Thu. 04/03 – How Tariffs Might Impact Tech - Tech Brew Ride Home

Techmeme Ride Home: Episode Summary – Thu. 04/03 – How Tariffs Might Impact Tech

Release Date: April 3, 2025
Host: Brian McCullough
Duration: 15 minutes

1. Overview

In this episode of Techmeme Ride Home, host Brian McCullough delves into the far-reaching effects of newly announced tariffs on the tech industry. From the immediate impact on major tech stocks to potential shifts in global supply chains, McCullough provides a comprehensive analysis of how these tariffs might reshape the technology landscape. Additionally, the episode touches upon significant developments involving TikTok, CoreWeave, Amazon's Project Kuiper, and Nintendo's innovative approach to combating scalpers.

2. Tariffs and Their Impact on the Tech Industry

a. Stock Market Reactions

McCullough opens the discussion by highlighting the immediate downturn in major tech stocks following the tariff announcement:

Apple: Opened down nearly 8%
Amazon: Dropped 6%
Meta: Fell by 6.5%
Alphabet: Down 3.3%
Microsoft: Declined 2.2%
Nvidia: Decreased by 5%

"At the time of this writing, the Nasdaq is down 4.4% at 16,800," McCullough notes, emphasizing the volatility triggered by the tariff news.

b. Details of the Tariff Announcement

The United States has implemented a 34% reciprocal tariff on Chinese goods starting April 9th, escalating the average US tariff on Chinese products to at least 65%. Additionally, tariffs on goods from Vietnam and India have been set at 46% and 26% respectively. This move aims to reduce the tech industry's reliance on Chinese manufacturing, prompting companies like Apple to diversify their supply chains.

McCullough references President Trump's statements from the announcement:

"We will supercharge our domestic industrial base. We will pry open foreign markets and break down foreign trade barriers," Trump declared, outlining the administration's strategy to bolster domestic production and enhance global market access for US tech firms.

c. Specific Impacts on Apple

Apple stands out as a primary target affected by these tariffs. Currently, Apple imports about 90% of its iPhones from China, making the company vulnerable to increased costs. According to Morgan Stanley, the new tariffs could escalate Apple's annual costs by $8.5 billion, potentially reducing profits by $7.85 billion or approximately 7% next year.

"Apple will have to either pay those fees, which will reduce its profit, or indirectly pass those added costs on to customers by raising prices," explains Anna Katrina Shedletsky, founder of Instrumentl and former Apple employee.

Apple's efforts to mitigate these effects include expanding its manufacturing operations in India and Vietnam, where it has already shifted a portion of its production to diversify away from China.

d. Broader Implications for the Tech Sector

Beyond Apple, other tech giants like Google and Microsoft may face increased costs related to consumer electronics and data center infrastructure. The tariffs could also spark retaliatory measures from other countries, potentially igniting a full-scale trade war that would make Silicon Valley's products more expensive globally and dampen international sales.

"Tariffs at the proposed level would shrink Chinese exports to the US by some 80%," reports Bloomberg Economics, underscoring the severe restrictions on trade flows between the US and China.

3. Potential TikTok America Announcement

The episode anticipates a major development regarding TikTok's status in the US. McCullough shares information from a source indicating that President Trump plans to announce TikTok America, a new entity partly owned by US investors:

"Structure would put ByteDance's ownership just under the 20% threshold required in the US law," the source explains, referring to the legislation that mandates TikTok to sever ties with its Chinese parent company or face a ban.

The proposed deal aims to retain the TikTok algorithm within the US framework, potentially involving investors like Andreessen Horowitz, Blackstone, and possibly Amazon. However, uncertainties remain regarding approval from the Chinese government and the final ownership structure.

4. CoreWeave’s Stock Rebound and Chip Supply Chain Dynamics

McCullough explores the recent resurgence of CoreWeave's stock, attributing it to advanced talks with Google to rent Nvidia Blackwell chips. This move highlights the ongoing struggles of major Nvidia customers to secure sufficient AI chip supplies amid surging demand from services like OpenAI's ChatGPT.

"Google executives have also asked other CoreWeave competitors for access to spare GPUs," reveals McCullough, indicating capacity constraints within CoreWeave. This situation mirrors the 2023 chip shortage triggered by the rapid adoption of AI technologies.

CoreWeave's ability to swiftly set up AI-focused data centers and maintain strong relationships with Nvidia positions it as a crucial player in meeting the high demand for AI infrastructure. However, with Google placing over $10 billion in orders for Blackwell chips, CoreWeave faces significant pressure to expand its capacity.

5. Amazon’s Project Kuiper Satellite Launch

The discussion shifts to Amazon's ambitious Project Kuiper, aimed at creating a global high-speed internet network through a constellation of over 3,000 satellites in low Earth orbit. The first 27 satellites are slated for launch on April 9th from the Cape Canaveral Space Force Station in Florida.

McCullough details the technical aspects of the mission:

"The Kuiper Atlas 1 mission will launch on an Atlas 5 Rocket via United Launch Alliance," Amazon stated, highlighting partnerships with Arianespace, Blue Origin, and SpaceX.

Key features of Project Kuiper include:

High-Speed Terminals: Amazon plans to offer user terminals capable of speeds up to 100 Mbps with a compact, affordable design.
Scalability: Larger dishes for residential and enterprise use will provide speeds up to 1 Gbps, positioning Kuiper as a direct competitor to SpaceX's Starlink.
Satellite Design Innovations: The satellites feature a unique dielectric mirror film to reduce visibility from the ground, addressing one of the common criticisms of satellite networks.

Rajiv Badyel, Vice President of Project Kuiper, emphasizes the experimental nature of this launch:

"We've done extensive testing on the ground to prepare for this mission, but there are some things you can only learn in flight," Badyel stated, acknowledging the inherent risks of deploying such a large-scale satellite network.

6. Nintendo Switch 2’s Anti-Scalper Measures

Finally, McCullough discusses Nintendo's latest strategy to curb scalping ahead of the Nintendo Switch 2 release. Recognizing the challenges of hardware launches, Nintendo has implemented an innovative pre-order system designed to prioritize genuine gamers over scalpers.

Key elements of Nintendo's approach include:

Gameplay Requirements: To pre-order the Switch 2 directly from Nintendo, users must have at least 50 hours of gameplay on the original Switch as of April 2, 2025.

"Nintendo revealed the anti-scalper mechanism on its pre-order registration page," McCullough explains.
Membership Incentives: Registrants must also possess a 12-month Switch Online membership to qualify, ensuring that pre-orders come from committed Nintendo users.
Data Sharing: Participants need to opt-in to share their gameplay data with Nintendo, allowing the company to verify eligibility based on gameplay hours.
Phased Pre-Order Invitations: The first batch of pre-order invitations will be sent out on May 8, 2025, with additional rounds following until the My Nintendo Store opens to the general public. Upon receiving an invitation, customers have 72 hours to complete their pre-order.

This method aims to create a fairer distribution process, reducing the likelihood of scalpers purchasing large quantities of the Switch 2 for resale at inflated prices.

Conclusion

Today's episode of Techmeme Ride Home provides a deep dive into the multifaceted impacts of new tariffs on the tech industry, spotlighting how giants like Apple navigate increased costs and supply chain challenges. Additionally, the potential restructuring of TikTok's ownership, CoreWeave's pivotal role in the AI chip supply chain, Amazon's ambitious satellite internet project, and Nintendo's creative anti-scalping measures showcase the dynamic and interconnected nature of the technology sector.

Listeners are left with a comprehensive understanding of the current hurdles and innovative solutions shaping the future of technology in a rapidly evolving global landscape.

Transcript

Brian McCullough (0:00)

Foreign to the TechMe write home for Thursday, April 3rd, 2025. I'm Brian McCullough. Today, well, we gotta talk about this tariff thing because the early indications are this could impact almost every nook and cranny of the tech industry. Could we get an announcement about TikTok within days? I think I figured out why Coreweave's stock popped back up and how Nintendo plans to fight the scalpers. Here's what you missed today in the world of tech. You all know I try to keep politics out of this show as much as possible, but the obvious exception is when politics affects the tech industry in a meaningful way. So take as read that I don't have a personal opinion on whether these tariffs are good or bad policy. But I can tell you at the time of this writing, Apple stock opened down nearly 8% Amazon opened down 6%. Meta down 6.5% Alphabet down 3.3% Microsoft down 2.2% Nvidia down 5% now obviously by the time you hear these words, all these stocks could have come roaring back. But let me just read some headlines for you. The US announced a 34% reciprocal tariff hike on China, taking effect from April 9th. Economists say the average US tariff on Chinese products is now at least 65%. Tons of gadgets get imported from China, right? So lots of companies have been trying to diversify away from China for that reason. But President Trump announced a 46% tariff on goods from Vietnam and 26% on goods from India. So that alone could account for the Apple weaknesses. That was where they had been going to try to diversify away from China. The White House said de minimis tariff exemptions for up to $800 packages from China and Hong Kong will end on May 2nd. So once again wither Temu and Sheehan. And if you think crypto is immune from this, well, according to Bloomberg, even though many of the largest bitcoin miners are based in the US the supply chain for mining equipment is rooted in Asia. And one more thing you have to keep in mind. As it stands right now, this only affects imports of things US Tech companies might want to sell. But countries around the world could announce tit for tat tariffs of their own, the very definition of a trade war, thereby making Silicon Valley tech more expensive to sell overseas and perhaps dampening sales. So, quoting cnbc, we will supercharge our domestic industrial base. We will pry open foreign markets and break down foreign trade barriers, Trump said during his speech. Ultimately, more production at home will mean stronger competition and lower prices for consumers. Apple is going to spend $500 billion. They never spent money like that here, trump said. They're going to build their plants here. The Nasdaq just wrapped up its worst quarter since 2022, dropping 10% in the first three months of the year, though the Tech Heavy index rose in each of the first two days of the second quarter, end quote. Though at the time of this writing, the Nasdaq is down 4.4% at 16,800. It was above the 20,000 point mark as recently as mid February. Bitcoin is down 5% at time of this writing. Ether down 7% Solana down 13% quoting the new York Times the proposed tariffs threaten to compound the pressure on Apple's business. The company is already dealing with 20% tariffs on products imported from China, where Apple makes about 90% of the iPhones it sells around the world. Mr. Trump said that the rate would go to 34% under his new tariff plan. The cost of reciprocal tariffs, as Mr. Trump calls them, could put Apple's business in a jam. The iPhones, iPads and Apple watches that the company sells deliver three quarters of its nearly $400 billion in annual revenue, with Mr. Trump saying he won't allow products to be exempted from tariffs. Apple will have to either pay those fees, which will reduce its profit, or indirectly pass those added costs on to customers by raising prices. Apple will take these new tariff numbers and put them in models have built and know within hours how big of a problem they have, said Anna Katrina Shedletsky, the founder of Instrumentl, a Bay Area company that uses artificial intelligence to improve manufacturing performance. She previously worked at Apple. The tariffs on iPhones and other devices imported from China will increase Apple's annual cost by $8.5 billion without any relief from the Trump administration, according to Morgan Stanley. That would reduce the company's profit next year by $0.52 per share, or about $7.85 billion. That would be a roughly 7% hit on next year's profits in 2017. As Mr. Trump started in office, Apple began setting up assembly lines for iPhones in India. It took five years for it to train workers and build the infrastructure to make its newest iPhones in the country. It is in the process of increasing production there with hopes. The country's Factories manufacture about 25% of the 200 million iPhones that it sells annually. The company also began shifting production of AirPods, iPads and MacBooks to Vietnam. The country became a destination for Apple and others after COVID 19 shut down factories in China in 2020, and Vietn factories accounted for more than 10% of the top 200 suppliers that the company had in 2023. Vietnam was an appealing location because of its proximity to China. India was alluring because Apple wanted to boost sales of iPhones in that country, which is the world's second largest smartphone market. While Apple is the most prominent tech company to feel the sting of tariffs, most other tech companies will see an impact, directly or indirectly. Google and Microsoft, for example, are not as heavily dependent on international suppliers, but they do have notable consumer electronics businesses, and tariffs could increase the cost of building the massive new data centers the companies are planning on to build new artificial intelligence technology, End quote and quoting Bloomberg Tariffs at the proposed level would shrink Chinese exports to the US by some 80%, according to Bloomberg Economics. China is now facing a 1 to 2 percentage point loss to growth as a result of the hikes, according to economists at BNP Paribas Society General, Overseas Chinese Banking and ING Bank. Many said Beijing would ramp up stimulus to offset the impact President Xi Jinping has just under a week before tariffs take effect to calibrate Beijing's response, with prospects for negotiating a deal in that window looking slim. Talks so far have stalled at lower levels, with the world's most powerful men not speaking since the Republican leader returned to the White House. That's the longest a US President has gone without talking to his Chinese counterpart post inauguration in 20 years. Beijing has responded to Trump's previous tariffs with targeted measures designed to avoid hurting its own economy, which is battling a property crash and facing its longest spell of deflation since Mao Zedong era. Retaliation has included restricting exports of critical minerals, putting tariffs on US Agricultural goods often produced in Trump voter heartlands, and investigating US Firms, including Google, which has little business in China. Today's action could harden views in Beijing and lead to serious escalation far beyond tariffs using the tools Beijing has sharpened over the past four years, said Martin Chorzempa, senior fellow at the Peterson Institute for International Economics in Washington. The information has a source who says that President Trump plans to announce TikTok America, a company that will be around 50% owned by US investors and 19.9% owned by ByteDance, the new entity with license the TikTok algorithm from ByteDance. Quote that structure would put ByteDance's ownership just under the 20% threshold required in the US law passed last year requiring TikTok to sever ties with its parent company, face a ban. With the new structure, Trump could deem a qualified divestiture has happened under the law, which was passed by Congress last year and upheld by the Supreme Court. The planned announcement comes ahead of a Saturday deadline, which Trump set to delay enforcement of the divest or ban law. The Trump administration is expected to spell out a timeframe of roughly 90 to 120 days from Wednesday to finalize a deal, the person said. The proposed new company name is not finalized and could change, the person said. It's unclear which new investors will participate in the deal. In recent days, media outlets have reported that Andreessen Horowitz and private equity firm Blackstone have mulled taking a stake. Amazon also submitted a last minute bid to acquire TikTok US operations, according to a person familiar with the bid. Though parties involved in the TikTok sale talks do not appear to be taking Amazon's bid seriously, the New York Times earlier on Wednesday reported Amazon's interest. It's unclear whether the Trump administration has approval for the proposed structure from the Chinese government. End Quote AI video startup Runway has raised $308 million, led by general Atlantic sources say at a $3 billion plus valuation, and plans to use the money to hire more filmmakers, screenwriters and others. Quoting Bloomberg, the New York based company kicked off the frenzy around AI video generators in early 2023 with the release of a model that could produce slightly choppy looking 3 second clips based on written prompts such as drone footage Desert Landscape. Two years later, the competition has increased significantly, with tech companies including OpenAI and Pika Rolling out similar services. Earlier this week, Runway unveiled a new AI model called Gen4 that aims to let users create videos with consistent characters, objects and backgrounds, a milestone that may mark a leap ahead of some of its rivals. As the company's software improves, co founder Chris Valenzuela said it's becoming increasingly possible to use it to speed up the filmmaking process. Films, in my opinion, should work in shorter timelines, valenzuela said, adding that the goal is to enable creatives to move at a pace closer to the show Saturday Night Live. If you have a good story, you can probably go from Monday to Saturday and make it like SNL does. End quote they say money can't buy you happiness, and that may be true, but money sure can make you feel better about a lot of other things. Today's episode is sponsored by Acorns. Acorns is a financial wellness app that helps you take control of your money with simple tools that make it easy to start saving and investing for your future. You don't need to be an expert. Acorns will recommend a diversified portfolio that matches you and your money goals. You don't need to be rich Acorns lets you get started with the spare money you've got right now. Even if all you've got is spare change, you don't need a ton of time. You can create your Acorns account and start investing in just five minutes. You don't need to feel like financial wellness is impossible. Acorns gives you small, simple steps to get you and your money on track. Ready to take control of your money? Sign up now and join the over 13 million all time customers who have already saved and invested over $22 billion with Acorns. Head to acorns.com ride or download the Acorns app to get started. Paid non client endorsement compensation provides incentive to positively promote Acorns tier one compensation provided investing involves risk. Acorns Advisors LLC and SEC registered investment advisor view important disclosures@acorns.com ride ever feel overwhelmed trying to manage your web hosting while juggling a million other tasks? Even if tech isn't your thing, Kinsta's Managed WordPress hosting is a relief. Their expert team handles it all. They've bundled up all the essentials to make sites stress free with speeds that'll wow your visitors, security that never sleeps, and a dashboard so intuitive you'll wonder why everything isn't this easy. And when you hit a snag, you'll Talk to real humans. 247365 Actual people who get it, not AI chatbots. Trust Trust me. I had a hosting issue earlier this month with resume writers, so I know that good actual human support is a godsend. Kinsta doesn't just host WordPress websites either. They deliver blazing speed, ironclad security and reliability. Worried about moving your site over? They'll migrate your entire website for free and you've got a 30 day money back guarantee. And when it comes to security, Kinsta's in a league of their own. They're one of the few WordPress hosting providers who back their promises with multiple enterprise certifications. Tired of being your own website support team? Switch your hosting to Kinsta and get your first month free. And don't worry about about the move. They'll handle the whole transition for you. No tech expertise required. Just visit kinsta.com Brian to get started. That's K-I-N-S-T-A.com Brian I think I might have solved that mystery of why coreweave's stock had been rebounding so much from that lackluster IPO day. In short, they might be close to solving that, but they only have one big customer concern. Investors were voicing the information also has a source that is telling them that Google is in advanced talks to rent Nvidia Blackwell chips from CoreWeave, highlighting how Nvidia customers are struggling with AI chip availability. The potential deal shows how major Nvidia customers like Google are struggling to get enough chips to meet rising demand from their own customers. It also shows how coreweave's special relationship with Nvidia and its ability to move quickly in setting up AI focused data centers is attracting business from large cloud providers and major AI developers like OpenAI and Meta Platforms. OpenAI, for instance, says it also can't get enough Nvidia chips as usage of its ChatGPT service accelerates, hurting its ability to run new features like the chatbot's image generation tools. In the past two weeks, Google executives have also asked other Coreweave competitors for access to spare GPUs, a sign that the firm is capacity constrained, according to two other people involved in those conversations. Though, Google is one of the largest buyers of Nvidia chips much larger than coreweave, Google has struggled to set up enough of its own data centers to power the newest ones, which have proven especially tricky to use. The situation echoes what happened in 2023, when sudden demand for Nvidia chips after the launch of ChatGPT triggered a worldwide shortage. CoreWeave and other upstart AI focused cloud providers, however, were able to buy sizable amounts of chips from Nvidia and grow rapidly. Nvidia saw these firms as friendlier customers compared to cloud providers like Amazon, Google and Microsoft, which have been developing their own AI chips to reduce reliance on Nvidia chips. Google itself has placed more than $10 billion of orders for Blackwell chips and began making those chips available to select customers in February. Leasing chips from coreweave would expand Google's capacity to rent out the chips to cloud customers that develop AI, which include Anthropic Apple, Character AI and GitLab. Google and CoreWeave are also in preliminary discussions for a separate deal in which Google would lease space in Coreweave's data centers to house the Google TPUs, suggesting that Google is facing a crunch in data center space for its own chips. It isn't clear Google has such arrangements with other data center providers. End quote Amazon is planning to launch the first 27 satellites for its Project Kuiper Internet network on April 9 after launching two prototype satellites in October 2023. Quoting Reuters in a statement. Amazon said it will launch the Kuiper Atlas 1 mission on April 9 at noon Eastern Daylight Time from the Cape Canaveral Space Force Station in Florida. The kick off Amazon's full scale deployment of Kuiper, a mesh like network designed to top 3,000 satellites in low earth orbit that will provide high speed Internet globally and rival SpaceX's Starlink. Amazon announced Project Kuiper in 2019 with plans to invest $10 billion into the network's development after hiring a team of engineers who had been leading Musk's Starlink before he fired them the prior year. End quote and quoting The Verge the Ka01 mission satellites, short for Kuiper Atlas 1, will launch on an Atlas 5 Rocke United Launch Alliance. Amazon's other Project Kuiper launch partners include Arianespace, Blue origin and yes, SpaceX. As a global service offering, Amazon Space Internet service will eventually be available from virtually any location on the planet. Users will need terminal antennas to tap into the satellite constellation in 2023. Amazon said that its smallest dish, a 7 inch square design weighing just 1 pound, would offer speeds up to 100 Mbps, making it a Starlink mini alternative. Amazon will further compete with SpaceX by offer larger dishes for residential and enterprise use, offering speeds of up to 1Gbps. Amazon expects to produce the terminals for less than $400 each, which may or may not be subsidized to attract users. Notably, the satellites flying on Ka01 are coated in a dielectric mirror film unique to Kuiper that scatters reflected sunlight that should help make them less visible to ground based astronomers, according to Amazon. Although Amazon already launched a pair of Project Kuiper prototype satellites, its upcoming mission will include a number of firsts that introduce risk. We've done extensive testing on the ground to prepare for this mission, but there are some things you can only learn in flight, and this will be the first time we've flown our final satellite design and the first time we've deployed so many satellites at once, said Rajiv Badyel, vice president of Project Kuiper. No matter how the mission unfolds, this is just the start of our journey and we have all the pieces in place to learn and adapt as we prepare to launch again and again over the coming years. End quote finally today, one more quick additional word on that Nintendo Switch 2 announce. You know how with gaming hardware launches, it can take months or even years before you can get your hands on one. Sometimes because the hardware can't be made quickly enough, but also often because scalpers get them first and then try to sell them at a big markup. Well, it seems Amazon has a solution. Quoting the Verge if you want to pre order a Switch directly from Nintendo, you'll need to make sure you have at least 50 hours of gameplay on the original Switch as of April 2, 2025. Nintendo revealed the anti scalper mechanism on its pre order registration page, where it says it will prioritize registrants who meet the gameplay requirements and have purchased at least a 12 month switch online membership. For Nintendo to track your gameplay hours, you'll need to have opted in to share gameplay data with Nintendo. You can check if you opted in by logging into your Nintendo account and checking privacy settings. Nintendo says it will send out its first round of pre order invites on May 8, 2025, with additional batches of invitation emails sent periodically until purchasing on My Nintendo Store is open to everyone. When you receive an email, you'll have 72 hours to pre order the Switch too. Pre orders at participating retailers will open to everyone on April 9th in North America or on April 8th in Europe. Nothing more for you today. Talk to you tomorrow.