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Chronic trade deficits are no longer merely an economic problem. They're a national emergency that threatens our security and our very way of life. It's a very great threat to our country. And for these reasons, starting tomorrow, the United States will implement reciprocal tariffs on other nations.
And with that, Wall Street's worst case scenario playing out in real time. Stocks selling off across the globe. European stocks, they're sinking. Asia closing in the red on fears of an escalating trade war. But most of the pain this morning, it's right here in the U.S. Futures down between 2 and 3 percent. It is Thursday, April the 3rd, 2025. You're watching Worldwide Exchange right here on CNBC.
Good morning. Thanks so much for being here with us. I am Frank Holland. Big day for the markets and for your money. We begin with our top story. President Trump officially launching his tariff plan and the reaction in the U.S. markets. U.S. futures sharply lowers as investors, they just digest the impact of that plan.
There's now a baseline tariff of 10% on all imports into the United States. It's effective April 5th. And then we have what the White House is calling reciprocal tariffs that begin on April the 9th. So with these tariffs on imports ranging from country to country, the White House saying they're based on actual tariffs and their calculations on other non-tariff trade barriers, 20% on the EU, 26% on India, 24% on Japan, and 34% on China. But
Very important to note here, that's on top of the existing 20 percent tariff on Chinese imports, making the effective rate 54 percent. China and the EU, they both come out saying they're planning countermeasures, while other countries like Australia and Malaysia saying they will not retaliate.
Turning back to Canada and Mexico, some people see them as the winners in all this. They will see their tariffs remain the same at 25 percent, with USMCA imports being exempt. So, again, 25 percent for both. That's staying the same. One notable sector that's not exempt when it comes to that, that's auto. Shares are falling in the pre-market. Tesla among the hardest hit. You can see Tesla shares right here falling about 3 percent. Toyota actually falling even harder right now. Toyota shares down more than 5 percent. GM down more than 1 percent. Ford down almost 1 percent.
But there's another sector that's hit even harder. We're going to take a look at the S&P 500 pre-market laggards. You're going to see here retailers really dominating in this situation. Dollar Tree, those shares down more than 11%. Lululemon, those shares down more than 10%. Best Buy, electronics retailer, down just about 9% as well.
We're also seeing some big moves when it comes to those international ETFs. We're going to start with India, Japan, China and South Korea. Taking a look at the moves there, you can see in the red across the board, the Japanese ETF pulling back about two and a half percent. The Chinese ETF pulling back about one and one third of one percent. We also want to look at Germany, Mexico, Canada and the entire world on the ETF basis today.
Some interesting action here. The German ETF fractionally higher, the Mexican ETF up 2%, while the Canadian ETF is under some pressure, along with the entire world ETF pulling back more than 3% this morning. So the president yesterday speaking at the White House depicting these tariffs as a leveling of the playing field in global trade.
It's our declaration of economic independence. For years, hardworking American citizens were forced to sit on the sidelines as other nations got rich and powerful, much of it at our expense. But now it's our turn to prosper and in so doing, use trillions and trillions of dollars to reduce our taxes and pay down our national debt.
The official tariff announcement leading to some anxiety on Wall Street. Take a look at the VIX. We often call this Wall Street's fear gauge. You see the tick up right here moving about three points higher than the level we saw yesterday. We'll continue to watch this throughout the show. And this morning, we're also getting our first reactions to the announcement. Overall, Fitch estimates that the aggregate U.S. tariff rate, that's now 22%,
A sharp rise from 2.5% in 2024. Remember, just last year, it was about 2.5%. We also have Ernst & Young forecasting. The tariffs will reduce GDP by 1% this year and also raise inflation by 1%. Stagflation, a major concern for many economists and investors.
And we're seeing that kind of play out in the energy markets this morning. Taking a look, WTI crew, the U.S. benchmark pulling back about 3.5%. Similar story when we're looking at Brent crude, the international benchmark for oil. Both of them pulling back significantly. WTI pulling back below 70 bucks a barrel, a key sentiment level for WTI. We also want to look at treasuries. Treasuries moving to their lowest level since October.
in part as a flight to safety, also a lot of concerns about economic growth. We're going to look at the benchmark right now, 4.08, moving significantly to the downside from the levels that we saw yesterday. Again, lowest levels since October. Okay, that's your setup now. We want to turn to the global market action. Our JP Ong has a look at the Asia trade. Juliana Tattlebaum tracking the moves in Europe, and Yunus Yun is in Beijing with reaction to those 54% tariffs on Chinese imports. Juliana, good morning. Let's begin with you.
Frank, good morning. Well, we have woken up to investors selling their European shares in response to that major announcement from the Trump administration. We've also heard from the European Commission already this morning, Ursula von der Leyen calling the U.S. tariffs a major blow to the world economy. She said the bloc is ready, though, to negotiate with the White House. So the Europeans' preferred solution at this stage is still a negotiated deal. Now, in terms of the market reaction, the selling has been broad
base. As you can see here, every major region is trading lower. The CAC 40 over in France down about 1.75 percent. We're seeing particularly heavy selling in the luxury names, in consumer discretionary stocks more broadly, in fact. Let me take you to the consumer space, because I think this is quite telling.
around how investors are feeling right now you've got adidas puma richmond lvmh all underperforming this morning the likes of adidas and puma exposed to heavily exposed to those vietnam tariffs vietnam a key producer of footwear and clothing and that's why we're seeing an outsized hit there adidas shares down 10 percent in contrast we're seeing a lot more resilience in the consumer staples names in fact some green on the board you've got buyers dwarf henkel
Imperial Brands, Unilever all holding up quite well this morning as investors flee for the more defensive part of the consumer market. We're also seeing a major reaction in European banks to the downside. This has investors priced in the prospect of a growth hit for Europe and potentially more accommodative monetary policy, so lower interest rates. And you're seeing a heavy selling here. Deutsche Bank shares off about 4 percent. You've got Barker
Barclays shares here in the UK down nearly 5%. Frank? Juliana, thank you very much. Juliana Tattlebaum, live in London. We're also seeing red arrows in Asia. Our JP Yong is in Singapore with a look at that trade. JP?
Yeah, good morning, Frank. And shock and awe was what greeted many Asian markets today. And you can see that expected reaction to those sweeping tariffs spared practically no one with stocks from Tokyo to Sydney really falling today's session. We got similar responses, at least, or statements from Japanese and South Korean leaders today who both called
these actions deeply regrettable, but also said that they are open for talks to try and renegotiate these trade balances and also renegotiate the tariffs that were imposed on them by the Trump administration. We look at auto stocks, which are some of the worst hit actually in Asia today. And also because South Korea is preparing some measures actually to help support and shield some of these industries like the auto sector from the impact of these tariffs. We heard from Hyundai today saying they are not yet planning to raise prices in the United States because of the impact of the tariffs. But this is
the initial decision from them right now. You can see Toyota, Hyundai among the biggest losers here. We want to take a look at the Japanese yen also because it did get a boost from a flight to safety, but they're also rising bets that the Bank of Japan could normalize and raise their rates in coming meetings because one of the criticisms of Japan is that they are allegedly artificially controlling or weakening
their currency so that rate hike from the back of Japan could support the strength of the yen. But it will come at a very delicate balance because it's very, very delicate to raise rates because the economic recovery in Japan is very fragile at the moment. Just quickly, we want to take a look at emerging markets and Vietnam again standing out because we saw
the VNI index in Ho Chi Minh today plunging by more than 6%. Keep in mind that 30% of the exports of Vietnam are destined for American markets. So if you see those 46% tariffs imposed on Vietnamese goods, mostly intended for American buyers, suddenly that creates a lot of questions as to what it might do to the economy of Vietnam. And the prime minister's office holding emergency meetings today when they heard the news that they're seeing 46% of tariffs hitting their products. And again, painting that very dismal picture of
across Asia for the most part this Thursday. Frank, back to you. And I'm hoping you guys are having a better morning than we did. Not quite, JP. Our JP Hong live in Singapore. I'm not sure anybody's having a great morning today. We're going to stick with the Asia action reaction pouring in from world leaders, including the U.S.'s largest trading partner. Eunice Yun has much, much more from Beijing. Eunice.
Thanks, Frank. Well, China's Commerce Ministry has vowed to take resolute countermeasures, taking into account the tariffs during President Trump's first term, as well as the two rounds since he's taken office. The effective rate now for the U.S., for China, in terms of tariffs, is around 70 percent. So, in addition, President Trump had announced plans to close a trade loophole on May 2. This is one that had been
benefiting e-retailers such as Timu and Shuyin. They were able to send their goods duty free. That's not going to happen anymore. And based on China's responses that we saw during those first two rounds, the expectation is that China is not only going to use counter tariffs to retaliate, but also to use its expanded
retaliation toolbox. So that means tighter controls potentially for certain items like critical minerals, also punishing individual American companies with blacklisting or more investigations. Now, Macquarie had said that it expects that Beijing is going to take a page out of that playbook to try to pressure or help Chinese suppliers
to pass that cost along to U.S. consumers as well as to companies. If you remember, Frank, the Chinese had summoned Walmart to stop what they see as an unfair practice of pressuring Chinese suppliers to take on more of that cost. So Macquarie believes that we could see more of that type of measure this time around.
Yeah, a lot of developments there. We're going to continue to wait for more reaction from China on this one. Our Eunice Yun live from Beijing. Great reporting as always, Eunice. Thank you very much. All right, turning back to the U.S. markets right now. One more quick check on U.S. stock futures. You can see we're in the red across the board. Hard to miss it right there. The Dow looks like it would open about 1,000 points lower right now. Big tech getting hit especially hard in the pre-market. Take a look at the big tech moves right now. You're seeing names like Apple, obviously a lot of exposure to China right now.
pulling back more than 6.5%. NVIDIA pulling back more than 3%. Alphabet pulling back more than 2%. And also a look at banks, the big banks here in the U.S. We're seeing declines across the board for them as well. We're seeing Bank of America pull back more than 3%. Similar story for JPMorgan Chase. Citigroup pulling back about 3.5%. Wells Fargo down more than 4%.
With that, let's bring in Jeff Kleintop, chief global investment strategist at Charles Schwab. Also with me, Ben Emmons, founder at FedWatch Advisors. Gentlemen, good morning. Jeff, if you don't mind, I'm going to begin with you. We thought we'd get some certainty following these tariffs. Do you believe that we have some certainty? Have we hit a bottom when it comes to the markets, or at least do you think we're close to a bottom when we get the reaction from these tariffs?
Certainly, there's the concept of peak tariff coming into play here. It's hard to imagine these numbers being much higher, particularly in Asia when you're looking at huge numbers on China, on Cambodia, on Thailand, on Taiwan. So those numbers are likely to be negotiated lower, but that doesn't mean it's coming soon. Expect retaliation to be a concern of the market in the near term. We know Europe is preparing a term sheet of offers, but also threats, including a digital services tax return.
which can weigh on tech companies. We've also got a number of China recently restricting companies from investing in the U.S. That could be a negotiation tactic. So there's a number of things coming that could continue to weigh on the market here in the near term. And also remember, we haven't heard from
The administration on pharmaceuticals or on semiconductors, they were excluded from the tariffs yesterday, but they are likely being targeted here and likely to be unveiled before the night. So we've still got some more tariffs coming out in the next week. Yeah, expectations are more tariffs. So I think a lot of investors are waiting for that. So, Jeff, it just sounds like you're saying the other shoe hasn't dropped. It's not quite clear, at least at this point, where the bottom is.
Yeah, that's right. So I think where you want to focus is on more domestically oriented companies, those less exposed to tariffs. I'd point out that, you know, we're seeing terrible numbers this morning in apparel, footwear, those types of companies. But if you look at utilities, telecom, they're more domestically focused. We've been seeing that for the last month. I think that's going to continue. More domestically focused companies within the U.S. and Europe faring better than those more internationally exposed.
Just to your point, Jeff, our CNBC Pro team came out with a great story looking at some of the companies that get more than 80% of their revenue here in the U.S. Names like Cure Dr. Pepper, Regeneron, CME Group, et cetera. Go on CNBC.com. You can check those out.
All right, Ben, I'm coming over to you. I got a lot tougher questions for you, Ben. What does this all mean for the Fed? We're seeing some estimates that have come out. One estimate that we're following right now, and I'm sure is going to be a flare from coming out today, that GDP is expected to decline by about 1 percent because of these tariffs. Inflation will rise by 1 percent. What does that mean for the Fed going forward?
I think, frankly, as much as they would like to react to the downside on growth, that inflation is going to hold them back because this is a major shock, right? This is much more than what I talked to you weeks ago, that reciprocal tariffs were reasonable in terms of the market reaction and the economy. Turns out it's not really reciprocal. It's just actually an escalation. The calculation of inflation, maybe somewhat moderate at the moment, but the Fed has to take that now into account, dealing with the price shock.
As consumers already reacted to this, you can tell from the Michigan surveys and other surveys, yesterday, Adriana Kugler came out right 30 minutes after Trump had spoken, did emphasize, like, if these tariffs stay in place for longer, inflation expectations are going to go higher, we have to respond to it. So I think that's where the markets are looking at, because Fed may not be able to do anything worse, may have to reverse course and tighten rates, and that, I think, is the big tension for markets from here.
I also want to ask you about the currency market. What do you make of the dollar's downside move year to date? Dollars moved down about 6%. We were often talking about its rapid rise to the upside, but now it's declined a bit. How does that impact global trade in your mind? What impact could that also have on the markets? It's a surprising move because you would think that the dollar would strengthen, but it actually turns out that people are looking at this, well, these tariffs are going to slow the economy and they don't seem to dare for an investment.
and that actually rose the value of the dollar. And so not very much of a positive story there in that sense. And as you say, the strength of other currencies you see this morning, the Euro, the Yen, or Swedish Krona, those type of countries, they may temporarily benefit from low
import price to be some sort of offset, but ultimately it's going to affect that trade as well. So it's actually a very negative impact in that way. And that's why I think equity markets are down everywhere. It's a global impact now as opposed to just US and the weakness of the dollar expresses that.
All right. I want to focus on the U.S. again, Jeff. I'm going to come back over to you. We hit on two areas that are under quite a bit of pressure this morning. We're talking about banks and also big tech. Our Jim Cramer says right now is a great time to put some money on the sideline. A lot of other people are saying this is a great time to buy the dip in some of these areas, specifically big tech. Are you seeing opportunities in financials or tech? And if so, would you wait? Is right now the time to jump in? Is this the dip that maybe you buy now and then years later you wish you could find these prices again? Or is there more pain to come in these two areas?
I mean, I don't think this is a V-shaped bottom. I think bottoms are a process when it comes to these types of things. There are plenty of negotiations coming. I don't think you have to be jumping at the bit here to come in and buy. And honestly, I still favor international markets over the U.S. The U.S. impacted these tariffs far more deleterious to growth in the U.S. than what we're seeing overseas. So still favoring international equities. They might be a buy. U.S. might want to wait. Jeff, one second, though.
it's not equal across the board. We're looking at international equity. Certainly, if you look at a country like Vietnam, they're going to be deeply impacted. China, we don't even know what the impact is. We don't know what the countermeasures are. We don't know if there is actually room for negotiation. We're going to talk about that later in the show. But let's be more specific when we're talking international markets. Are you talking Europe? Are you talking Asia? Are you talking emerging markets? Where are you seeing that opportunity?
Very much focused on Europe here, where we're seeing domestic economic growth really rebounding. A lot of defense spending, a lot of infrastructure spending helping to boost the economy, along with further rate cuts not matched in the US. Combine that with widening valuations and increased earnings estimates. Almost every week this year, we've seen rising earnings estimates in Europe where they've been cut in the US. So you combine better valuations, better growth, a better monetary and fiscal outlook, that still posts me to Europe as the safer place to be.
You know, to your point, I'm looking at the EWG ETF that tracks Germany. It is higher right now in the pre-market despite these tariffs. Ben Emmons and Jeff Klontop are going to leave the conversation there. Great to see you both. Thank you very much. Thanks.
All right, we've got a lot more to come here on Worldwide Exchange, including a look at Apple's supply chain shock, courtesy of President Trump's new tariffs, and why Cook & Company, they appear to have nowhere to hide from higher costs. Plus, automakers are already making moves as those sector tariffs take effect today. More to come next month. Our Philip Boe, he's going to be here. He has the very latest. We have a very busy hour still ahead when Worldwide Exchange returns. Stay with us.
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Welcome back to Worldwide Exchange. Taking a look at shares of Apple this morning, you can see they're falling almost 7% on the back of the president's new tariffs and ones that hit nearly every single part of his global supply chain. Arjun Kapal joins us now from London. Arjun, good morning. Apple, it really tried to diversify away from China. However, after these tariffs, not sure that's really going to help.
No, you're absolutely right, Frank. It's been looking to diversify the supply chain over the past couple of years or so. The problem is the countries it's actually moved to have now been hit with tariffs, too. So let me try and break down roughly Apple's footprint here to give you a sense of what I'm talking about. China undoubtedly remains critical, accounting for around 80 percent of production of all of Apple's products. That's according to Evercore ISI estimates. Now, for the iPhone specifically, Apple's most important product, of
Of course, China is around 90 percent of assembly. Other products, including Macs and iPads, are also assembled there as well. But China, of course, is facing a true tariff rate of around 54 percent under the new regime. So that's quite hefty. Now, talking about diversification, India has come into focus here for Apple and has grown into a key manufacturing hub with around 10 to 15%.
15% of global iPhones produced there. And India now is facing a 26% levy. Meanwhile, Vietnam, again, a new area for Apple, accounts for about 20% of iPad production and 90% of Apple wearable product assembly. So that's things like the AirPods, the Apple Watch as well, and is now dealing with a 46% tariff.
There are other countries in the supply chain as well that are key. Malaysia, Thailand, for example, where Apple makes other products. And those are quite smaller at the moment. But if these tariffs do have a big impact right now on Apple's cost base, it does raise the question of whether the company passes this on to the consumer with higher iPhone and product prices and whether that will impact appetite for the tech giant's goods.
But you're seeing a big reaction this morning in the pre-market on Apple shares to the downside. And that's really because all of Apple's production hubs are now facing potentially higher tariffs. Frank. Yeah, a lot of questions right here. I think one thing I want to talk to you about, Arjun, is that we often talked about Tim Cook and the fact that he's kind of a CEO slash diplomat. Any sense on if he's trying to secure some type of exemption from the White House or maybe even some type of deals with these countries? I'm sure every avenue has been explored. But what do we know this morning?
Yeah, you're absolutely right. He is very much the diplomat. We saw in the last Trump administration, he managed to carve out some exemptions. It doesn't seem to be happening this time around. One of the things he has pledged, of course, is a $500 billion investment in the U.S. in hopes, I think, to kind of get Trump on his good side as well. In China, Tim Cook continues to take many, many visits to the country to
work on the AI footprint there as well as some of the manufacturing. But right now it seems that all the countries that Apple has diversified to India, China, to Vietnam, Thailand, and other in Southeast Asia are all facing these higher tariffs. It doesn't seem at this point like there's going to be any exemptions. And the other challenge here is
It's very hard to shift this production all to the U.S. or at least a large chunk of it to the U.S. There's no major product in Apple's portfolio that is produced in the U.S. en masse at this point in time. And moving anything to the U.S. could come with higher costs and a lot of complications as well. So a lot of challenges here for Apple as it navigates these headwinds, Frank. Arjun Kapoor, I think we're going to be talking a lot about this in the coming weeks and the months. Really appreciate your time as always. Thank you very much. Arjun Kapoor coming live from London.
Still on deck here at Worldwide Exchange, former Commerce Secretary Carlos Gutierrez, he's here. Why he says these tariffs, they may be a thing of the past come July, despite the White House calling them permanent.
And as we had to break a quick check on cryptocurrencies, take a look under quite a bit of pressure this morning. Bitcoin down more than 3%. Solana down more than 9%. Ether pulling back about 4.5%. We're also checking some of the key stocks in that space, taking a look at the moves there. Strategy, one name that comes to mind. Watching it right here, we're seeing strategy pull back almost 4%. Coinbase down almost 5%. Riot Platforms down almost 5%. Robinhood, however, hardest hit, down almost 7.5%. We'll be back right after this.
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And welcome back to Worldwide Exchange. Time now for checking some of the stories outside of President Trump's tariffs. Hard to believe there is other news this morning. Our Silvana Henao is here with that and much more. Silvana, good morning. Hey, Frank. Good morning. Yeah, there is other stories. And we start with Senate Republicans unveiling a budget proposal aiming to fast-track President Trump's tax cuts and increase the debt limit. So the plan will allow for a $4 trillion extension of the Trump tax cuts
and an additional $1.5 trillion in more reductions. The blueprint appears to be a compromise following a meeting between Senate Majority Leader John Thune and House Speaker Mike Johnson. Meanwhile, the information is reporting Google is in talks to lease NVIDIA chips from CoreWeave. So the report says this move suggests Google is working to secure enough NVIDIA chips
as it faces growing demand from its customers. Google and Corweave both declined to comment to the information on the matter. And we're seeing shares, of course, all lower. Corweave, the big loser in pre-market, down 7%.
All right. And CNBC confirming Amazon has become the latest company to throw its hat into the ring for a bid for TikTok. So this is ahead of the Saturday deadline for parent company ByteDance to divest the social media company. And sources telling our David Faber that Applovin is also making a bid for TikTok, Frank.
It's really fascinating. I think Amazon's kind of seen it as a way to kind of inject, was it e-commerce shopping or whatever, like online shopping? Whatever you want to call it. You shop from TikTok and you buy things on there. And it's huge. I mean, that's huge. So many people can actually do that. Yeah. Let's go back to the two stocks really quick. I think they were both in the red. Hard to tell on a day like this, like if that's a reaction to it. Obviously, Trump tariffs are weighing on things. But I would imagine people would be very excited about either Amazon or Apple and getting it. Right, right. But...
In the red. All right. You were just talking about fast fashion a minute ago. We have to continue that conversation off air. Savannah Henao, we'll see you later in the show. All right. As we head to break, a check on some of the hardest hit sectors in the pre-market retail. Big sellers of imported goods among some of the hardest hit. Take a look. Nike shares pulling back almost 9 percent. Five below down, almost 14 percent. Dollar Tree pulling back 10 and a half. Gap and Best Buy also under quite a bit of pressure. We'll be right back with much more. Stay with us.
the foreign presidents, prime ministers, kings, queens, ambassadors, and everyone else who will soon be calling to ask for exemptions from these tariffs. I say, terminate your own tariffs, drop your barriers, don't manipulate your currencies. They manipulate their currencies like
nobody can even believe, which is a bad, bad thing and very devastating to us, and start buying tens of billions of dollars of American goods. Tariffs give our country protection against those that would do us economic harm.
Stocks here in the U.S. and all around the world selling off this morning on the back of President Trump's formal tariff announcement. One many expect will raise the price of just about everything from cars and food to laptops and smartphones. Taking a look at futures right now, you can see we're in the red across the board. The Dow looks like it would open about 1,000 points lower.
Welcome back to Worldwide Exchange. I'm Frank Holland. Much, much more coming up on the president's tariffs, the global market reaction and the sectors set to be hit hardest by these moves. Plus, former Commerce Secretary Carlos Gutierrez, he's standing by. We're going to see why he believes these tariffs won't ultimately be in place for too long. We're going to talk to him a lot about that. But first, let's get right to the sell off. Stocks hit hard all around the world. We're going to start again with U.S. stock futures. We just mentioned the Dow looks like it would open up about
1,000 points lower. The S&P and the Nasdaq both down more than 3%. We want to check some of the biggest laggers on the Nasdaq 100 right now. You're going to see a lot of retail names up here. Lululemon, the hardest hit, down more than 11%. Apple, we just talked about some of their supply chain issues right now due to tariffs.
Also, DoorDash shares down about 6 percent. Constellation Energy pulling back almost 6 percent. Then the other side of the coin, the biggest gainers on the Nasdaq 100 in the pre-market. Take a look at those. AstraZeneca, those shares moving up almost 4 percent. Perhaps kind of a relief that we haven't gotten pharmaceutical tariffs, at least not yet. A staple here, Korg Dr. Pepper moving up just fractionally higher. A lot of money moving into staples. Coca-Cola, Euro Pacific Partners also up just about 1 percent there.
We also want to take a quick look at the VIX. We often call that Wall Street's fear gauge. It's ticked up a few points from the levels that we saw yesterday. You can see the move very visibly right there. But surprisingly, not even at the highest levels that we saw right now. The VIX coming in at about 25.5 right now. We also want to check some of the ETFs tracking countries that are impacted by tariffs.
Let's begin with India, Japan, China and South Korea. Taking a look in the red across the board, Japan pulling back about two and a half percent. The Chinese ETF pulling back about one and a third percent. Remember the effective tariff rate for China right now at about 54 percent. The South Korean ETF also pulling back more.
We also want to take a look at Germany, Mexico and Canada. Taking a look at those, you're seeing some green here. The Mexican ETF rising about two and a third percent. Some people see Mexico and Canada as winners in all that, staying at a 25 percent tariff. The German ETF, as we mentioned earlier, fractionally higher. But the Canadian ETF actually pulling back almost one and a half percent. And then the world ETF, the ACWI, pulling back more than three percent. We also want to check the auto sector's response.
U.S. automakers under quite a bit of pressure after this tariff announcement. Taking a look at those, surprisingly, actually, Stellantis, those shares moving up about a third of a percent. But Tesla shares under pressure, pulling back more than 4%. GM and Ford also in the red right now. We'll take a look at the European automakers that are going to be facing these tariffs.
Seeing here clearly some right across the board. Volkswagen pulling back about 1%. BMW about one and a third. Volvo pulling back about two and a quarter of 1%. Mercedes-Benz also down about one and a half percent. We can't leave out the Asian automakers also impacted by all this.
We're seeing some downside moves there. This is tech. We're going to get to tech in a moment. But Asian automakers under some pressure as well. We're going to move on to Megacap tech. You can see Megacap tech under quite a bit of pressure. Apple, we've been continuing to talk about their supply chain pressures pulling back about 7.5%. Amazon pulling back more than 5%. Alphabet down about 2.5%. Meta down about 3.25%. And Microsoft, NVIDIA also under quite a bit of pressure this morning. Microsoft pulling back about 2%. NVIDIA nearly 3.5%.
We also want to take a look at some of the other side of the coin here. A look at some companies that get 80 percent of their revenue or more right here in the U.S. Our CNBC pro team kind of did a screen of that. Look at some of these stocks that could potentially benefit from these tariffs. We talked about it earlier. Cure Dr. Pepper up fractionally. Regeneron actually pulling back about three and a half, more than three and a half percent. CME Group, Progressive, Church and Dwight among that list. Great story on CNBC dot com, CNBC pro. And we would take a look at
bond yields this morning moving to the downside. The benchmark right now coming in at its lowest level since October, 4.06. A lot of concern about economic growth, also a flight to safety in the bond market. All right, that's your setup. Now we want to turn our attention over to Washington, D.C., the Trump administration facing mounting global pushback over that tariff announcement. Our Megan Kinsella joins us now with the very latest. Megan, good morning. I want to say you've been doing great reporting on all the twists and turns. Give us the latest.
Thank you very much, Frank. So we had been hearing ahead of this announcement that the president wanted to go big and simple on this one. I would call this very big, but maybe not so simple. The crux of it is that across the board tariff of 10 percent on all countries taking effect on Saturday. But about 60 of the worst offender countries will see these higher customized tariffs. Those take effect Friday.
about a week from now on Wednesday. So Trump is giving himself the power to do this by declaring an economic emergency over trade deficits. That's how he gets to regulate imports. But to show you some of the numbers, just some of them here, China sees a 34% reciprocal tariff, the EU about a 20% tariff, Japan 24% on some of our largest trading partners there. And those come on top of any tariffs already in effect.
So for China in particular, he had already imposed a 20% tariff this term, so you have to add those together. There are some exemptions to highlight though. Autos and parts, steel, aluminum, all of those will keep the 25% rate no matter where they're coming from that Trump has separately imposed. Canada and Mexico maintain their 25% fentanyl tariff rate as well. And goods that comply with the USMCA continue to be exempt
from those tariffs. There are also some specific items, copper, lumber, semiconductors. I heard you mention pharmaceuticals. Those are exempt from tariffs for now. But a White House official told me yesterday that's because the president is looking at sector-specific tariffs on those, so potentially more to come. And then finally, Frank, I just want to say it's worth flagging that right within the executive order itself, the president reserved the right to raise these tariffs
if countries retaliate or if he feels that U.S. manufacturing output is declining. He also says that he'll lower them if he feels that countries are aligning themselves with the U.S. on the economy and national security. I would say the upshot here is not only is this bigger than investors were expecting, but it also brings less certainty than they were hoping for. Frank. Our Megan Casella live in D.C. Megan, great reporting as always. Great to see you. Thank you.
All right. For much more on the tariffs, let's bring in Carlos Gutierrez, former Commerce Secretary under President George W. Bush, former Kellogg CEO and a CNBC contributor. Carlos, good morning. Great to have you with us. Morning, Frank. How are you? All right. So, Carlos, you were on our air last night right after the announcement. You believe that these tariffs, they may be short lived, maybe that they go away in the second half of the year and that this is really all the beginning of a negotiation. I have to ask you, where are you getting that from? I don't think I don't think I heard the president say the word negotiation yesterday. Where are you getting this idea from?
Yeah, so there are four groups of tariffs, and not all these tariffs are the same. The ones that are so-called reciprocal tariffs,
the countries that are misbehaving, those are the ones that I would see coming off over the next couple months. That will be country by country negotiations. You know, Israel and Japan, sorry, Israel and Vietnam have already lowered their tariffs. So those are two deals that have already been made that haven't been announced, but those are two victories that the president has. And each country will be different, but
Country by country, I think we're going to see that little by little coming off. The ones that will take a little bit longer are China. I wouldn't put that in the group of reciprocals. China's in a group on its own. And I think that could take a little longer. The 10 percent is an interesting one because that can also take longer and
What we need to watch is whether the president will leave that on, a way of just leaving those 10 percent permanent or 5 percent or 7 percent, whatever, over the long term. And that could be kind of a legacy that he cements for tariffs. We don't know, but we have to see that. But the ones that I think are shorter term are these so-called reciprocals, the country by country negotiations. OK, so that's just you having some insight from your past experience, but I think you've
It's fair to say the president didn't indicate that it was going to be short term. In fact, he said it was president and they kind of indicated that there won't be a lot of negotiations. I want to go to China. I know you just recently came back from China. A 54 percent effective tariff on China. Do you believe that some people are speculating that there's some some some back room or back channels working right now? Do you believe that maybe there's already a deal in place to reduce this? And this is a lot of bluster. But then in the coming days or weeks, maybe there's going to be a deal.
That's a good question. You know, I would have thought that there was more of that going on, more back channels. But in my recent trip, I didn't sense that. I sensed that there was a lot of frustration and confusion. Part of the problem is, who can they speak with? You know, they've had a good relationship with Secretary Besant, but they don't know who to speak with beyond Secretary Besant. So who is it in the Treasury Department, the—
the undersecretary of international is that job hasn't been filled. So things are in a bit of a standstill with China. I continue to believe that the end game here is going to be a big deal, perhaps beyond trade. It could include Chinese investment in the U.S.,
It could include potentially some geopolitical issues. But Carlos, we're not going that direction now. China just announced countermeasures. I mean, so we're trending decidedly away from any resolution that way with the countermeasures. Yeah, I know. And look, what we're seeing also in public is negotiations in public.
And, you know, sometimes you want to throw off the person with whom you're negotiating. So there could be a bluff, a tactic here and there. And that throws off everyone, not just the other side. So there's a little bit of that. We have to be careful.
But looking at this, you know, strategically, I do believe that that the president wants to strike a bigger deal with China. You know, the first term, a lot of the fighting with China didn't really lead to a lot of change. OK, can I ask you to put your CEO hat on? You were formerly the CEO of Kellogg. The president didn't really seem to have an appetite for a lot of diplomacy or dealmaking, at least not yesterday. Maybe behind closed doors he does.
But you were formerly a CEO. Looking at this as a CEO, how do you make business decisions going forward with a lot of uncertainty? I mean, last night you said like companies have to do like a 10 year cost benefit analysis to see if they want to build in the U.S. How do you do that not knowing if this policy could change in two years, maybe four years? You just don't know.
Yeah, those are the 10%. If those stay on, let's just say that the policy is 10% tariffs forever. It'll be permanent. Then at least you have something that you can evaluate. You can do a net present value analysis. But that's only for those 10%. I would be looking at
in each individual case, how permanent are these? How long lasting? Certain raw materials, certain ingredients. And if it feels like it could be longer lasting, then you have to do something about prices.
If a company decides that they're not going to take up prices because of this, A, it could be because they don't feel it's going to be around for a long time or they don't believe they have that kind of flexibility, then it's a different story. If you have low margins, that can impact things. You may have to issue debt just to get through the next six to eight weeks. So there'll be a lot of disruption. And I think the big decision is
prices or not raise prices. We also have to be very careful the supply chains I mean when I hear we're going to bring the supply chains home. These are supply chains that have been developed over years and decades. You know Apple in China these are you know multiple countries hundreds of suppliers that are
that congregate in China, you can't replicate that overnight. The same thing in autos. Carlos, we've got to leave the conversation there. Thank you so much for your time and for your insight. You have a great day. Take care. Thank you. And we're going to hear from the current Commerce Secretary later today, Howard Lutnick. He's going to join Squawk Box coming up just after 8 o'clock this morning. I'm sure the crew is going to have a lot of questions for him after this tariff announcement.
All right. Coming up here on Worldwide Exchange, much more on the president's tariffs. Shares of American automakers getting hit hard on the move. Our Phil LeBeau, he's here. He's going to lay out what it means for this critical industry and the cost of your next car. Stay with us. Welcome back to Worldwide Exchange. Look at shares of U.S. automakers getting hit on the back of President Trump's tariff announcement. Taking a look, you're seeing GM shares down more than 1 percent, Tesla down more than 4 percent. For much more, let's bring in our Phil LeBeau. Phil, good morning.
Good morning, Frank. You know, the question that we hear from a lot of people is, well, why won't the automakers simply take their production from Mexico or Canada, bring it back to the United States? That would help them avoid the tariffs that are now in effect. And by the way, they did go in effect in terms of payments starting to be received on shipments as of shortly after midnight tonight. And a reminder, it's 25 percent on all vehicles.
that are assembled outside the United States, brought into the United States. There are some trade-offs within there in terms of content that comes from the United States that goes into those vehicles. It's 7.38 million vehicles last year that were imported into this country. That's how many potentially could be impacted. And the cost can be anywhere to $4,000 to $8,000. By the way, that's a back of the envelope estimate.
It depends on the model. It depends on the level of production and how the automakers decide to do this. Do they do it model by model or do they spread it out? So to the question of why not bring back plants to the United States, it's all about money. It costs far more to produce a vehicle in the United States than it does in Canada and way more than it does to produce a vehicle all the way down in Mexico. This is according to Alex Partners. We asked them specifically, what does it cost in terms of
hourly labor and full content to produce a vehicle in those countries versus here. And in terms of where we might see the impact on what types of vehicles, the lower end of the market is going to be hit first. Here's a breakdown in terms of market share by transaction price. In the U.S., the vast majority of the vehicles that are bought
The transaction price at the dealership is between $40,000 and above $60,000. That's more than half of the vehicles. But you see 13% under $30,000. And that $30,000 to $40,000, very few of those vehicles are made in the United States. Those are imported. A couple of things, Frank. First of all, we showed the automakers at the start. Let's take a look at those shares and what they've done over the last year. Yeah, generally speaking, it's been nothing to write home about. And you look at auto sales in March up 8%.
4.8%. Could be a different story in the month of April. A couple of things that happened this morning. Nissan is shutting down some of its production in Mexico. Not a surprise. We've talked about this. Why would you ship a vehicle to the U.S. if you're going to run into this? And Volkswagen is
halting some shipments into the United States and also deciding it's going to add a tariff fee, part of the destination fee, onto the sticker price that buyers will see in showrooms in the future. So the bottom line is this, Frank, it's all about money. And I know that the president and his team are saying we want to bring facilities back to the U.S., we want vehicles built in the U.S., but if you're an auto CEO, the question on your mind is,
Cost benefit analysis. It's $70 all in an hour on production in the United States, $6 in Mexico. That's a tough decision to make to say I'm turning off some production in Mexico and I'm going to move it here to the United States. Can I ask you a very quick question? We got headlines about Ford offering discounts. Should we expect that from other automakers here in the U.S. or abroad? And how sustainable is that really?
Well, I don't know the full details there, Frank. I'm sure we'll hear about those today. I wouldn't be surprised if we see some types of marketing that are going to be coming out over the next week or two in terms of trying to bring people into showrooms. But this is going to be where we see the adjustment period in the month of April as far as automakers deciding, let's slow down our shipments.
Why build and send it into the United States when we can just slow down the shipments? And that's when you're going to see a slowdown in overall sales. That's the expectation that is out there. Yeah, a lot of concerns about a rising price because of low inventory as well. I was talking to a supply chain CEO. They were telling me a lot of those shipments across the border have slowed down significantly. Phil LeBeau, it is great to see you. Thank you for your time and insight as always. Have a great day.
You bet. All right, coming up here on Worldwide Exchange, much more on President Trump's tariffs and the global fallout. Futures, as you can see, deep in the red. The Dow looks like it would open 1,000 points lower. We're back right after this break. Welcome back. We're now joined by Mark Smith, SVP at Wells Fargo Advisors. Mark, good morning. I just want to get your take on the action we're seeing in the pre-market following that tariff announcement.
To be expected. There's a lot of uncertainty out there. The market isn't like uncertainty. When I talk to my clients or executives around the country, that's the one word I'm hearing is uncertainty. And we don't because they don't know how long these tariffs are going to last. Is it just going to be the baseline? Are we going to stay at this higher rate? Are there going to be folks of different countries that retaliate and
and bring our tariffs higher. So it's hard to do any kind of investing in your company or investing in the public markets with that amount of certainty going on. So that's what I'm hearing across the board. All right. So where do you put money to work on a day like this?
You're going to things that are a little bit more certain. Last time I checked, U.S. financial institutions have nothing to do with tariffs. Telecommunication companies have nothing to do with tariff. We're going to need to communicate. So there are sectors out there that actually will be able to weather the storm quite nicely in this scenario. All right, Mark Smith, great to see you. Thank you very much. That's going to do it for Worldwide Exchange. Squawk Box starts right now. You've been listening to CNBC's Worldwide Exchange. You can always catch us live weekdays at 5 a.m. Eastern.
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