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From the heart of where innovation, money, and power collide in Silicon Valley and beyond, this is Bloomberg Technology with Caroline Hyde and Ed Ludlow. ♪♪
Live from New York, I'm Caroline Hyde and this is Bloomberg Technology. Tariffs, they have come for big tech, the sector among the worst hit as higher duties target their Asian supply chain and investors brace for retaliation. Bloomberg spoke with Treasury Secretary Scott Messon yesterday who says the tech sell-off is actually not a MAGA problem.
In my old business, I was very concerned about market movements and I'm trying to be a secretary of treasury, not a market commentator. What I would point out is that especially the NASDAQ peaked on deep sea day. So that's a MAG7 problem, not a MAGA problem. But today, investors do think the tariffs are MAG7's problem.
Let's check in on those markets. We fall hard on the NASDAQ 100. Tech underperforms the other benchmarks. We're off by almost 5%. This is the worst day for the benchmark since 2022. We move on to those magnificent seven players, which were all in
in the red. Even the software services sector being hit by anticipation of what the EU levies back in terms of digital services taxes. Alphabet lower, Meta off by 8%, Amazon off by 8.8%. We move on and have a look at what the hardware impact is. Nvidia, even
semiconductors are exempt from current tariffs. We anticipate further to come and retaliation. We're off by almost 7%. Tesla wipes out 7% and Apple falls the hardest. We're off by almost 9%. We are having the biggest erasion of market cap for Apple ever. It's on pace for the biggest single day wipeout in the company's history, more than $300 billion in one go.
Apple supply chain woes, we dig into them. Bloomberg's Dana Woolman is with us. Dana, why is Apple in the eye of the storm here? We thought they were diversifying out of China, but that has backfired at this moment. Yes, diversifying out of China does not mean so much in this moment, especially given that the Trump administration has just taken aim at, if not every country in the world, seemingly every country in the world. And certainly,
levying very high tariffs on some of the very countries where Apple thought it was making progress by diverting some of its manufacturing countries like Vietnam, Thailand, others, even Ireland, not a company you necessarily think of as core to Apple's supply chain.
So Apple did spend years trying to reduce its dependence on China only to have this as the outcome. I mean, certain analysts' reaction, Rosenblatt Securities, for example, saying this just blows up Apple's business model. They question how Trump could be targeting such an iconic company. They say it's hard for us to imagine Trump blowing up an American icon. But at this moment, it looks pretty tough.
Many out there think eventually they'll get some sort of exemption. But for the here and now, it seems as though Tim Cook tried to be at the inauguration. He's promised investment in the United States, but it's not enough.
Absolutely. And I would not go so far as to say these measures were targeted at Apple, but certainly as we can see, Apple is one of the hardest hit. And as you said, Tim Cook's personal efforts to curry favor of the Trump administration clearly did not yield the outcomes that he or investors would have wanted or expected.
Dana Wellman, we thank you for the update on all things Apple. And then we turn our attentions to the services side, the software side too. France, Germany, they are pushing for a stronger response against President Trump's tariffs, pushing for the EU to target US tech companies in particular. And Alan Katz can tell us exactly how. This seems to be coming down to the digital services tax in particular. They really want to target big tech as the way forward here.
Well, they do really want to target big tech, but it's actually broader than that. So Emmanuel Macron is actually meeting with a whole variety of industries that are going to be affected by the tariffs. That meeting is happening right now. And speaking just before the meeting, he actually asked EU companies to pause all investments
all investment in the United States for the moment. So this is not tech specific, this is for all companies in all sectors saying, you know, if the US is hitting us right now, how can you be investing in the United States and you need cohesion among these sectors that are being affected by the United States. But to come back to your point about tech, the EU and more specifically France and Germany, and France I suppose more than anyone else, really thinks that going after digital services
is the way to hit the United States. Now this has come up before, it's been a fight before between France and the United States. France does have a digital services tax on companies like Google and Amazon, which it levies, which makes about $700 million a year for France's coffers, and it wants to use that, or it thinks that is the way to respond, the best way to respond to
the US decision, President Donald Trump's decision. That said, it's going to be difficult to get everyone to agree. Those digital taxes that exist in Europe are pretty different country by country, say France versus Poland, for example, are quite different. And some countries have really been very, very reluctant within Europe to impose that kind of tax. So France getting everybody on board, all 27 members of the EU, really is a tall task.
I suppose what's interesting is Germany seems to be aligned on wanting to go hard in response and Germany was one of the countries that hadn't wanted to align itself on this sort of attacks. Will we see big tech pull and retrench from Europe even? Are they willing to mentally get around that? Are we going to start to see bifurcation here?
That's not a million-dollar question. That's a multi-trillion-dollar question. It would be impossible to say at the moment. I mean, your point is a good one, right? Germany really was pretty opposed to the idea of digital taxation before. Now it seems to have come around to it. Habeck was quite strong. The economy minister was quite strong in his comments earlier today. So it does seem that Germany at least is on board with the idea. That doesn't mean, again, that all other European countries will be on board. And Europe is trying to do this
with more or less one voice, if not exactly one voice, because it thinks it will be much stronger if it responds that way. So even if France and Germany, which traditionally are the motor for the European Union, even if they agree on something, it doesn't necessarily mean that's going to happen. On the question of bifurcation, that's of course the question that immediately came to me too. France has for years tried to create alternatives to search engines and AI companies, and it generally hasn't worked out.
because France is too small a market and there hasn't really been one single European market functionally for these digital services. Will that come as a result of these tariffs? That's a good question and one that many people are asking themselves, but we really don't have an answer to that yet. Alan Katz, great to catch up with you. Thank you for giving us the tech nuance. Meanwhile, joining us now for more on the global tariff impact.
Mark Mahaney, Evercore ISI Senior Managing Director, joining us now. And I start with retaliation. Many of the internet names that you cover could well be in the eye of the storm if Europe does increase those digital services taxes that they already hate.
I think that's right, Caroline. I don't have any particular insight into that, but that makes logical sense to me. What I sense is the way these stocks are trading today, the degree of sell-off is kind of determined by retaliatory risk and recession risk.
So there are companies that I look at that are just off modestly today because they're perceived to be relatively recessionary resilient. That's names like Netflix or Spotify, which are inexpensive consumer subscription businesses. But at the other end are the three mega cap names that I look at, Amazon, Google, and Meta, which are trading off 5%, 4%, to 9%. Amazon at the top of that list because of
pure tariff exposure. Most of those products that they sell are produced, manufactured, and then exported from Asia. So there's going to be costs that Amazon's going to have to decide whether to eat or pass along to consumers and therefore depress demand
Meta also has this exposure to Xi and Timu, some of those kind of exporters, retailers that got hit by the removal of the de minimis exemption. So there's a lot of different issues in here. But retaliation and recessionary risks are sort of bifurcating some of the stock movements today.
How do you foresee this, Mark? Many have been surprised by the aggression shown in the reciprocal tariffs. But do we think this is knee-jerk? Is this in any way a buying opportunity?
Okay. Then I – yes, I think it's a buying opportunity. If you tell me that I can buy Meta at less than 20 times earnings and Google at 15 times earnings and Amazon at 23 times earnings, even I know – I understand that there's going to be earnings risk from the imposition of tariffs, from a slowdown economy, from a recession. Right.
You're talking about mid-single-digit percent earnings growth. Do you step in and take on a full position today? Absolutely not. But at these levels, yeah, I hunt for what I call DHQs, dislocated high-quality companies. Look, we had a two-and-a-half-year bull market, Uber bull market in tech stocks recently.
particularly in some of these internet stocks that went through the end of last year. Here's your negative catalyst. And, you know, you now got it. You didn't have any real DHQs at the beginning of the year, but now you do. And so you want to step in on the highest quality names when they're trading at trough multiples. So, yeah, I think you want to be picking away at these. I think what you have to also be very cognizant of is this tariff issue is going to play out for a while with retaliations. So you get all that volatility.
then you've got increasing risk of recession. So you're going to have to be careful about those estimates. And they're going to come down, you know, probably mid-single digit percent again in a modest recessionary environment. But with these kind of multiples, yeah, you want to start picking away at them. Could you, in the next earnings season, as soon as that, see a retrenchment in purchasing of IT right now?
Will we see that in the earnings season? I think most of these companies are going to be, and we're just finishing up our previews now, most of these companies are going to be reporting reasonably solid March quarter results. My guess is that what's going to be consistent across almost all these tech earnings is cautious commentary about end market demand for the June quarter. And therefore, you're going to see cautious guidance that's in line with or below that.
the street for most of these estimates. The only silver lining here is currency, which looked to be a massive headwind for the year. It doesn't look like it's going to be as much of a headwind as thought. So there's a little bit of help there. But at the whole, I think the March quarter results, I think, are going to be fine. I think the guidance is just going to be cautious about the June quarter. So I don't think there's any particular reason for the stocks to trade up
on the upcoming prints. You can totally understand why enterprises would just slow down their commitment to spend on some of your names and some of the technology that they sell. What about the AI trade, though, Mark? It does affect some of your names, like Meta, like Amazon. Does the wind come out of the sails there, too? I think it has been coming out. I saw the Treasury Secretary's comments about DeepSeek being one of the key factors behind the
the, the mag seven trade on wine. I think there's some truth to that. Now, I think there's also policy that's just been just as much, probably more of a factor in the, in the, in the, in the, in the market sell off and in the, and in the, um, and in the mag seven, uh, unwind, uh, the AI trade, uh,
I don't think these companies are going to be slowing down their AI capex anytime soon. And I think we're going to see more and more evidence that they're getting a return on that. We're going to get a lot of these good productivity data points. Google is telling you 25% of their code now is being generated by AI, which means that their programmer headcount is probably going to be flat.
for a couple of years. Amazon telling you that they have 25% lower cost to serve in their most advanced automated distribution centers, that's a massive efficiency gain for a name like Amazon. So I think that's going to come through in terms of margins. The question is what's happening to demand and is that going to depress the margin expansion we would normally expect from the AI trade? That's the big unknown to me, but I don't think these companies are going to slow down their AI expenses.
Mark, as someone who is every day having to respond to the headlines that we're going to get, many feel that nuance will come. There'll be carve-outs potentially, nearly every analyst anticipating that for Apple, for example. With your names, how are you going to keep abreast of how this changes? How we see other countries respond and try and carve out certain names or at least will try and curry favor with the administration?
Well, I think I'm going to focus. I mean, the sector I look at, the Internet sector, has very little direct tariff exposure, except for the retailers like particularly Amazon. It's really kind of the indirect exposure, what impact the tariffs have on
consumer confidence and on consumer spend. And so then what you really want to do is look at the stocks that I look at and I kind of put it together a recessionary spectrum, like who's the most recessionary resistant, who's the most recessionary exposed. And, you know, I think names like Netflix and Spotify are
the least recessionary, they are the most recessionary resistant. That's why they're trading off better today. They'll hold up better. The stocks have year to date. They've actually outperformed the market materially year to date because of this. But a Shopify, for example, Mark, just to jump in, a Shopify would be on the other end of that.
Yes, it would be. And so would the travel names, too, your bookings, your Expedias, your Airbnb, the kind of discretionary consumer discretionary spends. Also, advertising names with a lot of exposure to brand advertising. Brand advertising always gets cut before performance marketing. So that's why I particularly find Meta very intriguing here. You brought it down to a very attractive price point. It's the largest performance marketing platform out there that isn't called Google. And I think it actually will hold up fundamentally better than most assets. So that's why I'd be chipping away at the stock here.
Mark Mahaney with News You Can Use. We thank you so much, Evercore ISI. Coming up, we'll take a look at how the 25% auto tariff is going to be impacting the electric vehicle market. This is Bloomberg Technology.
Thrivent can help you plan your finances for the people, causes, and community you love. What makes Thrivent different? A combination of financial services and generosity programs. Thrivent offers advice, investments, insurance, banking, and generosity, as well as resources to fund service projects or direct dollars to causes you care about. With more than 120 years serving clients, you can plan your finances with confidence. Visit Thrivent.com to learn more. Thrivent.
where money means more. The world is built on code. From the apps we use every day to the systems powering industries, developers like you are the architects of tomorrow. But let's be real. The road to innovation can get a little tricky. You need the right tools to move fast, but you also need a community to help you go further. That's where Microsoft comes in. Microsoft has the tools to help you move at lightning speed, like GitHub Copilot, VS Code,
and a ton of AI resources to keep you on the cutting edge. But here's the best part. You can build with confidence, knowing that Microsoft security and compliance are already taken care of. No more worrying about vulnerabilities or threats while you focus on your craft.
And with Azure AI Foundry, you can build your way. The future is yours to build, no strings attached. From ready-to-code tools to full flexibility, it's all in one place. The future's in your hands. So learn more at developer.microsoft.com slash AI. When your company has a position to fill, are you really seeing the best professional candidates?
Sure, you get plenty of resumes, but you may be missing an untapped resource. Ideal candidates not currently job searching. People not actively looking, but who may be open to the right opportunity. It can be the difference between a good hire and a great hire.
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Now, let's take a look at how tariffs from the auto industry, that's Trump's 25% tariff on US imports, is already taking effect. Expected to increase costs and disrupt industry supply chains, Bloomberg's Craig Trudell joins us now. These aren't promises, these are delivered. And how much are we already seeing auto sector and EVs respond to it? Yeah, I think we will see significant disruptions to supply chains. I think that is part of why you're seeing some of these stocks trade down.
I think you're also likely going to see some of these companies caught up in retaliation potentially in the days and weeks to come. We haven't necessarily seen that from countries that are newly
you know, newly facing higher tariffs from the Trump administration. But we did get at least a whiff of that already with, you know, Canada, for instance, kind of taking aim at Elon Musk's companies as a result of the tariffs that the U.S. has put on Canada and Mexico in the last few weeks. So, yeah, go there for us, because Tesla is down hard, even though many would anticipate, look, it makes more of its
cars here in the United States should be less exposed but you think it's a retaliation trade here I think retaliation is is likely something that the market would be you know concerned about I do wonder to looking at Tesla shares you know they really were down quite a bit yesterday they had this you know really furious rally in response to this report by Politico that maybe musk would be looking to to exit his roles in in you know advising the Trump administration and I think
You know, not only did the White House press secretary and Musk himself, you know, sort of knock that down, but you heard J.D. Vance today, you know, come out and say that, you know, he will continue to kind of have our ear even after he, you know, officially leaves. And so this notion that Tesla is, you know, going to make a clean break from this situation where its CEO
is so closely tied to the Trump administration just seems pretty misguided. I think the one other thing I would point out is Tesla likes to, and rightfully so, likes to tout how US, made in America, its cars are.
But in order to rely on its parts content to share that data with folks, it relies on U.S. government data that loops in U.S. and Canadian parts content. So that just speaks to this notion that I think for decades we've sort of thought of what happens in Canada and what happens in the U.S.
in the US, it's sort of one and the same in this automotive supply chain. And for us to move to this new paradigm where that's no longer the case is really disruptive to everybody, even companies that make all their vehicles in the US.
Really thoughtfully put, Craig Trudeau. Thank you. Let's get more for you on auto tariffs, how they could impact electric vehicles in particular. John D'Souza is with us, co-founder and president of Ample, which is working to accelerate the transition to electric mobility. And what's so interesting about you is you basically offer to swap out the actual batteries to make charging that much swifter and cleaner. But John, you've made real inroads into building in America. How is this going to backfire for you with tariffs?
So, as you look at the tariffs, there are actually three things that you need to look at. One is where do you go to and produce it, where are your factories? The second thing is where do you get your materials from? And the third is what do you do to finish goods? So, I think we were ahead of the curve. We do all of our production in the U.S. and California. We have our factories there.
The two other parts though, one is where do you get the goods? When you don't have the capacity or you don't have the necessary skill set domestically to go through and form it, you buy those things from abroad. So the tariffs for us, that means everything we bring into this country, we need to go pay tariffs on it
because we're doing all our production in the U.S. The last part of it is once you produce it, we export, and export helps our trade surplus. But I think part of the tariffs has this new provision where it takes back duty drawbacks. Duty drawbacks is you get your tariffs back. So you pay the tariffs when you bring it in, but when you export it, you get it back.
If you take that back or you take it away, it makes your goods exceedingly expensive and uncompetitive. So I think as we think about the full cycle, it's important to look at all three components. We are doing all the production in the US, but the tariffs hit us on two parts, the stuff that we buy in, and then when we send stuff off, we don't get any of those tariffs back. How hard does this make your decision-making, this uncertainty?
I think there are three things, and I think what COVID showed us is that the full supply chain is very complicated. So the three things that I think make it difficult is one is the number of different tariffs that are coming out there. They're also complicated. Second is the speed at which they come out and change. And I think the third is the speed at which they're implemented.
So supply chains have a very long life cycle, so it's hard to go through and change it quickly. So I think where the difficulty comes when you put those together, we try to make long-term decisions on our supply chain, but with the speed at which they come out, change, and then you don't have the time to react, it puts a lot of stress, especially on smaller companies. And I feel that what we should do is help the smaller companies through this because it's what the US is known for, the innovation, the stuff we create. And I think it's exceedingly burdensome for small companies like ours. John, briefly,
Will the longer term impact be for you to make even more in the US? Do you have optimism that you'll be able to get the skilled labor, you'll be able to get some of the rare earth minerals you need right here in the US, or are you always going to be exposed? Briefly, 30 seconds.
So I believe that we can produce in the U.S., but we need the time to be able to do it. So given enough time, I think we can keep on bringing it here. But if you do it very quickly, many companies will not survive that time to be able to do it. So I think we just need to have a partnership with the government to make sure that we're working in concert, to make sure we can get to the goals, which I think the goals are really important, to produce in the U.S. and increase our exports. John D'Souza, really great to speak with you, co-founder and president of Ample. We thank you.
Microsoft has pulled back on data center projects around the world, sources say, suggesting that the company is taking a harder look at its plans to build the server farms powering AI and the cloud. Microsoft shares, now they're down, as you can see, 11% this year. Those concerns of an AI infrastructure bubble, they've been weighing on global tech stocks in recent weeks, especially NVIDIA, which sucks up a significant share of data center budgets, of course. But as we head to break, let's just take a look at
Nvidia and all the other big tech names which are under significant duress today. We think about the knock-on effects of tariffs, about the exposure of countries that many of them had diversified away from China into. And that is why even with a carve-out for semiconductors, the semiconductor index is off by 8%. We worry about retaliation coming from these countries. Nvidia off by 6%. Move on and have a look at what's happening more broadly as the Nasdaq 100 has its worst day since 2022.
Apple having its single biggest market cap sell-off. Almost $300 billion wiped off of Apple in one single trading day as we worry about the exposure to Asia, to Vietnam, not just China, and what reciprocal nature from other companies and countries will mean. From New York, this is Bloomberg Technology.
Thrivent can help you plan your finances for the people, causes, and community you love. What makes Thrivent different? A combination of financial services and generosity programs. Thrivent offers advice, investments, insurance, banking, and generosity, as well as resources to fund service projects or direct dollars to causes you care about. With more than 120 years serving clients, you can plan your finances with confidence. Visit Thrivent.com to learn more. Thrivent.
where money means more. The world is built on code, from the apps we use every day to the systems powering industries. Developers like you are the architects of tomorrow. But let's be real. The road to innovation can get a little tricky. You need the right tools to move fast, but you also need a community to help you go further. That's where Microsoft comes in. Microsoft has the tools to help you move at lightning speed, like GitHub Copilot, VS Code, and
and a ton of AI resources to keep you on the cutting edge. But here's the best part. You can build with confidence, knowing that Microsoft security and compliance are already taken care of. No more worrying about vulnerabilities or threats while you focus on your craft.
And with Azure AI Foundry, you can build your way. The future is yours to build, no strings attached. From ready-to-code tools to full flexibility, it's all in one place. The future's in your hands. So learn more at developer.microsoft.com slash AI. When your company has a position to fill, are you really seeing the best professional candidates?
Sure, you get plenty of resumes, but you may be missing an untapped resource. Ideal candidates not currently job searching. People not actively looking, but who may be open to the right opportunity. It can be the difference between a good hire and a great hire.
Specialized Recruiting Group is ready to find the talent you need. Go to srgpros.com and see how the recruiters, with a deep understanding of the experience and expertise you need, can find the right fit for your business. After all, you deserve to see the best candidates, both active and passive. Whether you're looking for a long-term or project-based professional,
Specialized Recruiting Group is ready to find the talent you need. Go to srgpros.com right now to get started. That's srgpros.com. Specialized Recruiting Group, a tailored approach to professional hiring.
Welcome back to Bloomberg Technology. I'm Caroline Hyde in New York. A quick check on these markets, which are well and truly in the red. We're off by 5% almost on the NASDAQ 100. Worst days since 2022. But you drill into individual moves of certain players, with the Magnificent Seven in particular, because the big tech tariffs have come for Mag7. Meta having its worst day in a year since April 2024.
We're down by 7%. This is as we eye what the EU response might be. Could it be a higher digital services tax? Is this going to affect Meta? Amazon off by 8% as it's in the eye of the storm when it comes to commerce, even though the de minimis ruling being removed from Chinese competitors not enough to help the stock. We're off by 8%, again, the worst since 2024, August of that year.
Meanwhile, President Trump's tariffs entirely have the markets on edge. Global stocks selling off as well. But US Treasury Secretary Scott Besson says the equity plummet in the Magnificent Seven is a Magnificent Seven problem. It's not a MAGA problem. Let's get into that with Bloomberg's Ryan Vlastelica. Really interesting from Scott Besson that he's saying, look, we peaked in tech.
back when deep seek happened. It's been a sell-off since then. It is not because of our tariff policy, but today it feels like it is Magnificent Seven's problem, these tariffs. Absolutely. I would say that tariffs are 100% driving the move lower today. A lot of the Magnificent Seven companies, notably Apple, notably NVIDIA, a lot of chip makers, they have a ton of manufacturing out of China, out of Vietnam, out of Taiwan, countries that were really hit with some a lot higher
with tariffs that were a lot higher than some people were expecting. So they are now facing a really rough decision, assuming they don't get any kind of exemption or there's no change in policy. Either they're going to have to raise prices, which would hurt demand, or they're going to have to absorb higher costs, which is going to hurt profitability. It's obviously not a great position for them to be in.
Not a great position. Such a bad position, Ryan, that you brought a quote to your story. You've assessed some of the analysts' reactions. Rosenblatt is the one that took my attention, and I'll repeat it, that they're saying that this basically blows up Apple in many ways. And it's hard for us to imagine Trump blowing up an American icon. It does feel like a lot of analysts out there think there might be exemptions going forward.
We did see that during the first Trump administration, although I wouldn't say that the terror policy, they were anything nearly as aggressive as we're seeing today. So far, we haven't seen any real indication that there will be an exemption, but a lot of these companies have been working, you know, probably behind the scenes, first and foremost, trying to get some kind of exemption. We saw, uh,
Zuckerberg was at the White House, I believe it was yesterday, looking for help with antitrust stuff. So obviously they're hoping for something, but so far we haven't seen anything yet. And I think the longer we have to wait or until there's clarity one way or the other, I think we're going to continue to see a lot of uncertainty in markets. Those inauguration seats not paying off thus far. Ryan Vlastelica, we thank you very much.
Now let's get more on the markets. Janet Muir is with us, RBC Brewing Dolphin, Head of Market Analysis. Risk-off just everywhere you turn, is that the right move?
Hi Caroline, thanks for having me. Unfortunately we are in the eye of the storm and we are entering a period of significant uncertainty and risk of periods. I think the thing is there is still likely to be a retaliation going forward and I think markets actually are not pricing in more severe economic slowdown and more
Janet, just
Focusing in on what you just said, you think there's more downside to come. You think that we haven't priced in enough the retaliation. Already we get France, Germany looking at saying they're not going to invest as much in the U.S., in particular Macron asking French companies not to invest in the United States. Yeah, I think the problem is that I think there's still so much uncertainty. We never really had this sort of uncertainty.
high tariffs going on that is blanket across the globe in the modern ages. So this is like uncharted territory we are talking about here. And I think the most significant area that is affected is the Asian nations that have deeply embedded supply chains. And, you know, multinationals over the past decades have, you know, been investing heavily in China and the China plus one
brand-sharing strategy and that is being upended at the moment. So huge uncertainty, huge changes to the trade flow and cost structures and huge compression to margin potentially if this goes on for a longer time. I think what I worry about is really the portfolio flows going forward, which overseas investors contemplate whether they should continue to reduce that U.S. exposure. And it could be going on for a more sustained period of time.
What still needs to go on for a sustained period of time is clarity with semiconductors. There's a carve-out for semis from this particular round of tariffs, but there's ongoing discussion around support for building here in the United States as the CHIPS Act gets reworked. How many more shoes to drop are there in the semi space?
Again, I think it's the really complex supply chain we're talking about here. There's just so much uncertainty. And I think, you know, TSMC has already pledged over $100 billion of investment. But again, Taiwan is being hit with 34% of terror. So it seems that there's just...
you know, not much certainty and potential room for negotiation. So I think it is just very bad for the sector, which is a highly complex supply chain related. I mean, we'll have to see, but ultimately this is going to increase costs
for a lot of the foundries, semiconductor companies in the States. So I think this is not a great outcome. It's a lose-lose situation. Janet Mui, we have to leave it there. Thank you so much. RBC Bruin Dolphin, Head of Market Analysis. We now have to move over to Ottawa, where the leader, Carney, is speaking. Take a listen as he articulates potentially his retaliation.
At the same time, President Trump confirmed that the tariffs announced last week against our auto industry will come in and indeed have come into effect today. So while it's progress that further tariffs were not imposed on Canada yesterday, the President's actions will reverberate here in Canada and across the world.
Three different sets of U.S. tariffs remain in place and will continue to pose significant threats to Canadian workers and Canadian businesses. And while they have been imposed under different premises, some things are consistent. They are all unjustified, unwarranted, and in our judgment, misguided. And we are already seeing the consequences.
Just last evening, workers from Unifor Local 444, with whom I met last week, learned that their auto assembly plant in Windsor will be shutting down for at least the next two weeks. That's 3,600 workers who are now out of work, not by their choice. Workers who now worry how they're going to put food on the table and pay their bills.
I and my government stand in solidarity with those workers in Windsor and all those workers hurt by President Trump's tariffs. And that's why we committed from the very start that all, and I repeat, all of our tariff proceeds will go to protect workers affected by the tariffs.
The first tariffs were announced in February. After a brief pause, they were put in place. Canadian Prime Minister Mark Carney there, speaking regarding the U.S. tariffs, the impact being had on his country. You can watch much more on LiveGo if you have a terminal.
President Trump's new tariffs, well they are sending shockwaves across global markets, sparking a trade war as both China and the EU vow to retaliate. Canada just now saying they will match US tariffs on passenger vehicles. Rimbaud's Enda Curran joins us now. Your economic expertise is so valuable, so too is your experience in Asia. This has come as a surprise, particularly for the countries other than China.
Yeah, I think it's certainly up at the worst case if I'm beyond the worst case scenario, Caroline. There's been a hammer blow to China to begin with. You know, you're talking about tariff rates there of around 67% according to Bloomberg Economics as of next week across all goods. That's going to both hurt Chinese economic growth, maybe take one to two percentage points off of growth there.
and really hammered the volume of exports out of China to the US, maybe by as much as 80%. Now then, by extension, if that's happening in China, that's also going to spill over to the rest of the region. In particular, you have Southeast Asia looking very exposed, Vietnam, Cambodia,
also Bangladesh, among those now facing very high tariff rates on the goods that they do ship to the US. Remember some of these economies have become very important in recent years as kind of connector economies between the US and Asia. So certainly a hammer blow coming for both exports and growth in that part of the world. And a hammer blow for US giants that have relocated a lot of their production from China into Thailand, into Vietnam, into Malaysia,
Top of mind for us is, of course, Apple. But how much are these countries now going to have to worry that that foreign direct investment pulls away?
Well, that's right. These economies had emerged as something of connector economies, we like to call them here. As you mentioned, Caroline, your Vietnams in Southeast Asia, a lot of companies moved there to get out of the tariff dragnet in the hope they could still produce cheaply in Asia and sell into the US. Well, obviously, that model is now under severe scrutiny. The question, of course, becomes two things. A, do these governments retaliate and the trade war worsens, or do they negotiate and those pressurizations
President Trump come to the table and reach some kind of agreement whereby the tariffs are reduced. Now, a lot of observers are saying an off-ramp on this won't be so simple. It's unlikely the tariffs will go back to zero given the kind of ideological outlook that President Trump is bringing to this. But nonetheless, the benign take is that
these could be negotiated away. If not, then to your point, companies are going to have to face again very expensive decisions on their supply chains. Even those areas that you think might be a little bit more protected, for example, Chinese internet giants, which are very focused on their home domestic consumer. Well, if their consumer is hurt...
they from knock on will be hurt a little bit. But talk us through the de minimis impact as well, because that too was another announcement from President Trump. He's ending the ability for Chinese giants to ship cheaply to the U.S.
Yes, this is an important announcement in itself, lost by the significance of all the other news, but like the likes of Shine and Taimou, Caroline, the bottom line is currently you can buy in goods on these e-commerce platforms from China without paying a tariff on it up until a threshold of $800. And that's been very popular with households. There's literature that says it's especially popular with lower income households buying goods from China.
at a cheaper cost than they would get here. Now, the new rule will take away that threshold, will bring it down to zero, so you'll have to pay the tariff on all the goods coming in from China. And that will both have obviously a specific company impact in terms of those e-commerce platforms who are aligned that business model, that's one. But two, it will also impact, of course, consumers here who've been buying those goods at a cheaper price. Now, again, the Trump administration says this is necessary. It's all about driving investment,
creating more manufacturing at home and creating jobs at home in the US. But near term, economists are saying at the very least, there's going to be prices going up for consumers. Enda Curran, thank you so much for that deep dive. Let's talk more about the consumer impact.
Verizon, in fact, has just announced an offer for a three-year price lock, free phone trade-in, as it tries to win customers in a fiercely competitive wireless market and, of course, when they're experiencing inflation. Samar Narayan, Sampath, is the CEO of Verizon's consumer business, joining us now on the back of these announcements. And just have you changed the timeline on this because of a consumer that is currently facing a lot of inflationary headwinds?
Caroline, we've over the last three or four quarters, we've been listening to our customers and they're telling us two things pretty consistently. The first thing is they want price certainty. There's so much uncertainty in their lives, but on the category that they love most, which is connectivity, they want price certainty. The second thing is flexibility. No one wants to pay for things they don't use. So
A combination of those two made us get to this point where we have this really incredible value prop for our customer, and this was always in our plan. We have a sustained turnaround strategy for the consumer group, and this was always in our plans to do it right now.
The investors like it. Shares push higher on the news of this focus. But tell us about the costs you incur because of that. If I'm suddenly able to trade in my phone, no matter what the damage, and get a new one for free, if I'm able to lock in prices, how do you bear that from a cost perspective?
Look, largely, we are an American company. We have almost no export revenue. We are an American company. We rely on America for all our revenue. So we're very comfortable with that. Second thing on cost, look, we work with our partners on this. We work with handset partners. We work with our suppliers. So we will work to mitigate a lot of the risk on the inflationary pressure that we get. But more importantly, we want to offer customers something they really like and love. And we want to take away uncertainty in their life, at least in the category that we are involved in.
I'm really interested in your working with the partners. We are looking today at Apple, which Rosenblatt Securities is saying this is going to blow up their entire business model if they currently are exposed to the sort of tariffs you're getting from China imposed on Vietnam and where India as well. Do you think Apple will have any more pressure to increase the prices on their phones? And how do you respond?
Look, we are a big partner to Apple. It's a great relationship and you put the best network together with a great handset. You know, it creates a really good value prop for customers. You know, last year we had said that, you know, our upgrade rate, which is code for how long people keep their handsets, has probably reached its highest point in 2024. And in 2025, you're going to see that dropping. People keep their handsets for a little over 40 months right now. We think in 2025, we're going to see that number fall a little bit. So the low point was last year.
And we'll work with them to mitigate all the price and other risks that we have in the piece. But we do think there's going to be a slightly higher upgrade rate in '25 compared to 2024. And a lot of that has to do with how well we work with our partners. Sampath, I'm going to go to your experience here because you have such a long tenure as a management consultant. You then went around the enterprise, the business side of Verizon before moving to the consumer side.
As just someone looking at the market right now, do you have optimism that you'll be able to have resiliency for those businesses that you serve and indeed the consumers that you serve at this time?
Look, we think so because part has to do with our category. You know, we provide connectivity, we provide resiliency, we provide cybersecurity both to our business customers and to retail customers everywhere. This is a core category. I mean, this is a category people don't have much choice. They're going to have to rely on the best offer they have and that's with Verizon for the last part. So, I do think it creates a very resilient business model for us. But,
you're going to see our customers having to zig and zag a lot more, having to mitigate risk, be more flexible where they can on supply chain and other pieces. But as far as our category is concerned, we see a lot of resiliency in that. And investors like it, they're coming into you because you're deemed a haven in this trade. But very briefly, Sampath, what about your willingness to invest in your business right now, particularly around AI and more data ever needed? Have you got the certainty to do that?
No, definitely. Look, we play a long game here, you know, whether it's investment in our spectrum, it's investment in fiber, whether it's investment in AI, those are big three themes for us where we make really long-term investments and we're using AI. I'll give you a sense for this current announcement. You know, we,
We have hundreds of thousands of our customers who call us every single day. We now, using generative AI, are able to capture every morning at 9 a.m. I get a report that tells me exactly what the sentiment was yesterday from our customers. We use that in real time to make decisions. So I think it's part of our operating model, and we want to be the world's best AI-applied company. So we are very comfortable with our investment profile and long-term performance.
status for that. Sampath, it's always great to catch up with you. Thank you very much. Verizon's consumer CEO there. Currently seeing market sell-off in response to tariffs announced yesterday by the White House, much more aggressive than many had thought, particularly facing Asian nations. We therefore see tech fall hard. 4.5%, NASDAQ 100 having its worst day since September the 13th, 2022.
Bitcoin, another risk sentiment. We're off by almost 5%. $81,768 is where we trade. But let's get you to another story, geopolitical in nature and one that might be embroiled in tariffs in some way. TikTok owner ByteDance set to be hit by a privacy fine of close to $555 million for illegally shipping European users' data to China.
This adds to the growing global backlash over the video sharing app. This is the app, of course, faces potential ban here in the United States on Saturday. Bloomberg's Kurt Wagner can piece it all together for us. First, that EU fine. Basically, they're taking issue with exactly what the U.S. has been fearing for a long while. This is the concern, and this is the driver of this ban that you mentioned, Caroline, which is that...
Can the US government, do they feel that they can trust TikTok and parent company ByteDance to handle American user data appropriately? When you see headlines and stories like this, it just adds fuel to that fire of the idea that this company can't be trusted. And that's what we saw elected officials vote for last year when they passed this law that will ban the app on Saturday unless there's a deal struck. So I think this is the kind of thing people were worried about. If there's a deal struck.
Feels as though suddenly that has accelerated. Talk to us about the Amazon offer, whether it's a real one and what's going on with JD Vance in particular.
Yeah, everyone's sort of coming out of the woodwork at the last minute here because we've been talking about a deal for months now. But, you know, I think the expectation at this point is that the deal that's being considered by Trump is a lot of the existing by dance investors from the U.S. Oracle would be involved. Blackstone would be involved. And it would sort of.
minimize ByteDance's ownership stake in TikTok. So it would bring it below that 20% threshold that the law requires. And so it would sort of fill in the other 80% with a bunch of U.S. investors. Now, I think we're still a ways away from an actual resolution because even if Trump presents this solution, it requires approval not only from ByteDance, but from the Chinese government. And we don't know the specifics around the algorithm, the
You know, does that change hands? Who gets to control that? So we're kind of hearing, I think, the thinking from one side of the fence, but we don't know what China's thinking, and that's a big player here. 30 seconds, Kurt. Matt are under pressure. Your name, too. Gosh, yeah. Yeah, I feel like, you know, we saw that headline yesterday that Mark Zuckerberg's trying to ask Donald Trump to help him with the...
FTC trial. Not surprising. Why else would you build that relationship with Trump if you're not going to make that request? But I also don't think Trump has a lot of incentive to do that right now. He may as well hang that over Meta's head for a little longer. Meta in the eye of the storm when it comes to tariffs instead and an EU potential response. Kurt Wagner, we thank you so much. That does it for this edition of Bloomberg Technology. Quick check on these markets. A sea of red, particularly for the technology space. This is Bloomberg Technology.
Thank you.
Building the next big thing. Learn more at developer.microsoft.com slash AI. Something unexpected happened after Jeremy Scott confessed to killing Michelle Schofield in Bone Valley Season 1. Every time I hear about my dad, it's, oh, he's a killer. He's just straight evil. I was becoming the bridge between Jeremy Scott and the son he'd never known. At the end of the day, I'm literally a son of a killer.
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