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.