notice something a little different on the walls of subway stations. The New York City subway got a new map this week, its first redesign in almost 50 years. In many ways, the new map is a throwback to the 1972 Unimark map,
which has a modernist streamlined feel and features as many straight lines as possible. That was replaced in 1979 with Michael Hertz's so-called spaghetti diagram, which has remained in use until this week. Toby, on a scale of Jaguar to HBO Max, how would you rate this redesign?
I think it's very, very understandable, which is the main point here. Because think about a transit map. It has to be available to be seen by people with different levels of vision. It has to be seen by people who have different levels of understanding of what New York City is. It's not just locals taking it. So there's a lot of things to kind of take into account.
And what this map is good at is that it finally gets away from reality a little bit. It's a lot more abstract than the previous more geographically representative map and it prioritizes visual clarity over pure accuracy, which I think is a good thing for a lot of people because the good thing it does too is improve the visibility of transfer points at the busiest hubs. You can clearly see
All right. Union Square's got a lot of stuff going through it. So this is where I have to make my transfer. So I do think that this is not a new debate. I mean, you talked about the 72 map that changed over in 79. So we've been having this geographic versus visually representative debate for a long time now. And now we're swinging back towards, you know, visually representative. And it looks cool.
That's that's my main baseline. It looks cool. Now a word from our sponsor, Tax Act. Neil, I have a confession to make.
Oh, no. Did you put decaf in the coffee machine again?
Neil, I would never do such a thing. No, my confession is I haven't started my taxes yet.
Toby, the deadline is April 15th. What are you waiting for?
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Chapter 2: How are new tariffs impacting global markets?
That was their biggest one-day losses since March 2020, when the world was shutting down due to COVID. Investors consider these tariffs a severe economic shock that threatens to crush corporate profits, raise prices for consumers, and slow growth in the U.S. and around the world. To recap, on Wednesday, aka Liberation Day, Trump upended decades of U.S.
trade policy when he instituted a 10% tariff on virtually all American imports, With much higher duties on 60 countries, he considers the worst trade offenders against the United States. It is an earth rattling gambit by Trump to reshore manufacturing back to the U.S. and swallow short term pain for a longer term buildup of the industrial base.
The president brushed off the market panic yesterday, saying his tariff plan is going very well and adding that I think our markets are going to boom. Got to give it a chance. Got to give it a little bit of time. But Toby, as it stands, it's the end of the economic order as we know it. And Trump feels fine. Investors, on the other hand, are panicking.
Right. The damage was immediate and it was widespread. Over 80% of the companies in the S&P 500 were were in the red as of 10.20 a.m. in the morning. And then over 80% finished the day in the red as well. And the hardest hit companies were those that rely on manufacturing abroad. So think about your Apples, your Nikes of the world.
Retailers, too, that source a lot of their products from abroad also took a hit. Target was down over 10%. Dollar Tree was also down double digits. Big Tech was also feeling the pinch a lot. The Magnificent Seven saved more than $1 trillion off of their market cap. And Apple had its worst day in over half a decade.
So those were just some of the biggest names and why you saw such a deeply red day is that from the very top of the tech world all the way down to Dollar Tree and the retail world, there was a lot of people feeling the pinch here.
Yeah, let's talk about Apple first, because they really were the poster child of this sell off, especially in tech. You know, Apple has manufactured its iPhones and everything we buy from it in China for a long time. It has these vast factories from its suppliers there.
And in 2018, over the past five or so years or decade, it's been trying to diversify away from China because Trump threatened tariffs on China in his first term. So where did they go to Vietnam? So they set up all and India. So they set up these big factories to make iPhones and iPads, Macs and other accessories in India. Vietnam and India. And then what does Trump do?
Yesterday is slaps a 46% tariff on Vietnam and a 26% tariff on India. So this diversification around Asia that Apple tried to do starting in 2017, 2018, just completely backfired and fell 9% yesterday because it is going to bear the brunt of tariffs. And overall, the hardware sector, everything we get from China was just absolutely crushed.
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Chapter 3: Which goods will see price increases due to tariffs?
But that is another reason how these tariffs affect even companies that aren't manufacturing direct goods in those countries.
And then another sector that was so... That was hit so badly was retail, as you mentioned, Five Below Gap, Urban Outfitters, Kohl's, Best Buy. They all posted losses of more than 15%. And if Apple was the poster child of the tech wipeout, then I think RH, formerly known as Restoration Hardware, will be the poster child of the retail wipeout. So they make high-end furniture in China.
And on Wednesday, as Trump was announcing these tariffs, the CEO was on an earnings call giving a pretty downbeat statement. earnings call as it was. And what the transcript shows is that he looks at the screen and says, oh, believe as he's seeing these tariffs roll out.
And later he's explaining to the analysts, anybody of scale in the home business has a high percentage of their content coming out of Asia. Among all furniture stocks that got wiped out, RH suffered a 40 percent drop.
And then finally, one blip of green in that sea of red yesterday where some stocks did go up. Consumer staples was a big one because even that's the classic go-to protection in times of downturn. You still need to buy goods like toilet paper, food, etc. Then utility healthcare sectors also didn't fall as hard as the rest. Also, companies that make American-made products rose pretty well.
Some automakers actually weathered the storm quite well. Ford was a survivor, if you want to call it. They said yesterday that they're going to lower some prices on its vehicles to match the same level it charges employees to try to capitalize on this surge of Buy America. So there were a few companies there that were green, even though most of the market was red.
The other angle of this post-tariff shockwave that is reverberating through the economy is that a lot of things are on their way to becoming more expensive. According to the Yale Budget Lab, this round of tariffs could bump up fresh produce prices by 4% and overall food costs by nearly 3%. That means you can expect some sticker shock on your favorite foods and drinks.
To name a few, coffee in the U.S. is almost entirely imported with 99% grown outside U.S. borders. Same with shrimp, where over 90% comes from just four countries now facing new duties of up to 46%. Chocolate and vanilla, same story. Even a cheat day McDonald's burger could get more expensive thanks to a 10% tariff on Australian beef, which is blended with American cuts to create their patties.
Outside of the grocery aisle, tech is another industry that not only had a rough day in the market, but it's also likely to see higher prices. China and Vietnam supplied the vast majority of laptops and tablets, nearly $47 billion worth last year, with new tariffs of up to 50%. Price hikes are likely to follow. And then finally, everyday things like shoes are also staring down higher input costs.
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Chapter 4: How are world leaders reacting to U.S. tariffs?
The overall sentiment abroad was outrage, threats of retaliation, and bafflement over how these tariff rates were chosen. In the EU, a major trade partner of the U.S. that was hit with 20% tariffs, President of the European Commission Ursula von der Leyen, said the global economy would, quote, massively suffer from the tariffs and urge negotiation.
UK Prime Minister Keir Starmer promised to respond with cool and calm heads. In France, President Emmanuel Macron did not keep his cool, encouraging European companies to avoid investing in the United States because of the tariffs. Switzerland said it was confused why it was hit with a 32% tariff, higher than other U.S. trade partners with similar economies, when 99% of U.S.
goods can be imported into Switzerland without a duty. The calculations of the U.S. government are not clear to the federal council, the Swiss federal council said. Meanwhile, in developing countries that were walloped with tariffs, leaders are spooked, fearing the decimation of key industries centered on sending products to the U.S. Clothing-focused Cambodia, which counts the U.S.
as its top export market, was hit with a 49% tariff. As a small country, we just want to survive, said a spokesperson for Cambodia's ruling party. Toby, these tariffs reached every part of the globe.
What you're seeing right now is sort of a jockeying period amongst world leaders where they, one, try to figure out if this is a jumping off point for negotiations with the United States or if it is something that is here to stay. That being said, you said it touched every corner of the earth, including some truly random places. And I just want to highlight some of those.
One of those are the Heard Island and McDonald Islands. They are in external Australian territory. They face what Trump is calling a reciprocal tariff of 10%, even though the islands had zero trade with the U.S. last year. And the reason why they had zero trade with the U.S. last year is that they have no human population.
They are home to only a large population of marine birds and mammals, including seals, albatrosses, and penguins. So that was kind of held up as a meme yesterday of like, we are literally tariffing every corner of the earth, even those corners that don't have humans and just have penguins.
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Chapter 5: Why is Amazon interested in buying TikTok?
All right. So the investors won't have any time to take a deep breath today because the March jobs report is out at 830 a.m. And we'll see what picture of the labor market that paints. But it's just been a wild week on Wall Street. Trump yesterday said. that there would be room for negotiation. Remember, the tariffs are not going into effect until April 9th.
Next week, his aides had been going out all over the media and saying, these are the final rates. We're not negotiating. They're not negotiable. And then Trump, to reporters yesterday, as he was boarding his helicopter, said, you know, I'm down to negotiate. If somebody offers something spectacular in return, then we can talk. So you can bet They will be fielding calls.
They will be negotiating for the next couple of days until these tariffs go into effect. But clearly a shockwave across global markets. Up next, we got a deadline for TikTok coming up.
Have you heard what's happening in Ohio lately? The list is long, folks. The economic development corporation Jobs Ohio is making it insanely easy and appealing for businesses to lay down roots in the Buckeye State.
That's right. Since it's both a private and a nonprofit corporation, Jobs Ohio is uniquely positioned to give companies very hands-on support with complete confidentiality.
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Chapter 6: How is Microsoft celebrating its 50th anniversary?
Yeah, you can really see their work in the accolades Ohio's received lately. CNBC ranked it at number seven in its list of top states for doing business and number two for the cost of doing business.
It helps that Ohio has the third largest manufacturing workforce in the U.S. and the cost of living is 5.8% lower than the national average.
The world's best get better in Ohio. Learn why companies like Andruil, Honda, and Intel are moving to Ohio. Head to JobsOhio.com slash WhyOhio. That's JobsOhio.com slash W-H-Y-Ohio. Taking your business international can feel like sailing through a sea of red tape, regulations, and unpredictability. Is attracting global business worth the global hassle?
Chapter 7: What can we expect from the upcoming Minecraft movie?
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To learn more about how you can use Wise Business to save time, money, and stress, visit wise.com slash business. That's W-I-S-E dot com slash business. In some non-tariff news, TikTok's clock is getting mighty close to midnight. The April 5th deadline for ByteDance, the platform's Chinese parent company, to sell its U.S. operations or face a nationwide ban is less than a day away.
The final countdown has a slew of bachelors from PE giants to big tech power players lining up to win the social media platform's final rose. Right now, the leader in the clubhouse, according to the Financial Times, is a deal that would spin off TikTok's U.S. business into a new entity called backed by investor powerhouses like Andreessen Horowitz, Blackstone, and Silverlake.
Oracle would oversee U.S. data, while ByteDance would retain a minority stake under the 20% cap required by law. Meanwhile, Amazon entered the chat late in the game, making a Hail Mary bid via letter to the Trump administration. They joined a bizarrely wide field of other suitors, including Perplexity AI, which wants to rebuild the app's algorithm from scratch, mobile tech company AppLovin,
and even Mr. Beast, who says he's been approached by some backers to be the face of a bid. Whether a deal is actually completed by the deadline or the deadline is extended remains unclear, with a major sticking point being the app's all-important algorithm. ByteDance has floated an idea to license it out to new owners, while U.S. officials want it fully controlled domestically.
What is clear, TikTok has become a geopolitical football to be tossed around until Trump can tush-push it across the finish line
You said it wasn't tariff news, but in a way it is because everything ties back into tariffs now. Trump said that he would be willing to lower tariffs on China. Right now they're at 54% if Beijing would approve a deal and- it's a very interesting quirk of this acquisition or buying process because how do you buy a company that's not for sale? China does not want to sell this app.
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