AnnMarie Horden (2:28)

what we see with the decision is 6, 3. That was what the court said. That was the voting about striking down the use of IPA to enact his tariff policies. Now, IPA tariffs have been used for about 75% of where we are right now with the United States when it comes to tariff policies and negotiations. We have seen the entire year this administration take on. Now Brett Kavanaugh in dissenting was talking about the fact that this court does not outline how the rebates are going to go. And he actually said that probably is going to be a mess. So Supreme Court is just deciding whether or not IA but was legal or not for reciprocal tariffs and for the use of the fentanyl tariffs. They are not the ones that are going to be deciding how the rebates go. A lot of you already seen a lot of retailers and companies line up at trade courts signing up to sue the administration basically to get those rebates. If the Supreme Court came down with this IPA ruling, which they did today, saying that the president's which is for him this was a paramount policy. This was an incredibly important is really a key pillar for this administration. They are now saying this is illegal. What comes next, Ed, is we've known this administration has had a plan B. Whether or not it's Ambassador Jamison Greer, Treasury Secretary Bessant, Peter Navarro, they have all talked about the other avenues they can use. So blend plan B includes also some of the sections. We've already seen this in the administration news and Trump has used. Also in Trump 1 section 232 things that have happened on commodities, copper, aluminum, also section 301, section 122 and 338 get used to hearing these names. The issue with a lot of these other avenues is and some of them inquire investigations and some of them have certain limits to how high the tariff rate could be. IPA really was this blunt, flexible tool that the administration can use. So now this is just going to create some potential hurdle hurdles when they are trying to enact the next tariff policy.

Matt Rogers (4:31)

So let's be clear. This Supreme Court decision voids the April Liberation Day tariffs, right? They range from 10 to 50% fentanyl related duties. They impacted Canada, Mexico and China. Those tariffs did not affect those under the decision. So it does not affect those under separate authorities. And as you note, like that's why in the moment, steel, aluminum, autos, they're not covered by this. One other piece of breaking news literally in the last 10 minutes or so is we have some details of the president's visit to China. So I wanted to give that context to the audience because actually China was a big part of this story either way.

AnnMarie Horden (5:11)

Absolutely. So the president will be going to China starting March 31 through April 2. That was going to be a visit he's been talking about. He's going to China. But how awkward almost in a way that the Supreme Court strikes down his IPA tariffs when he has been using that authority when it comes to China and the tit for tat trade war we've seen between Washington and Beijing. Now, not all the tariffs placed on China will evaporate. As I mentioned, there are 232 and Section 301s that are still being used when it comes to Beijing. But some of those sky high levels when it comes to fentanyl and the reciprocal rate, well, the Supreme Court says that is illegal, although I have been talking to some of my sources abroad and some of these foreign officials who have been in the room with this trade team are talking about the fact that nothing really changes because for them they understand the administration has been preparing for alternative scenarios under 301. So, so not quite sure they're saying what happens with specific companies. But when it comes to the bilateral trading relationships, what they've gotten is the same information we've received, which is if the Supreme Court decides to strike down our tariffs, we are going to make sure we enact similar policy using other forms. And one individual I'm talking about is the fact that they are very well prepared for this administration to come back to them in the negotiating room and say we are going to do the same sort of tariff scenario. We we're just going to use a different avenue and for them it's going to be section 301.

Matt Rogers (6:40)

We have not yet heard directly from the President. We'll bring that reporting when it comes. But of course we have State of the Union Tuesday night that was supposed to be focused on the economy and I'm sure now we'll look for that. Bloomberg's AnnMarie Horden on the breaking news decision. Thank you very much. We should talk more about markets prior to that headline hitting about the Supreme Court decision on IPA and tariffs. The Nasdaq 100 was headed for its fourth straight weekly decline, its longest run of weekly declines since March of last year. That has turned around. Equities continue pushing higher. Technology in the moment right now is outperforming at the index level as reaction to this Supreme Court decision on tariffs. While bonds and the dollar fell. Let's bring in Scott Ladner for more. CIO Horizon, $12 billion of assets under management, who had planned to come onto the program to talk about the technology sector. What was going on in software. We need to react to this Supreme Court decision. What does it mean for you? What does it mean for your strategies? What does it mean for the technology sector?

Scott Ladner (7:46)

Yeah, look, and thanks for having me on. This is always interesting when we get news like this, you know.

Matt Rogers (7:50)

Right.

Scott Ladner (7:50)

Right before we go on. But it is, you know, this is this interesting, but this is just, look, this is just like one part of the thing that we need to understand. And, you know, like, now we have the Supreme Court. This, you know, like, let's be clear with that. You know, the market had priced in or sort of like, understood that this was the most likely outcome from the Supreme Court. But now we have to understand, like, what is going to be Trump's reaction? Because there obviously will be a reaction not only in the, you know, sort of the tweet storm that I'm sure is forthcoming, but, but, but also from some of the policy actions that you and Marie were just discussing. You know, on top of that, we need to understand, like, what are individual companies, you know, how individual companies are going to react. So, you know, this is really just sort of the first ending of how this is going to end up playing out. But I do want to make one point, Ed, and that is, you know, if the market was convinced that this was sort of the end game, you'd see, you wouldn't see technology leading today. You'd see something like small caps and more of the cyclical stuff really sort of leading. And you see more of a reaction out of the long end of the yield curve. You see, you see 10 years and 30 year, you know, probably up 10, 15, 20 basis points because of the, you know, both taking a tax away, you know, sort of the positive growth impulse that that would imply and, and also the sort of the damage that this does to the, to the, to the budget deficit. So, you know, you know, those, those things together would lead to a larger reaction in the bond market and the small caps than we're frankly seeing right now. So that's the asset market saying, we don't exactly know how this is going to end up just yet.

Matt Rogers (9:11)

Some research and academic institutions have actually crunched the numbers on that. So I'm going to pose your question, then I'm going to jump into my Bloomberg terminal and look up that data for it for later on in this conversation. We're showing Amazon and Etsy, right, both pushing higher. Think about what those companies do, the duties that have been paid. A lot of this is logical, as Amari outlined very clearly. A question for a lot of companies, including across the technology sector, is refunds that will go to the lower courts. But, you know, does this fundamentally alter the fortunes and projections for growth of some of those names, E Commerce being one, Amazon and Etsy?

Scott Ladner (9:49)

Look, I think it makes their operations a little bit more simple because, you know, one policy tool that was really just at the whim of one individual person, that policy tool has been taken away, or at least, at least, at least not. If not taken away, then they're blunted somewhat. So it does increase the visibility and sort of the understandability of their operating environment. So that is helpful and that is, you know, part of the reason why you're seeing the reaction in some of those stocks today. But we do need to see how Trump is going to react to this and how the administration is going to react to this. You know, what is the counter to what the Supreme Court just did. So, you know, these gains make sense, but in order for them to be maintained, you know, that sort of future, you know, sort of the look through in the future at how we're going to operate these companies needs to be a little bit more in cement. That cement needs to be a little bit more dry than it is right now.

Matt Rogers (10:34)

So the data I was just referencing in the blog comes from the Yale Budget Lab. And without ERPA tariffs, consumers will face an overall average effective tariff of 9.1%. Had those tariffs been left in place, it would be nearer to 17%. But your point on the budget, you know, in the long run, the US economy will be persistently smaller, but 0.1% based on this decision. And they're talking about the kind of shortfall and impact on growth, economic growth, trying to balance, like what the treasury would have brought in from these tariffs versus basically like in layman's terms, people being put off buying right, because of higher, higher cost pressures. Just try and cost us forward what you think happens next and any real impact on this market and this economy longer term.

Scott Ladner (11:23)

So, look, I mean, I think that, you know, there's one thing that is, that is relatively clear and that is this is a tax cut. So, you know, you know, the tariffs are taxes and you know, at the end of the day, tariffs are going to be lower than they otherwise would have been had this decision not been ruled this way. And so at the margin, this is a tax cut. Now what, like what we have to figure out is what is exactly what does that exactly look like, you know, what sectors are most impacted directly and how big is this, is this ultimate tax cut going to end up being, you know, so those are things that they're going to have to be played out in, you know, not only in the market, but in the courts, obviously. But, but, but ultimately this is a positive thing for US Growth. This is a positive thing for nominal GDP growth. It is a negative thing for the budget deficits. The magnitude. So directionally we know these things. The magnitude is the thing that we're going to all have to sort of figure out over the coming weeks. And that magnitude will obviously impact, you know, the ultimate markets.

Matt Rogers (12:15)

All right, Scott Ladna, CEO, Horizon thank you. And actually some news crossing the Bloomberg tunnel. The European Parliament's trade Committee is going to meet on Monday to discuss a U.S. trade deal. The committee also will assess this trade ruling and its implications. That's coming from the eu, of course, a key trade partner of the United States. Coming up, the battle for the Bugs Bunny brand continues. We're going to discuss the latest efforts to make a deal for Warner Brothers. This is Bloomberg Tech.

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Matt Rogers (14:31)

Netflix Co CEO Ted Sarando says the company's bid to acquire Warner Brothers Discovery will close even after Warner reopened talks with Paramount Skydance. Speaking with Bloomberg, Sarandos accused its rival bidder of spreading misinformation about the office.

John McCuskey (14:46)

What we believe is what the Warner Brothers Discovery board agrees with us on as well, is that our deal is a superior deal. We believe it's good for them, know it's good for us, and we are excited about getting it done.

Scott Ladner (14:59)

When you talk about clarity and certainty, you know, one of the aspects of the Paramount deal that they have stressed is better. And I think some of the Warner Brothers shareholders seem to agree or at

John McCuskey (15:08)

least entertain it is, you know, they're

Scott Ladner (15:10)

offering to buy the whole company. They will just take it out.

John McCuskey (15:13)

$30 a share.

Scott Ladner (15:14)

Warner Brothers doesn't have to proceed with a spin beforehand. What is your argument for why your more complex deal is better for all those shareholders than just getting the cash tomorrow?

John McCuskey (15:25)

This deal is not complicated at all. Is 2775 at, plus the value of Discovery Global. By the way, it's the deal that they want. It is the deal that they asked for. Those. These are the assets that were for sale. So the more complex thing is buying the whole company. They do that. Then you're buying these European sports networks. As you know, sports rights in Europe are incredibly highly regulated, as is the television landscape, which they'd be stepping themselves into. So I would argue that our deal is quite simple. 2775 per share the value of Discovery Global, and. Which I think is an incredible asset.

Scott Ladner (16:02)

And.

John McCuskey (16:02)

And they do. And they do, too. That's why that they set the offer up this way. That's why when we were bidding, we bid for the assets that were for sale.

Mike McKay (16:11)

If Discovery Global is.

Scott Ladner (16:13)

Is a great asset, I'm just wondering, have you guys talked about just buying the whole company and doing the spin yourself?

John McCuskey (16:19)

As you know, the linear broadcast business is not something that we're interested in, but others are. And I think when I look at the business, particularly those European networks, are not in decline the way that some of the way they are in the US So it is not of our interest, but it's, I'm sure of interest in many buyers.

Matt Rogers (16:39)

Ted, you are competing in a politically sensitive media deal. There is reporting and we are in a time where the Ellison's and their relationship to the Trump administration has been discussed. It's also reported of course that you met with the President I think on November 24th. How are you weighing that and assessing that in this scenario, that relationship between Paramount's leadership and this administration?

John McCuskey (17:10)

Look, I have spoke to the President about the state of the entertainment industry. We've had multiple conversations about how do we protect American jobs, how do we keep the entertainment industry healthy? What are those headwinds? What are those things that we're working on to try to keep production up in the United States? We are investing $1 billion into a new state of the art production facility at the old Fort Monmouth military base in New Jersey. Obviously the President is very keenly interested in entertainment and he's very interested in American industry and American jobs. So those are the conversations that we've had. I don't know, I don't know why the Ellison's intimate that they have some direct line to the Department of Justice for clear for a faster path of clearance, but I doubt that they do. This is a process that is being run by the Department of Justice. The President has been very clear on that. We've been very clear on that. The Department of justice published in 2023 the guidelines for mergers that they are following right now. So that's what's happening here. This is a business deal, not a political deal.

Matt Rogers (18:13)

That was Netflix Co CEO Ted Sarando says stick with the media drama and bring in Rich Greenfield. He's a partner media technology analyst at LightShed Partners. There was a lot in that. You know, I think to start I welcome your thoughts on it. But to be frank, you know, we open that conversation by saying given the current scenario where there's a waiver until Monday for, for Warner Brothers Discovery speech, Paramount has Netflix got the means and the will to improve its bid if it needs to. And that wasn't really answered.

Rich Greenfield (18:46)

Well, I think you've got to step back. You know, I think what one of the things that were one of the points that I think Lucas sort of ignored in asking Ted, you know, he was talking about isn't the bid for the whole company simpler? And the answer is obviously bidding for one whole company is obviously simpler. But what, what he's missing is the Warner board. And what really started this entire process was a desire to split the company, right? To separate the, the studio streaming assets from the linear TV business. That was considered mission critical. And I think, you know, the challenge now is Netflix, by buying only the streaming and studio is not preventing Warner Brothers from affecting the split this summer. Paramount is, they want to stop the split. They need the cash flow from those, you know, they're dying, but you know, those high free cash flow cable network assets to finance this. And so they're trying to stop the split. But the Warner board wants to split because God forbid, Trump changes his mind. Like we've seen Tegna Nextar, like you have certainly seen Trump change his mind. If for any reason Trump or even a foreign regulator blocks the Paramount Warner Brothers deal, you would not have split the company and you'd be in 2027. And I think that is, there's a lot more value, sort of an intangible, but a real value to that split that I think there's been a tremendous amount of just ignoring in what I've read in sort of the press about this. And so I think that piece is really important. But to answer your very specific question, I do think if Netflix had a raise by 5 to 10% their bid, I think they would. And so I think the only way Paramount wins is with a knockout bid, something in the 35 to 40 range, probably 36, 37. I doubt Netflix chases that high on

Matt Rogers (20:42)

the networks linear TV piece. I think we asked him later on why, you know, and Ms. Sarande, his answer is pretty simple. We're not in that business. But he'd already said those are the assets for sale. What we did talk about was the movie business, theaters, right? And Bloomberg had reported that the DOJ is talking to that industry to assess what they think will happen. And you know, the simple argument Mr. Sarande makes is that Warner Brothers has not just been making the IP for 100 years. Their distribution at theaters is excellent. That would be an advantage to Netflix. Do you see that?

Rich Greenfield (21:14)

Look, Netflix is not in the theatrical distribution business. I think they certainly have recognized that theatrical can add a marketing power to some of their content. You look at how they put Stranger things in movie theaters. You know, they put K Pop Demon Hunters a couple of times in movie theaters. So, you know, they actually released a lot of movies with, you know, shorter windows. But there was a lot of movies, I think probably 20 movies released in theaters last year by Netflix. And so, you know, I don't think there's a wholesale Aversion. Do they believe that the movie business needs to change? I think they do. I mean, look, movie theater attendance, forget about this whole Netflix discussion for a second movie theater box office in the last 12 months is 25% below where it was pre pandemic. And that's just box office. Actual butts in seats. Attendance is down 50% from pre pandemic. So the bottom line is the theater business is in a very, very dark, troubled place. The reality is you need people that are investing in the entertainment business. And, you know, the reality is Netflix has certainly shown a history of investing very aggressively in content all around the world. You know, look, we'll see. Paramount says they're going to make 30 movies, but Disney also said they were going to keep Fox as a fully independent studio and cost cutting eventually drove that production right back down. And so there's very few incremental moves movies from Disney today. And so I don't know, I'm sort of skeptical that anyone would ever try to actually make 30 movies because you can't make 10 or 15 movies profitably, let alone 30.

Matt Rogers (22:55)

Paramount has until Monday to, to do something, right? Because right now that's sort of a red. Okay, so go with that. So go with that. Not really. So what happens next?

Rich Greenfield (23:05)

Well, we don't really know. I mean, look, the board has a fiduciary. If you're the board of Warner Brothers, you have fiduciary responsibility up until the vote, right? Like, so if Paramount came in the night before with a knockout bid, $35 or $38, all cash debt guaranteed by the Ellison, so you don't have to worry about solvency and closing and all of that. You know, the board would, I think, would have to listen. So, like, sure, they are definitely trying to force a best and final out of Paramount, who's been asking to talk to the board for quite, you know, probably for a couple of months now. But my point just being that even if it doesn't happen on Monday, it theoretically could happen later. Time is obviously running out. You know, you're down to, you know, effectively four weeks from today, there's going to be a shareholder vote. And I think without a meaningful increase from Paramount, Netflix is going to win that vote.

Matt Rogers (24:00)

To your mind, Rich, we just have 30 seconds. But which is most logical, remind us where you stand.

Rich Greenfield (24:06)

Unless if I was Paramount, I would not dramatically raise my bid. They really believe that regulatory wise will fail. I would play that out. I think overpaying, if you're Paramount and over leveraging does not make sense. I'd rather lose and invest on my own, sort of the way Netflix did for a decade, than overpay. And so I hope Paramount doesn't do something quote unquote price stupid. But we'll see over the next few weeks.

Matt Rogers (24:33)

Rich Greenfield, LightShed Partners Great to have you back on the show. Thank you very much. Let's go to space. NASA has set March 6 as the target date for its Artemis to lunar mission. The space agency is holding a press conference right now, which we're monitoring. Let's get the latest details of Bloomberg Space reporter Sana Pashanka. Okay, we have a date. You and I will be, it seems, heading to Florida. Remind us how we got to this point.

Carmen Reineke (24:58)

Yeah, so they just conducted the wet dress rehearsal over the past few days and during that test they practice loading fuel into the rocket, conducting the launch launch countdown, and removing the propellant at Kennedy Space center to make sure the rocket is ready to take these astronauts to the vicinity of the moon, which will be the first time in over half a century. So yeah, now they are launched. They are launching successfully targeting the March 6 launch day. The four astronauts will enter a quarantine period soon so that they can be prepared for the mission.

Matt Rogers (25:34)

Yeah, I think that 14 day quarantine period kicks off this afternoon. And there are no guarantees.

Mike McKay (25:38)

Right.

Matt Rogers (25:38)

Remember, there are windows. There are dates through March and then another window in April. Big news yesterday. NASA had put Starliner and what happened with Starliner in the same class of mishap as the shuttle tragedies. That was a big red headline on the terminal. What do we need to know?

Carmen Reineke (25:57)

Yeah, so basically, if you might remember, the Boeing Starliner mishap left two NASA astronauts kind of stuck on the International Space Station for months longer than expected after the vehicle suffered technical difficulties on the way there that made it too dangerous to bring these astronauts back home. So they initially had a week long mission planned and it ended up turning into months since they could not come home on the Boeing Starliner vehicle. And so this report which came out yesterday, essentially classified the whole debacle as a type A mishap. As you mentioned, it's the same level as the Challenger and the Columbia incidents. And Isaac Mann, the NASA administrator, essentially attributed the debacle and kind of the lack of, you know, clear organization around it as the fault of NASA bureaucracy, faulty engineering and more. So it was really just a substantial kind of reflection on what happened and how bad it really was in the scheme of NASA's history.

Matt Rogers (27:07)

Bloomberg Sana for Shankar, it's Great to have you on the show. Thank you very much. Let's get back to markets and this is what the picture is right now. The Supreme Court has struck down a large part of President Trump's tariff policy. The NASDAQ 100 is now up half a percent, paring what was a big gain in the immediate aftermath of that. We also saw the dollar for bonds for you look at the US 10 year yield now kind of up less than 2 basis points, 4.082%. But that's where the reaction was. We are waiting for direct and official response from the president and the White House and continue to monitor markets and its impact on tech. We'll be right back. It is half time and this is Bloomberg Tech. Welcome back to Bloomberg Tech. The big breaking story of the day is that the Supreme Court has struck down President Trump's global tariffs policy. A 6 to 3 decision arguing that he exceeded his authority under the international emergency, the Economic Powers Act. Markets reacted as follows. Big surge in equities, outperformance in technology, particularly in chip and infrastructure stocks. Others we'll get to in just a moment. Bonds fell and the dollar fell as well. Within that bucket of technology stocks, there are some specific things to take into account. Right. Which is on the crypto side, we see some movement, Bitcoin going up. E commerce is, is a big story as well. There's a lot of emphasis on the what happens next? Clearly we will get to that very soon. But a number of companies across the US Economy had sued to recoup any of the duties that they paid. Let's try and summarize that with Bloomberg's equity reporter, Carmen Reineke. I mean, Carmen, the advantage of having the terminal is to see everything play out in real time. What are you seeing in the tech sector? Is there anything specific in terms of outperformance performance or underperformance in single names directly in response to the Supreme Court decision?

Carmen Reineke (29:07)

Yes, we've really seen enthusiasm flow back into some of those big hyperscalers. We've seen, you know, Amazon, Alphabet, even in video sort of back at the top of the NASDAQ performers today. You know, these are the biggest stocks in that index. They're helping to lift the entire thing. So some of that is, you know, enthusiasm around the potential for, you know, revenue to flow back to these companies. And I think there also might be a sense that this decision might sort of lift or smooth out some supply chains from Asia. So that's particularly important for those chip makers. As you said, you know, the companies that are building manufacturing chips and semiconductors. I think the other thing that we're seeing here is that, you know, we saw Apple also higher, definitely one that has a very global presence and could benefit here. And all of this is really contributing to that. NASDAQ going higher on the week and it could snap a three week.

Matt Rogers (29:58)

Right, yeah.

Carmen Reineke (29:59)

String of losses.

Matt Rogers (30:00)

So I'm sorry to interrupt you. I'll jump in because when I got to my desk this morning, that's the story I was waiting for. It looked like the NASDAQ 100 would drop on the week. Fourth straight weekly decline. Actually the Supreme Court decisions really turned it around. But let's say, you know, we were headed for a four straight week of losses. What's been the driver at the index level in the tech sector more recently?

Carmen Reineke (30:24)

Yeah, so we've obviously had this sort of a disruption narrative play out. There's been a lot of jitters about, you know, heavy capex spending not bringing enough ROI for investors. And then you know, the softs that we saw in some very specific names over the last week and a half in places where, you know, there were worries that software would just disrupt entire, you know, sectors, entire companies. So, so that was really interesting. I was also looking for the Nasdaq, you know, to potentially hit a fourth week of declines heading into next week where we have in video's earnings. So the setup there is interesting. I think seeing some enthusiasm today maybe changes the narrative a little bit. We'll see if this, this sticks and if it really marks a sentiment shift in AI. But in videos report that's really the next big catalyst. You know, what Jensen will say about what they're seeing, seeing next is going to be really important to investors looking for some, you know, confirmation or some excitement about the trade going forward.

Matt Rogers (31:21)

Video earnings aftermarket next Wednesday. But generally I think the market betting on lower tariff risk, reduced policy uncertainty. Bloomberg's Carmen Key, thank you very much. Let's get more on the Supreme Court decision tariffs and Tech with Michelle God, CEO of the Kraken Institute for Tech Diplomacy at Purdue. So that's the kind of next step. The unknown. The, the court did not take action or weigh in on the issue of refund that will go to the lower courts. But across the sector there are companies that had taken legal action to recoup duties that they were having to pay because of the upper tariffs the president put in place. Hard question to start with, but what does happen next?

Carmen Reineke (32:03)

Well, I think we're, we're going to see that play out in the next 24 hours and, and frankly the next few months. But I think there's two very important things to recognize about the ruling today. The first is that the ruling is a screenshot in a very long movie about American economic transformation. And the truth is that we can't unsee the fact that the trade policies that we've set up over the past 20 years, 30 years, 50 years in some cases have disincentivized the very things that we need to do in order to look lead and be safe, prosperous and secure as a country. That includes being able to manufacture at home, to regain control of our supply chains, to have any sort of production capacity here at home. So the when and how of revamping our trade relationships is all taking place. And this is the latest scene. But the reality is in the big picture is that re industrialization is our future. Our trade relationships are at the heart of that. And there's, there's no bringing the train back into the the station.

Matt Rogers (32:59)

Michelle at the time the news broke, the President was in a closed doors meeting with governors, but CNN reporting that he stated that he has a plan B. Earlier in the program we went through that there are other powers, right. Relating to other buckets for tariffs that his cabinet have outlined. How much do you expect a sort of severe reaction or a continuation of the status quo from the President in that sense?

Carmen Reineke (33:27)

Yeah, I think they're going to take a look, it sounds like they're going to take a look at all of the different tools that the executive branch can use in order to rebalance our trade relationships. Congress is already coming out with statements by some members on, on doing the same. And so there's a number of things here. But remember that tariffs aren't our only tool and look no further than the summit that just took place in New Delhi in India over the past few days to recognize that trusted technology and the innovation coming out of the United States is also a very important and maybe the most important tool that we have to revamp our economic relationships with our allies. You had every leading American tech company show up in New Delhi to announce deal after deal with our partners in India. You had the White House show up to say we're here to give you the best gold standard AI to give you financing. On top of it, we're going to send in the US tech core. In other words, we're going to teach you to fish and we're going to make you a sovereign prosperous capital in the world. And, and that is a very strategic tool for getting our partners around the world to want to do business with us.

Matt Rogers (34:29)

Michelle, very grateful that you took us there. You know, there are almost competing policies or competing ideals. Right. A big section of the White House wants to have the American technology stack dominant in markets overseas. One of the things that Carmen Reineke, our equities reporter, was seeing in the markets is the reaction reflects hope that maybe supply chains get used up a little bit because tariffs taken out of the equation give you access to China. Try and balance that for us.

Carmen Reineke (34:58)

Yeah, I think look again, the tariffs in the specific percentages that, that we're agreeing on with our partners around the world are one single tool. Another tool is all of the other pieces of the American value proposition in trading with our partners. And again, India is a really great example. Japan's also a really good example. We've got a new trade relationship with them. They're investing $500 billion into the United States or first 30 billion. They announced last week in power infrastructure here. Softbank, a Japanese company wants the US to be a leader in artificial intelligence. So the money is pouring in from our allies. The trade relationships are strong there. And again, it's because of the trusted technology. We have the best technology in the world world. We also have trusted tech companies. You didn't see any Chinese deals announced in India. And remember, India was the first to be to ban Tik Tok and other Chinese tech companies because they don't trust them. And so we have tariffs as a tool and we have trusted innovation as a tool. And I think that's going to be the future of American diplomacy.

Matt Rogers (35:57)

Michelle Guide of Purdue Crack Institute for Tech Diplomacy, great to have you back on the show. Thank you very much. Again, going back to financial markets, particular focus on the technology sector. The NASDAQ 100 has come off its session high gain of about 1.1% but still up 8.10of a percent. And as we've been saying for the last 40 minutes, it is no longer on track for its fourth straight weeks of declines. It's snapped three straight weeks of declines outperformance in the chip sector Philadelphia semiconductor index. But the story basically equities pushed higher than dollar and bonds fell as the Supreme Court struck down President Trump's global tariffs. We have more throughout the hour. This is Bloomberg Tech. This is Matt Rogers from Last Culturistas with Matt Rogers and Bowen Yang. This is Bowen Yang from Las Culturistas Matt Rogers and Bowen Yang. Hey, so what if you could boost the Wi fi to one of your devices when you need it most because Xfinity WI fi can. And what if your wifi could fix itself before there's even really a problem? Xfinity is so reliable, it does that too. What if your WI fi had parental instincts? Xfin wifi is part nanny, part ninja, protecting your kids while they're online. And finally, what if your WI fi was like the smartest WI fi? Yeah, it's WI fi that is so smart it makes everything work better together. Bottom line, Xfinity is smart and reliable. You deserve the peace of mind of having WI fi that's got your back. Xfinity.

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Matt Rogers (38:27)

Do U.S. supreme Court has struck down President Trump's tariffs, a major decision with implications for global trade. Among the companies most impacted Apple. According to Bloomberg Intelligence, the tech giant has paid roughly $3 billion in tariffs over the past year. For more on the ruling on Apple and the administration's trade agenda, Bloomberg Surveillance co host Annmarie Horden is back. I mean, Apple is now pushing to its own session high. It's one of the names that's continued to have momentum since the ruling hit. There's some logic to that.

Carmen Reineke (38:56)

Yeah.

AnnMarie Horden (38:56)

And they recently spoke about this on the recent earnings call, and they said that actually the tariff impact was somewhere in the $1.4 billion range when it comes to how much they have had to deal with paying some of these costs. And obviously there's a lot of consternation about what is those costs from the tariffs mean for everyday consumers that want to Go out and get new iPhones. When it comes to Tim Cook, remember there's some few key moments throughout the course of the last year as he tries to be the diplomat between the White House as well as Beijing. So in the summer he went to the White House and talked about how he was going to invest. Apple is going to invest another $100 billion into the United States. That was in August. And then more recently in the fall, he went to China. And in China, he talked about committing to expanding manufacturing reputation representation as well in China. And China, of course, is its key market. Outside of the United States, they still make a bulk of their manufacturing. But for Tim Cook, he has to almost do both at the same time, make sure that he's showing China that he's committed to that market. But at the same time, especially when you have this tariff announcement and you likely see this administration having to go back to the drawing board, especially with China, which took the hardest to land end when it comes to the tit for tat trade. What we saw in China coming out and using rare earths as a negotiating tool at those talks. Tim Cook is probably going to likely continue to diversify the manufacturing supply chain as we have seen Apple move into places like Vietnam, of course, and places like India.

Matt Rogers (40:28)

And it's probably worth reminding our audience that actually the other piece of news that came out this morning is we know that the President will go to China. What are the dates and frame it in that trade negotiation context.

AnnMarie Horden (40:39)

Yeah, it was pretty stunning the fact that we got the IPA Supreme Court decision at the same time that we have confirmation about the President's trip to Beijing. He's been talking about this trip and he'd go in April to have a meeting with Xi Jinping and it's going to be March 31st through April 2nd. And at the same time the administration thought they had a tariff rate with Beijing. They clearly are going back to the drawing board. Now There are section 232 and 301 tariffs on China. Those will stay what the Supreme Court ruled today was regarding IA and they just ruled the President cannot use IPA the way he did. The flexibility, how blunt AIP is for this emergency tariff authority. So now they're going to go back to the drawing board and plan B, we can expect more tariffs. And I'll speaking to foreign officials all morning that they expect things to stay the same because they know the administration is going to come out using legal authority. But this means that that trift we are trip, we are not past peak Tariff uncertainty. There's going to be a lot of trade headlines before and during that trip when the President sits down with Xi Jinping in Beijing.

Matt Rogers (41:47)

And we haven't heard directly or officially this morning from the President. The European Commission's come out to your point and basically said we are looking for clarity of what the President might do next after this ruling. Bloomberg's Annmarie Horton, don't go far. Thank you very much for the reporting in the show thus far. West Virginia is suing Apple alleging the company knowingly allowed users to store and distribute child sexual abuse material on its icloud platform. Apple, as most of you know, consistently advertised its commitment to privacy and has end to end encryption in its icloud platform. The company says in a statement protecting the safety and privacy of users, especially children, is central to what it does. Though Apple didn't specifically comment on this case, let's discuss the allegations with the man behind them, West Virginia's attorney general, John McCuskey. And attorney general, good morning. Thank you for your time. Start, start with the basics, timing, why now and what is it that ultimately you are trying to affect here and want Apple to do?

John McCuskey (42:54)

Yeah. So to start with first, thank you for having me on. West Virginia has a child welfare crisis and we have thousands of children who are in and out of foster care. And the data tells us that kids that come from homes where parents have substance use disorder or in and out of foster care are the most, most likely to be the ones who are harmed in these child trafficking rings. And so West Virginia has an exigent problem and this is a huge part of it. And we hear from our law enforcement partners all the time that when we're trying to find these child predators, the people who take these pictures, distribute these pictures, use these pictures to groom other children, that they have a very, very difficult time finding these images when the user, the pornographer, the child predator is saving them in an icloud. And so for us, you know, I appreciate the fact that Apple is committed to user privacy, but that privacy ends when you decide to commit an egregious felony against a child. And so it is our contention that while Apple's privacy can be a very good thing for those of us who, who live in the real and legal world, it is the balance needs to tip in favor of finding these child predators and removing these images from the Internet.

Matt Rogers (44:08)

In 2021, you know, Apple had put out a proprietary set of, it's outlined, you know, in the, in the filings, CSAM detection tools. But ultimately you know, a year later, they weren't put into effect. You talk about that. What's your assessment of that decision at the time?

John McCuskey (44:31)

Yeah, so I think the really significant salient point here is, is that in 2023, Metta and Google provided to law enforcement somewhere in the neighborhood of 35 million CCM images, meaning they removed 35 million criminal pornographic images of children from their cloud. And at the same time period, Apple removed 236. So on one side, you have the entire market removing almost 40 million images, and Apple's being less than 500. And so we know the images exist. We know they're on the Apple cloud. And it is our contention here that the safety of these vulnerable children who are being abused needs to come before Apple's commitment and marketing strategy to privacy.

Matt Rogers (45:19)

JB Apple alone, or are you looking at other other large technology companies in the context of this issue and just because we're short on time, Any other attorneys general that would or didn't want to participate with you in this?

John McCuskey (45:34)

Yeah, so this is, this is an issue that is being batted around in legal circles all over the country. West Virginia likes to go first. We like to be a leader. And so I believe that us taking this first step will very likely induce other Attorney generals to follow. And sort of, to your larger point, if we find other technology platforms that are intentionally harboring these kinds of images, a similar lawsuit will certainly follow. But Apple is, is the, the market player that is the most committed to ensuring that these images stay within their cloud.

Matt Rogers (46:10)

This morning, the U.S. supreme Court struck down President Donald Trump's global tariffs, saying he exceeded his authority by invoking emergency powers law. I have to ask you, Attorney General, for your thoughts and your response on that.

John McCuskey (46:26)

Yeah, so the United States has a wonderful system of laws, and when the Supreme Court speaks, that's the law. We have a president right now who likes to push the envelope. He likes to make big, bold changes. And when you do that, you will occasionally run afoul, you know, trying as hard as you can to effectuate your policy. And so, so what the President will do is he'll go back, analyze which tariffs are still on the books, which weren't affected by this, as you just spoke about before, which is actually kind of a lot of them. And he will work on trying to implement what, what he thinks and what I think is an important policy of reshoring so much of this American manufacturing and holding China accountable for their improper trade practices and the ways in which they've hurt the American economy.

Matt Rogers (47:08)

West Virginia Attorney General J.B. mcCuskey thanked you for your time. Let's get back to tariffs. Break the SCOTUS decision down with Bloomberg's economics correspondent Mike McKay. The specific point in this, because we keep saying struck down global tariffs, but it's a ruling that the President exceeded his authority under the International Emergency Economic Powers act, erpa, ipa. Take it from there, Mike. Like help us understand the specificities within the ruling and then maybe we can get to what happens next.

Mike McKay (47:40)

Well, basically what the court said is the President doesn't have the power to impose a tax, calling international trade an emergency. And the court said basically a tariff is a tax and that's not a power granted by the IPA Act. So the President has to find other ways now to put on the tariffs that he wants. The IPA tariffs, right? Basically the reciprocal tariffs, the ones he put on everybody, along with the fentanyl tariffs that he put on Mexico and China and some others. So those go away. But there are a number of other different methods the President could use that the court said are fine. And they noted that the administration could have done that in the first place. Section 122 is maybe their first fallback. It's a ability of the President to put on a 15% tariff for 150 days if there's a balance of payment problem. And the administration contends we've got a balance of payment problem because we have a trade deficit. So look for that first. And then there are the ones that they've already used, like section 338 to 32, the National Security one they put on China. Those will stay in place. So there's at this point a question only really of what tariffs are they going to use. And then how do they add up the tariffs, get them as high as they want them to be to replace what they're losing from IPA.

Matt Rogers (49:01)

The trade deficit continued to grow throughout last year, 2025. I'm trying to get a sense of the sort of economists reaction to this. So economists are basically saying that this could lower the effective tariff rate and now support growth. Give me the economics of this morning's decision.

Mike McKay (49:19)

Well, if you take it in isolation, it does lower the tariff rate. The Yale budget lab says it puts it down to about 9.1%. It was at 16%. So imports would be cheaper. But that's assuming the President doesn't put on any more tariffs. We don't know what the ultimate tariff rate is going to be. But the trade deficit basically was unchanged from last year. And the reason being is we import a lot of stuff. We like to buy stuff from overseas and a lot of the things that we like to buy we don't really make here. And so even if we are not getting things from tariffed countries, we're getting them through other countries. And China sends a lot of stuff to Vietnam. Vietnam has a tariff, but not as high as China. So they send stuff to Vietnam and then they ship it to the United States. That sort of stuff's been going on and we have found new markets to buy things from. So it's not really having the effect the administration wants on the trade deficit to bring that down. They say over time it'll cause people to build factories here and make the things that we buy from overseas. But it's hard to see us making, you know, making factories to make clothing or to make toys. Things that don't aren't very big value add. We make the AI chips and things like that.

Matt Rogers (50:43)

Mike McKee, thank you very much. So let's get out to the north lawn of the White House to the latest with Bloomberg White House reporter Kate Sullivan. And you know, I keep checking the Bloomberg terminal for headlines reaction from the president. I don't see any directly thus far. There was reporting from cnn. What do we need to know?

Carmen Reineke (51:01)

That's right. I have have been refreshing as well. We have not yet heard publicly from the president, from the White House press secretary or anybody in this White House about this. The president received the news the ruling came down when he was in a closed door meeting this morning with governors. There was a breakfast. He invited a lot of governors to the White House. He reportedly, according to cnn called the ruling a disgrace and said that he would implement a backup plan. So that's the big question now is we're watching to see how the president responds, what the actual plan is. I will say that I don't think that this is coming as a big surprise to the president, to this White House. They have been bracing for this and talking about potential other avenues that they could take for quite some time now. We also heard the president last night. He gave an economic speech in Georgia and he talked a lot about the tariffs. He defended the tariffs. He said that he talked, he complained about the fact that this case was even before the Supreme Court. So we've been hearing from the president for quite some time now on this case and now we're just waiting to see what the next steps are and how this White House is going to

Matt Rogers (52:03)

respond just very quickly. I know that the treasury secretary has a number of public appearances on his docket. But then we get State of the Union Tuesday. That's next, right?

Carmen Reineke (52:14)

That's right. That's right. I do think that this will be something, I think we will hear from the, the president before the State of the Union, but certainly this will be something that is hanging over the State of the Union, something that the president will address. He is not supposed to travel to Florida this weekend. He's supposed to stay here in D.C. and so again, we're just, you know, I, like you said, just. We keep refreshing to see what the reaction is going to be.

Matt Rogers (52:38)

Bloomberg's Kate Sullivan in the White House, thank you very much. That does it for this edition of Bloomberg Tech. In addition, where the Supreme Court court did make a ruling finally striking down President Trump's global tariffs, this is the market reaction. Tech outperforming the NASDAQ 100 back near session highs up more than a percent outperformance in chip stocks. And the rest of the story, bonds and the dollar fell. We continue to await response from the president of the United States, but the tech sector is making moves. This is Bloomberg Tech. This is Matt Rogers from Las Culturistas with Matt Rogers and Bowen Yang. This is Bowen Yang from Las Culturistas with Matt Rogers and Bowen Yang. Hey, so what if you could boost the WiFi to one of your devices when you need it most? Because Xfinity WI fi can. And what if your wifi could fix itself before there's even really a problem? Xfinity is so reliable. It does that, too. What if your wifi had parental instincts? Xfinity WI Fi is part nanny, part ninja, protecting your kids while they're online. And finally, what if your wifi was like the smartest wi WI Fi that is so smart it makes everything work better together. Bottom line, Xfinity is smart and reliable. You deserve the peace of mind of having WI fi that's got your back. Xfinity. Imagine that.

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