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Smartphones Exempt From Tariffs… For Now & Meta vs. FTC in Antitrust Trial
00:28:03
Smartphones get a pass & Meta heads to court
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- [00:00]
Toby Howell
Hey, Fidelity. How can I remember to invest every month? With the Fidelity app, you can choose.
- [00:07]
Neal Freyman
A schedule and set up recurring investments.
- [00:10]
Toby Howell
In stocks and ETFs. Huh, that sounds easier than I thought. You got this?
- [00:15]
Neal Freyman
Yeah, I do. Now where did I put my keys?
- [00:19]
Toby Howell
You will find them where you left them. Investing involves risk, including risk of loss. Fidelity Brokerage Services, llc. Member nyse, SIPC.
- [00:31]
Neal Freyman
Good Morning Brew Daily Show. I'm Neal Freyman.
- [00:34]
Toby Howell
And I'm Toby Howell.
- [00:35]
Neal Freyman
Today Meta heads to court to fight for its right to keep Instagram and WhatsApp.
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Toby Howell
Then Trump gave the electronics business a welcome reprieve from the most punitive tariffs. Only to clarify that psych, it's gonna be short lived. It's Monday, April 14th. Let's ride.
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Neal Freyman
Good morning. Welcome back to the week. To kick off the show, we wanna give a huge shout out to our coworkers and incredible business, Macy Gilliam and Dan Toomey, who have been nominated for Webby Awards, AKA the Best of the Internet. Dan was nominated for his hilarious Good Work series which explores big questions like what does Palantir actually do? And is in going to kill me and the Boys. Macy was nominated for her incredible video in which she worked as a New York City hot dog cart vendor for the day. You can head to the Webby website to vote or check out the Brew newsletter this morning for for the direct links.
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Toby Howell
We sit next to these people every day and basically just hear them giggle to themselves as they cook up some of the funniest but also the most educational business content on the Internet. But they also work extremely hard. I mean, Macy literally slept in a van on the street of New York for her hot dog video. So if you're a fan of Morning Brew, go show them some love and help them bring home some hardware. Plus, if they don't win, they're fired.
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Neal Freyman
All right, and now let's hear a word from our new sponsor, Planet Oat. Toby, you know how a good soundtrack can make an movie feel epic?
- [02:02]
Toby Howell
Don't I ever throw a massive orchestra behind a guy tying his shoes and suddenly it's a heroic journey. There's a reason why my top genre on Spotify last year was actually movie soundtracks.
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Neal Freyman
That's what Planet Oat does for your coffee or your cereal or your smoothie. It doesn't just show up. It elevates everything around it.
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Toby Howell
It's rich, creamy, delicious and crafted to blend like dairy milk or a perfect melody.
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Neal Freyman
I toss them into my coffee and I swear it feels like I paid eight bucks for it. Even though I made it right at home.
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Toby Howell
And it's not just taste. You're getting Calcium Vitam and plus they have an unsweetened version that has zero grams of sugar and still tastes great.
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Neal Freyman
Planet Oat the Complete Symphony of Oat.
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Toby Howell
Milk get your hands on the oat milk that has it all. Visit planet oat.com for more. After weeks of layering more tariffs on China than a homemade lasagna, Trump hit a major part of the economy with a welcome reprieve. Late on Friday, the administration issued a notice that carved out exemptions for smartphones, computers, semiconductors and other consumer electronics that had companies from Apple to Dell breathing a little easier over the weekend. Still, it's by no means a full exhale. First because other tariffs around 30% total, still apply to electronics and smartphones coming into the US From China. And second, because Howard Lutnick, Trump's Commerce Secretary, went on TV to explain that these reciprocal tariff exemptions are likely to be short lived and that separate tariffs are coming soon. On ABC, Lutnick clarified that all those products, meaning smartphones, computers, etc. Will fall under semiconductors and they're going to have a special focus type of tariff to make sure that those products get reshored. And Trump followed up that appearance with a post on True Social explaining that no tariff exception was announced at all on Friday and that the products are just moving to a different tariff bucket. So the companies that were celebrating are now left in another uncertain position, once again hanging in limbo as the administration works out sector specific tariffs. Neal, just another weekend on the tariff beat.
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Neal Freyman
Still, this is good news for Apple. I mean, all indications point to the fact that even if they move these tariffs to a separate bucket right now, you know, those widespread reciprocal tariffs on China are at 145%. The sectoral tariffs that we've seen the Trump administration apply on things like aluminum, steel, autos, those are at 25%. So it doesn't look like we're getting to the doubling of price that would have happened under the previous tariff regime for these specific electronics products. But yeah, this is, this is overall very good news for Apple. Its stock is ripping this morning. Since that initial tariff announcement, Apple has lost $640 billion. The cost of an iPhone was projected to go up to as much as $3,500. They were shipping in planes of iPhones. People were panic buying iPhones. Now it looks like Apple, Apple's iPhones and other products are going to, you know, be at a the same price point at least for the next few weeks and months.
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Toby Howell
Yeah. The one thing that can definitely hang on to, I'm using Apple here as kind of a proxy for any company that imports electronics is that the tariffs are going to be lower. 125% was just kind of astronomical and caused those, you know, shipments of iPhones to come in via plane. But it does look like sector specific tariffs are going to be probably around that 25% range. Trump has also said that we're going to be very specific on Monday. So today is Monday. We'll get some of those. Yeah, everyone, it's Monday. But also these latest exemptions are, were a big deal because it covered $390 billion worth of US imports, including more than $100 billion from China. So that is why you, I use the term, breathe a sigh of relief because everyone's like, oh, thank goodness, like our iPhone isn't going to go up to, you know, $1,000 plus. Wow. They are all.
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Neal Freyman
They are 35.
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Toby Howell
30. Wow.
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Neal Freyman
That estimates are like 35.
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Toby Howell
That felt like such a me. But you're right, it's closer to 30, $500. So that is why you saw kind of this, this big exhale. But we're still a little apprehensive with, you know, the sector specific tariffs coming down the line.
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Neal Freyman
Yeah, they account for nearly a quarter of U.S. imports. This exceptions that were made and another big exception is the semiconductor equipment made by companies like asml. We're trying to make semiconductors here in the United States. Biden tried it through incentives. Trump tried it, is trying it through tariffs. Those semiconductor machines that make semiconductors were under this tariff regime, 125%, 145%. And now those are going to be moved to a different bucket under a different tariff rate. So yes, markets are exhaling this morning. S and P and NASDAQ are up over 1%. Apple's up 5%. So A, you know, a short term reprieve. We'll see what comes down the pipe.
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Toby Howell
Just if you're keeping track at home, I just want to give one last run through of what has happened. So reciprocal tariffs from Liberation Day were applied. Then there was a removal of those back down to 10% across the board. Then there was the extra 50% Chinese tariffs. Then in 104%, then 125%, then 145%. Then electronics were exempted. Psych. Electronics are probably coming down the pipeline. So Neal, good luck planning on where to locate your supply chain if you are a big electronics company these days.
- [07:24]
Neal Freyman
That was that Was very helpful, thank you.
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Toby Howell
As all the uncertainty continues to swirl around exemptions that aren't exemptions and tariff rates that change by the hour, an interesting trade has begun to emerge amongst global investors. Sell America. For a long time, American capital currency and bond markets were the most attractive games in town. But now all three look shakier than Rory McIlroy's wedge play down the stretch. Take the US dollar. Its exchange rate with the euro hit a three year low on Friday, meaning Americans are only getting 88 cents on the euro on their vacations abroad. The dollar has also seen drops compared to other so called safe haven currencies like the Japanese yen and the Swiss franc. Demand for U.S. bonds and other treasury notes also largely fell last week while German bonds gained ground as money flocked outside the usa. So really what we have here is a reckoning. What if the US Dollar and government securities are not the global safe haven assets they have been for generations? It's an especially pertinent question coming off a wild week where riskier assets like stocks declined, but so did safer things like US Treasuries. That is something that just doesn't happen or at least didn't happen under the previous economic world order. But now, Neal, Sell America has totally upended things.
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Neal Freyman
You know, that quote, there are decades where nothing happens and there are weeks where decades happen. Certain people on Wall street were saying last week was that moment where perhaps we're seeing this reordering of the that US Led economic system because you just don't see a simultaneous sell off in equities, bonds and the dollar at the time. That's exactly what happened. Then you have leaders coming out, analysts saying, I think what we're seeing is this massive sea change with, you know, enormous consequences. The chief investment officer at J.P. morgan Asset Management. There is now a very good case for the end of American dollar exceptionalism. Here's Deutsche bank strategist George Saravellos. The market is reassessing the structural attractiveness of the dollar as the world's global reserve currency and is undergoing a process of rapid de dollarization. And finally, Minneapolis Fed President Neel Kashkari, great name. Normally when you see big tariff increase, I would have expected the dollar to go up. The fact that the dollar is going down at the same time, I think lends some more credibility to the story of investor preferences shifting. This would be a massive shift.
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Toby Howell
And the reason why we're calling this a shift is because usually a lot of money comes into the US $2 trillion pours into US businesses, banks, from investors outside of the country. Every single year, the US actually receives 41% of all the money in the world that gets invested across national borders. And that has only been rising since the pandemic. The story we've been telling on the show and amongst other news outlets is that the US has bounced back from the pandemic better than any other, you know, developed country and that it looked like it was only increasing its global dominance when it comes to, you know, economic inflows. But then the week from craziness happened and that entire narrative is shifting now. Now I guess the caveat here is is this a actual structural shift or was it really just a crazy week and that you'll have to see play out over time? But seriously, some wonky stuff happening that made people say sell America might actually be a real trade coming down the pipeline.
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Neal Freyman
Meanwhile, like the the most important thing that happens on the economic calendar now is the auction of the 10 year U.S. treasury bond. Everyone is looking forward to when these happen to see what demand is. It happened last week and it calms some fears because there did appear to be, you know, a good amount of demand. But that's basically what, you know, everyone as Wall street is paying attention to is these, these bond auctions which, you know, are typically kind of under the radar, I would say. More than a decade ago, the US Federal Trade Commission gave Facebook its blessing to buy WhatsApp and Instagram, two acquisitions that ultimately cemented Mark Zuckerberg's dominance in the social media sector. Now it wants a take back. Starting today, the FTC and Metta, as the company is now called, square off in a landmark antitrust trial that could shape the future of social media feeds everywhere. The FTC has accused Facebook of illegally monopolizing the personal social networking market through its purchases of WhatsApp and Instagram to would be competitors and wants those acquisitions unwound. Regulators say there are no serious alternatives to Meta's apps when it comes to staying up to date and connecting with friends and family and a shared social media space online. Metta has responded. Are you for real? To quote a spokesperson, the evidence at trial will show what every 17 year old in the world knows. Instagram, Facebook and WhatsApp compete with Chinese owned TikTok, YouTube, X iMessage and many others. Over the next few weeks, both Metta and the government will trot out evidence that supports their claims. And the stakes could not be higher. Meta derives billions of dollars in revenue from Instagram and a forced separation could leave it without its Cash cow. Plus, it's the rare antitrust trial that involves products billions of use every day. So the world will be watching how it plays out. Toby, this is an existential threat to Metta. It can't lose Instagram.
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Toby Howell
Yeah, and it's also the FTC swinging for the fences here. I mean, we haven't seen a corporate breakup of this scale since AT&T was broken up 40 years ago. So this is definitely a big kahuna that they're going off of here. Metta obviously doesn't want to lose Instagram because of the ad revenue it generates. It's going to generate around half of its ad revenue, which is, you know, a massive business for. For matter. But also they don't want to lose the distribution networks that matter. And what are that? WhatsApp and Instagram provide for their AI chat bot that right now they think that's the next frontier, that's the next big tech war that they're fighting. So Obviously, losing the 50% of the revenue for their advertising business would be horrible, but losing the distribution channels is just the secondary effect that makes them really, really not happy about this case that the FTC brought against them.
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Neal Freyman
Now, you might be wondering, like, why is the FTC going after Metta? Lina, who was the chair of the ftc, was known as this big and big tech critic. She's gone along with the rest of the Biden administration. So is this new guy, Andrew Ferguson, who leads the ftc, really going to go after Zuck? After all, Zuck has been trying to cozy up to the Trump administration. He donated $1 million to the inaugural fund. He's visited three times with Trump, and he is reportedly requested Trump specifically personally to drop this case. Ferguson, the FTC chair, has, you know what? I'm going to just do what the FTC does, which is tried to prevent Monopoly. So he's tried to distance himself from the sort of political maneuvering that Zuck and Trump have seemed to have been doing behind the scenes. And he says, you know, this case was brought originally under the first Trump administration in 2020. Lina Khan continued it, and now we're here, back into another Trump administration. It looks like Zuck's lobbying has not. Has not been successful so far in this realm.
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Toby Howell
And one thing that Metta is just kind of rolling their eyes out is that saying, hey, ftc, you approved this initially. Like, why are we saying that you can now litigate us all these years later? Like, we went through the whole regulatory process, but the FTC is saying, like, hey, we still think you're making the market like less competitive, which leads to a worse outcome for consumers. The government are saying that you had this buy or bury strategy, which is snapping up competitors to either, you know, make yourself stronger, just eliminate competition on that front. So if you're Mark Zuckerberg, though, you're kind of going through this saying, I thought we went through this whole song and dance. How is this song and dance continuing? And it's just the beginning of it now. Would we see Trump step in and maybe do something? Sure. But if it doesn't, this is a massive antitrust lawsuit that, you know, we haven't seen in over four decades at this point. Up next, it's our Winners of the weekend.
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Neal Freyman
The best B2B marketing sometimes ends up in front of the wrong people. It's like advertising fishing gear to a fish.
- [15:25]
Toby Howell
That's a fitting metaphor. What's also fitting is when you can tap into the right network to target the professionals you're looking for.
- [15:32]
Neal Freyman
That's what LinkedIn ads is built for. LinkedIn has grown to a network of over 1 billion professionals. Of those, 130 million are decision makers. You can target your buyers by job title, industry, company role, seniority, revenue. So many options all in one place. Don't waste precious budget on the wrong audience. Tap into LinkedIn ads to find your people. LinkedIn will even give you a $100 credit on your next campaign. So you can try it yourself. Just go to LinkedIn.com/MBD. That's LinkedIn.com/MBD. Terms and conditions apply only on LinkedIn ads. Got five minutes to spare?
- [16:08]
Toby Howell
Let's face it, if you're listening to a podcast, you have five minutes to spare.
- [16:12]
Neal Freyman
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Toby Howell
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- [16:22]
Neal Freyman
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Toby Howell
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- [16:43]
Neal Freyman
Fund your account in five minutes or less and you could earn up to $10,000. Yes, 10K when you transfer your old investment portfolio, start at public.com/morning brew. That's public.com/morning brew paid for by Public Investing. Full Disclosures and Podcast Description welcome to Winners of the Weekend. The segment where Toby and I picked two things that had a better weekend than your CPA friend who sees the light at the end of the dark tax filing tunnel. I won the Pre show dramatic 1090 reading, so I get to go first. And my winner is Thrifting. Because if there's anyone that may benefit from tariffs, it's your local thrift store. With 125% tariffs on Chinese imports threatening to drive up prices substantially on clothes and other home goods, consumers may increasingly turn to resellers for their weekend outfits since those clothes are already in large part in America already and therefore tariff free. That's not the only tailwind behind this industry. Trump also closed the so called de minimis loophole that allowed companies like Sheehan and TAMU to ship in products for ultra cheap. Resale has already been booming before these tariffs were applied. The US market for secondhand apparel surged by 14% in 2024, its biggest growth year since 2021, and it's expected to reach $74 billion overall by 2029. Tariffs could push those numbers even higher. A thread up study found that nearly 60% of consumers and 70% of millennials would seek more affordable options like secondhand if tariffs make apparel more expensive.
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Toby Howell
Plus, one of the big tailwinds too is people like shopping vintage now. It's cool. It's part of the fashion trend du jour right now. So that is another tailwind behind it. I do want to pour a little bit of cold water on this though, mainly because if we enter into economic recession, that's not good for people buying any discretionary items and vintage clothing might fall into that bucket. And then secondly too, you're seeing all these sites like Poshmark, like Thredup, might see this huge surge of supply because people are looking at their closet and saying like, hey, maybe I can make a little extra buck off of this shirt that I never wear. And so you're going to see this flood of supply coming onto the market right when demand might be drying up. So that's not a good market force if you are within this secondhand industry. So there's multiple pathways ahead here, one of them being that like people want to buy stuff that is not imported and therefore not subjected to tariffs. But then the other might be that supply and demand economics get all wonky and it doesn't see the boom that a lot of people are expecting.
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Neal Freyman
You're not allowed to yuck my winner. Sorry, that's not the rules of this game.
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Toby Howell
Sorry for yucking at your yum here. But yeah, I mean, I Guess I'll just end on a positive note for sure here. And the more aggressive the US Trade policy becomes, maybe the the better position secondhand sellers actually are, especially in the war against fast fashion sellers like Sheehan and Temu. My winner of the weekend is Neil and Toby, because we made it this far into the show without really talking about what happened at the Masters. But talk about it we must. Rory McIlroy finally got the monkey off his back, which, thank goodness, because my heart could not take his shenanigans anymore. And as he put his arms through the sleeves of one of the most unique prizes in golf, a green jacket, a thought struck us. What is a green jacket actually worth? Luckily, the athletic did a deep dive and their answer was multifaceted. On the one hand, Rory took home a record $4.2 million for winning the Masters. But what if the jacket itself made it to a secondary market? What could it fetch? Thankfully, we have a few data points, thanks to an auction house formerly known as Green Jacket Auctions, who is subsequently sued and changed their name to Golden Age Auctions. A green jacket belonging to 1957 champion Doug Ford sold for over $60,000 back in 2010, while in 1959 winner Art Wall's coat fetched a similar price. Those are small potatoes, though, compared to Horton Smith's green jacket from his 34 and 36 wins, which sold for 10x the price of the others, bringing in $682,000 in 2013. Now, no offense to Horton Smith, but the second priciest auction for a green jacket has a way cooler backstory. Somehow the most coveted prize in golf ended up in a pile of old blazers at a Toronto thrift store where someone bought it for $5. The name tag inside was cut out. But the so called thrift store jacket sold for 139 grand in 2017. So the answer to the question, how much is a green jacket worth? Is somewhere between $5 and $682,000. Neal.
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Neal Freyman
I mean, some things are so a part of your life where you don't realize how kind of weird and bizarre they are. And yesterday as we were thinking about this story, I was like, wow, this person wins a golf tournament and they get a jacket that is green. Like, that's a little weird. But in terms of the second hand secondhand sales, the the Masters does not like that this is happening. So in 2010, they declared ownership over the green jacket, and now you can't. They're clamping down on all these secondhand auctions. Rory McIlroy or whoever wins the Masters is the only person who can wear the green jacket outside of the grounds of Augusta National Golf Club over the years. So it's become a system very much like the Oscars, where they retain ownership because they don't want these things being sold on the second hand market. They want to kind of keep it all in house and you can rent it out. And that's kind of how they've played this, because they don't want, you know, people like Toby come around being like, did you see how like this green jacket was sold for X number of dollars on, on at this thrift store? So that's kind of what they've been clamping down. Everything in the Masters is kind of very buttoned up and so is these jackets.
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Toby Howell
And then finally, one of the greatest stories from green jacket lore that goes even beyond a Horton Smith $682,000 jacket is Arnold Palmer's master screen jacket had been discussed in a sale of $3.65 million back in 2022. And the way that that jacket was actually brought to that auction was it was stolen and eventually intercepted by the FBI in a sting operation. There was this Masters employee, a Gus employee, who'd been stealing merchandise. He filched the Arnold Palmer jacket, was going to sell it off for nearly $4 million. But then the FBI got involved. So just some crazy lore when it comes to, you know, $5 thrift store jackets all the way up to nearly $4 million Arnold Palmer jackets that were busted by the FBI and his thing operation. So the only way to get your hands on one is to, you know, just put better if you're roaring or steal one and try to buy it on the black market.
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Neal Freyman
All right, it's Monday, so here's what you need to know about the big events of the upcoming week. Katy Perry will finally realize her goal of living like an extraterrestrial. Later this morning, a blue Origin rocket will launch from Texas carrying an all female crew. The first time since 1963 that a spacecraft will launch with only women aboard. The passengers are pop star Katy Perry, TV journalist Gayle King, producer Carrie Anne Flynn, former NASA scientist Aisha Bough, civil rights activist Amanda Wynn, and Jeff Bezos, his girlfriend Lauren Sanchez. The suborbital mission is set to launch from west Texas at 10am Eastern Time and will last all of about 11 minutes in the air.
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Toby Howell
I mean, sending your soon to be wife because they are getting married soon up to space with all her friends. That is some high stakes space flight. Right there. And also, I mean I'm not the first one to make this joke, but saying hey honey, you want me to send you to space? That might be inauspicious before, you know, your wedding. But first, all female crew to reach the internationally recognized boundary of space. So definitely a trailblazing moment and hope everything goes smoothly back here on Earth.
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Neal Freyman
Earnings season gets going in a big way after other banks like JP Morgan topped estimates last week week Goldman Sachs, Citigroup and Bank of America will hog the spotlight to start this week. And then later on, Taiwan Semiconductor, UnitedHealth, Netflix and American Express will share their Q1 results to a crowd of jittery investors. Elsewhere on the economic calendar, the government will release its monthly retail sales data on Wednesday, offering insight into consumer spending during these uncertain tariff filled times.
- [24:55]
Toby Howell
Yeah, I'm definitely looking forward to TSMC ASML to see how the semiconductor industry is affecting by all of this tariff uncertainty. And then also yeah, that retail sales data is kind of a very almost a real time look into how consumers are feeling so very curious about that as well.
- [25:10]
Neal Freyman
Yesterday the NBA's regular season wrapped up an 82 game roller coaster defined by shocking trades and coaching changes. And the play in tournament for the playoffs starts tomorrow. The top three seeds in the east are the Cavs, Celtics, Knicks and the West. It's the Thunder, Rockets and Lakers.
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Toby Howell
And tonight we got WNBA draft as well. So Paige Becker's lottery is now opens. So a lot of good basketball news coming down the pipeline and another sports news.
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Neal Freyman
Don't want to leave out my hockey fans out there. The NHL playoffs start on Saturday and then finally it's going to be a short trading week since markets are closed for good Friday on Friday and two days later is Easter Sunday which is also for 20.
- [25:50]
Toby Howell
I hope you stockpiled those eggs everyone because they're going to be expensive.
- [25:54]
Neal Freyman
Let's wrap it up there. Thanks so much for starting your morning with us and have a wonderful start to the week. For any questions, comments or feedback, send an email to Morning Brew daily at Morning Broadcom. Let's roll the credits. Emily Milian is our executive producer. Raymond Lu is our producer. Our associate producers are Olivia Graham and Olivia Lake. Dan Bauza is on audio hair makeup is gone Thrifting. Devin Emery is our president and our shows are production of Morning Brew.
- [26:19]
Toby Howell
Great show today Neal. Let's run it back tomorrow.
- [26:23]
Neal Freyman
It.