Tariff Fears Weigh on Tech Plans, Trumps Signals TikTok Deal Close
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Live from New York, I'm Caroline Hyde and this is Bloomberg Technology. Tariffs, they hit global tech stocks again today as China retaliates and imposes tariffs on all American imports and withholds crucial rare earths. Two

trillion, wiped off the NASDAQ 100 in two days alone. That's as the benchmark is set to enter a bear market. Investors now expecting the Federal Reserve to cut interest rates four times this year. We will hear from the Fed Chair Jerome Powell later this hour. But we've got to dive in to the NASDAQ 100's move. Ran Vlastelaka is here. Extraordinary. We haven't seen this sort of sell-off since 2020.

Absolutely. The scale of the weakness has been pretty breathtaking. The size of the drops, just the broad base nature of the sell-off, it's been pretty remarkable.

What's also remarkable is how much we start to see the ongoing retaliation, whether it be from countries such as China and the impact that will have on being able to make technology products here in the United States. But individual companies later will be shining a light on Nintendo reports that they're going to be delaying their switch to pre-orders to the U.S. All of this isn't yet priced in, Ryan. What are analysts telling you?

Well, what I've heard so far is that there's just so much uncertainty out there that few people are really willing to jump in right now. I mean, some people remain positive on a longer term basis. They say if you have a three to five year time horizon, maybe you can take advantage of some of the drops and some of these names. But we don't really know what to expect. I mean, yesterday things were really bad. They're even worse today. We had China retaliate. Is there going to be a response to that?

some kind of back and forth. We just don't know and that makes it extremely difficult for companies to know how to plan and that makes it extremely difficult for investors to know how to position. And at the moment, just where in particular are the pain most acute? It's hardware rather than software, but software is still in the eye of the storm if indeed the EU decides to respond from a digital services tax perspective.

Yeah, absolutely. So far, we saw a little bit of relative outperformance in software, especially yesterday. Some people were telling me maybe this is too much, too fast for software because they're not as directly exposed to tariffs as other part of the market. But certainly hardware, like you mentioned, very much getting hit with this. It's extremely, you know, there's a lot of manufacturing exposure to China, to Vietnam, to places that really got hit with tariffs.

That place is really suffering over the past couple of days in particular. Chips have really come in quite a bit. There's still, like I said, a lot of uncertainty. People were already concerned about what is the outlook for AI spending. People were already talking about valuations maybe being elevated. All of these things are just dovetailing. And it's just you have a lot of reasons to be selling right now and very few reasons to be buying.

Worst case scenario is the lead quote in your story coming from a particular investment, the CIO of Granite Bay Wealth Management. Do we think there's a movement back from this worst case scenario? There have been many calling for the fact that Apple might get some sort of exclusion from the tariffs longer term. Are many bracing for just headline risks going forward?

I think there's a lot of bracing for headline risk. There's been a lot of hope that Apple would get an exemption the way it did in the first Trump administration. But this is a very different kind of trade war, very different tariff policies than we saw in the first administration. So there's not really much of a playbook that you can use here. In the same way, you might have thought, well, it wasn't that bad.

eight years ago or whatever that was, it's looking like a lot more severe right now. And that, again, just makes it harder for people to know how to allocate, how to position, if they should be bracing for more short-term pain, if this looks like a long-term buying opportunity. There's just so many questions right now. It's hard to know really what to do. That's what people are telling me.

get back to the phones i'm sure and the email ryan vlaselica thank you so much for spending time with us look let's turn to individual stocks tesla for example trading lower unsurprisingly in fact it's down 15 in the last two days following tariff news its own deliveries missed interestingly jp morgan want to shine a light on their perspective they've cut their estimates further on the stock quoting what they see as unprecedented brand damage greenberg's craig trudell joins us

for more, and we'd been deciding whether this was production issues, whether this was the lack of a new model, but for J.P. Morgan, this is brand damage.

Yeah, and I do think it's both, right. But of course, JP Morgan, as one of the more bearish analysts or bearish brokers on the street, they have very much sort of leaned into this idea that this is more than just the Model Y changeover, which we should note is a significant issue in the first quarter. And it remains to be seen just how much Tesla can sort of overcome any brand damage that is an issue here.

But it is hard to sort of think of an equivalent moment for a car brand where you see people throwing paint onto showrooms and lighting cars on fire. This is just very unusual for any product, but particularly for cars where this is the second most valuable thing that people buy right after their home. So to

buy a Tesla now means something a lot different than it did only months ago. And there are real questions about just how much sort of lasting impact Musk's entry into politics is going to have on this brand. You cite, of course, JP Morgan being one of the more bearish on the street, and they've got a price target of just $120. But you go to the more

optimistic. The bullish on the street, Dan Ives of Wedbush, $550 price target on Tesla. Even he is saying the recent report, the deliveries won, a disaster on every metric. Is there any view that Elon Musk potentially starting to ease out of the White House and his day-to-day roles, as has been reported? Of course, they push back against that. But whether or not he will come back to the fold, refocus on Tesla and that being an optimistic light?

I think if we listen to what Musk is saying and what even J.D. Vance has said, I just have a hard time seeing Elon heading to the backseat, if you will. That's not very much his nature, right? He has very much gotten in deep with this administration. Just in the last few days, he was pictured with a

Trump, you know, everything Trump said was right. Had I maybe, you know, getting the verbiage a little off, but he is very much, you know, behind the president and, you know, sort of one in the same with this administration. And even if he does, you know, take a step back officially, I think, you know, it's hard to sort of fathom how he could really sort of separate himself after he's thrown himself in so emphatically the last, you know, six months.

Trey Crotodile, who's been following this for six months and then some, we thank you. The market onslaught, it continues for other names. Let's look at Apple. Their market cap slipping now below $3 trillion.

Let's get to a key analyst on the stock, Apple, Gil Luria, DA Davidson, Managing Director joining us now. You look at so many names and I'm excited to talk to you about all of them, Gil. But let's just focus in on Apple at the moment and what extent is being priced in the supply chain upending and indeed the tariff impact. Will they get some sort of exclusion, do you think?

It looks less likely now that they'll get an exclusion than last time. I think that commentary is probably correct. The market is doing its best to assess the impact on Apple. Right now, it's just doing the rough math.

A third of the revenue being impacted, about a third tariffs higher. One times another, the stock is down about 10 to 15%. That's as good as the market can do right now. We're going to have a few days and weeks to refine that math as we see how this plays out. But the structural change to the United States' role in the global economy

is has already happened now and every day and week that we proceed in this uh in this direction it's going to be cemented as a different world order and and therefore we have to to get better at doing the math about how that impacts companies like apple but also a lot of other technology and other companies

There are so many headlines coming out minute by minute, Gil, and one of them, we understand President Trump is saying that Vietnam wants to cut their tariffs down to zero. Now, Vietnam has become a relatively new hub for Apple. How are they able to, in this moment where the news can change from day to day, able to stomach the higher costs? Because they have a healthy margin of about 46% to 49%.

That's right. So Apple has a few levers. One, it can push cost increases to its suppliers. Two, it can pass through price increases to its consumers. And then three, it can absorb some of the...

of the margin degradation. So it has all three levers. In the short term, it's going to use all of those. But to your point, in the medium to long term, it has the ability to shift production. It's already started shifting production from China to India and Vietnam, who are far likely to arrive

at a beneficial agreement with the United States about tariffs and trade than China is. So the fact that Apple's already manufacturing in India and Vietnam gives them medium-term and definitely longer-term flexibility

to offset some of the tariff increases and reduce the impact on prices and margins. Gil, that's the hardware perspective and I can understand why in Nvidia that you also look at is feeling the pain on a hardware perspective and getting product out of Asia. Meta, under significant pressure, why? Is that more about the EU response mechanism?

That's part of it. Part of it is that in an economic recession, there's less advertising dollars, which will mean less digital advertising, which is really all of Meta's business. So that's part of the reaction. Part of the reaction is Europeans have a habit of,

of drawing funds out of our large technology companies through non-tariff barriers. So they'll decide that Meta isn't doing a good enough job on privacy, so they'll limit Meta. They'll fine them billions of dollars. They've done the same to Google.

They've done the same to Apple. And so the more we get in conflict with Europe, that's a lot of the lever that the Europeans have. It's not just tariffs on goods. It's the Europeans' inclination to put in regulation that restricts these companies and allows the Europeans to fine them billions of dollars. Talking of levers, President Trump thinks he's got a lever when it comes to TikTok and China tariffs. Just you cover Oracle.

In any capacity, do you want to see Oracle become a minority holder of future shares in a US TikTok if indeed that deal that seems to be being discussed with the White House goes through? Somebody's going to get a windfall from this.

The TikTok US business is incredibly valuable. And to the extent we can accomplish the national security goal of not allowing our data to be sent to the Communist Party in China, that business is incredibly valuable. And whoever gets to participate in it is going to get a windfall. It looks like Oracle may be in the running to do that, but everybody else is running for that too. It's incredibly valuable.

Because if you think about it, there's only really three venues for social media where you can access consumers. Google's YouTube, Meta's Properties, and ByteDance's TikTok. And whoever owns TikTok in the U.S. will have a very valuable asset. And to extent Oracle can expand its business, it already has a TikTok business in hosting. If it can expand more into an operations role with TikTok, that would be a windfall to Oracle.

There's got to be some people winning in certain circumstances. Gil Luria of DA Davidson, we thank you for your real expertise. Let's just go to more breaking headlines right now because President Trump is indeed speaking. We understand that he says it's perfect time for the chair of the Fed, Powell, to cut interest rates. Remember, we're hearing from Fed Chairman in Butch

10, 15 minutes time. He is speaking at an event in Arlington, Virginia, among other journalists. And we understand that Trump is saying that Powell is always late, but this is the perfect time for Powell to cut interest rates. The market currently factors in four interest rates cuts for this year. Let's take a look at some other companies that are being moved around via tariffs. Nintendo, for example, checking on its US ADRs. The stock, as you see, falling significantly.

Currently 3.3% intraday. There are reports out there that the company is set to delay its US pre-orders of the Nintendo Switch 2 because of tariffs. The product launch date is still set to remain on June 5th. Coming up, Vice President JD Vance says a deal for TikTok will come out before the deadline for its potential ban. That deadline is tomorrow. We'll discuss that next. This is Bloomberg Technology.

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Meanwhile, Saturday is the deadline for ByteDance to find a buyer for its US TikTok holding or be banned. President Trump and Vice President J.D. Vance have both signaled that a deal is within reach. Bloomberg's Kurt Wagner joins us for more. And maybe a deal even before Saturday the 5th?

I would be surprised if we don't have something before Saturday. It's either going to be an announcement of a deal or a proposed deal, I should say, because again, this requires buy-in from the Chinese government and by dance, which I don't believe we have yet.

or an extension to continue discussing a deal, right? But we know that this week the Trump administration was meeting to talk about a specific deal that involves Oracle, Blackstone and a handful of other investors. I think we're really circling around something that looks like that. And I expect we'll have something before midnight Eastern tonight, which, as you pointed out, is when this ban is supposed to kick in if they don't do something. The deal is all very well and good depending on who's agreed on it.

And I suppose that the U.S. investors might be aligned, but do we understand if ByteDance and the Chinese government might be aligned, considering they've just unveiled further tariffs in response to the U.S. ones? Yeah, that timing is not necessarily a strong sign that everyone is working together here. We have not heard from ByteDance. We have not heard from the Chinese government. My understanding is that the U.S. side of this equation is working to propose something that then they hope

will be accepted on the other side of the fence there. But as you point out, we're in the middle of this global trade war right now, particularly with China. And so Trump has suggested, well, hey, maybe the tariffs come into, you know, are a negotiating bargaining chip in this whole thing. But it is a complicated situation because of what you just mentioned. And what's also complicated is what happens to the algorithm and what oversight Oracle and indeed U.S. investors ultimately have.

And whether that's in line with the letter of the law, 2024 law passed, well, didn't have much way in which the algorithm could be kept in Chinese hands.

That's right. So by letter of the law, the Chinese tech company ByteDance or the Chinese government should have essentially zero influence or control over this algorithm. The deal that has been proposed seems to suggest that they would. And so the deal that is being discussed may not follow the law. Now, the question is, is there someone who's going to challenge President Trump on that, right? If he just simply says, this is acceptable to me, we're going to do it.

Is Congress going to step in and say, hey, look, this doesn't follow the law. We're going to challenge you. Or are they going to let it slide? And I don't know the answer to that. But I think you bring up the stickiest point in this whole thing, which is the actual control over this key technology. Both sides want it, and I'm not sure how they're going to rectify that.

What do you think, Kurt Wagner? Staying on top of a very timely conversation. We thank you. Let's focus now, Oyin, on what advertisers, marketers do in this moment. Do they go to TikTok or not? Rachel Typograph is with us, founder and CEO of Micmac. You have the data. And since January 19th, which was the first deadline when we were worried it was going to be banned and it went black for a moment,

traffic has recovered to TikTok, right? Absolutely. So January 19th, I was here with you. We saw TikTok traffic go to zero. It took about until March 1st for TikTok traffic from major advertisers to reach Q4 levels. Why? There was a lot of confusion if it was still legal to advertise on TikTok. And if you've been following, TikTok did a lot of advertising themselves to communicate this is a safe place for you to advertise.

Here we are, and we're now seeing TikTok traffic surpass Q4 levels. So Micmac tracks 2,300 of the biggest brands in the world, and our traffic on TikTok right now is 20% higher than Q4 levels.

That's pretty phenomenal considering the level of uncertainty going into this Saturday. Is there likelihood that people are paring back just into this one-off event? We haven't seen that yet. And the reality is TikTok is a very unique asset. It's why we have the U.S. and China fighting over it. You can build brand and drive conversion all at once. So until U.S. advertisers hear that they shouldn't be advertising on that platform, I believe that they will continue to do so.

That being said, they all have contingency plans. They have contingency plans for tariffs, and now they have contingency plans for advertising.

And what we saw around January 19th is how easy it is to move dollars from one platform to another. Where did it go? Where did it shift? Who benefited? So the two big beneficiaries were Alphabet. So Alphabet is paid search, YouTube, DV360 and Pinterest. In both of those platforms, you can drive conversion and brands consider it a brand safe environment.

Is that why they're not going to Meta? Why did Instagram not become the automatic place you put yet more advertising dollars? Or is everyone already there? So the interesting thing about Meta is it is the gorilla. It's the giant. On any given day at Micmac, it's our number one source of traffic, and it remains to be so. That being said, when we compare Q1 to Q4 Meta traffic, we've seen a 3% decline. And when we look at the timing of this, it's all around Zuckerberg's announcement of removing fact-checking from the platform.

So it goes back to many of the things that brands are balancing right now, and one of them is concerns around brand safety. - That's really interesting. And I'm wondering, therefore, also at this moment, we're seeing meta stock under pressure significantly because people are worried that advertisers are gonna pare back because of economic uncertainty, let alone brand certainty and safety. Is that something you're preparing yourself for? - Absolutely. I mean, this is a whole other curve ball. This isn't about TikTok or meta or the trade desk. This is about tariffs and consumer goods.

And the reality is consumer good companies are in a really tough spot. Their margins are getting squeezed and they really only have three options: raise prices, which retailers and consumers don't want that,

The second is reduce supply chain, so essentially produce fewer SKUs. I can tell you advertisers are not going to want that. Why? What creates advertising revenue to rise? Auction density. You need more SKUs. And then finally, the worst thing, which is what I think the markets are reacting to, is removing working media spent altogether. And I can tell you if you're a student of brand the way that I am,

If you stop investing in brand, you will lose market share. And every CMO and CFO across the world right now is having this conversation.

Worried about tariffs. Going back to TikTok, though, in 30 seconds, if TikTok isn't bought by the Oracle contingent and we don't see the algorithm come to U.S. hands, do people stick with it? I think that you're going to start to see dollars shift very quickly then, and they'll shift into platforms like Alphabet and Pinterest. Always great having MakePax data. Rachel Tipper-Groff, a joy to have you on. Thank you.

Look, we've got more breaking news in response to the tariffs. This one is StubHub's IPO. We understand, according to the Wall Street Journal, that StubHub has also delayed its plans for initial public offering. Remember, there's the likes of StubHub we're in potentially coming to the market. We also have Klarna delaying, according to the Wall Street Journal, the ripple effects being felt far and wide. Coming up, we're going to be hearing from the Fed Chair Jerome Powell in the midst of this market uncertainty following widespread tariffs, reaction from China. That's next, and this is Bloomberg Technology.

Developers like you are building the future, but you need the right tools to move fast and go further, right? That's where Microsoft comes in. With tools like GitHub Copilot, VS Code, and Azure AI Foundry, you have everything you need to push the limits and bring your ideas to life faster. And with security, compliance, and responsible AI built in, you can focus on what matters most, building the next big thing. Learn more at developer.microsoft.com.

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