WSJ Tech News Briefing: "Tariffs Leave Apple With a Cost Conundrum" – April 4, 2025

Hosted by Victoria Craig for The Wall Street Journal, this episode delves into the significant impact of President Trump's tariff policies on Apple Inc., explores broader implications for major tech companies, and provides an update on Intel's former CEO, Pat Gelsinger.

1. Tariffs and Their Impact on Apple

Victoria Craig opens the discussion by highlighting the ramifications of President Trump’s tariffs on Apple, emphasizing that the cost burdens extend beyond corporate balance sheets to affect everyday consumers. Apple’s intricate supply chain, which spans countries like China, India, the Philippines, and Japan, makes it particularly vulnerable to these new levies.

Dan Gallagher, a WSJ columnist, provides a detailed analysis of the financial strain on Apple:

“I have some estimates that like about a quarter or 25% of its earnings per share this year could get hit by this. And if you took at a higher level... that could be like a 9% hit.” ([01:35])

Gallagher explains that Apple’s robust profit margins, which are a significant draw for investors, are under threat. The dilemma facing Apple is whether to absorb the increased costs, thereby reducing profits, or pass these costs onto consumers through higher prices.

When questioned about consumer reactions to potential price hikes, Gallagher notes:

“It’ll definitely have an impact. I think it'll hurt demand for that.” ([03:06])

He elaborates that while some consumers will purchase essential upgrades like new iPhones, others might opt for cheaper models or delay purchases altogether, especially since Apple products are already priced at a premium.

2. Supply Chain Diversification and International Negotiations

Isabel Bousquet discusses Apple’s ongoing efforts to diversify its supply chain, particularly focusing on India:

“Apple has tried for a while now... to diversify its supply chains.” ([04:04])

Apple is seeking to increase its reliance on India to mitigate the impact of tariffs from other countries. However, the uncertainty remains as Bousquet reveals India’s stance:

“It wasn’t going to retaliate. It wants to negotiate with the Trump administration.” ([04:23])

Gallagher points out the precarious balance Apple must maintain:

“If countries decide to retaliate by putting their own tariffs on things... it could hurt their demand even more than they might see in the US right now.” ([05:27])

This potential for retaliatory tariffs poses a significant risk not only for Apple but also for its standing in global markets.

3. Broader Implications for Major Tech Companies

The conversation shifts to the broader technology sector, where giants like Amazon and Meta are also feeling the pinch of the new tariffs.

Isabel Bousquet notes the stock market's reaction:

“We’ve seen a big stock market reaction to Amazon and Meta, these so-called magnificent seven tech companies are also in the crosshairs.” ([05:29])

Gallagher explains the unique challenges faced by these companies:

“Amazon and Meta have a unique bit of exposure to essentially Chinese e-commerce merchants that are trying to sell to American customers.” ([05:37])

The removal of the de minimis rule, which previously exempted low-priced items from tariffs, means that cheaper goods are now subject to taxes, potentially altering advertising strategies and consumer pricing expectations.

4. Impact on Consumers

Dan Gallagher underscores the inevitable rise in consumer costs:

“Consumers are going to see prices go up. There's no getting around that.” ([06:21])

He emphasizes that the extent of the price increases remains uncertain, but the foundational effect of tariffs is an unavoidable rise in costs for consumers.

5. Pat Gelsinger’s Continued Influence in the Chip Industry

Transitioning from tariffs, the episode explores the trajectory of Pat Gelsinger, Intel's former CEO, who remains a pivotal figure in the semiconductor industry despite his ousting.

Isabel Bousquet provides background on Gelsinger’s tenure at Intel:

“Pat Gelsinger's sort of big bet was that he could double down on manufacturing... but there were a lot of challenges, especially on the manufacturing side.” ([07:45])

Although he was removed from his position before fully executing his strategy, Gelsinger continues to influence the industry through his role at Playground Global.

Gelsinger shares insights into his new ventures:

“What we know about Gelsinger is that he's not afraid to make big, seemingly impossible bets.” ([09:06])

At Playground Global, Gelsinger focuses on investing in startups that push the boundaries of technology, particularly in hardware and semiconductor fields, which are traditionally challenging for venture capital firms.

Moreover, Gelsinger is expanding his impact into the intersection of technology and religion through his involvement with Glue, a startup aimed at integrating advanced technology into faith-based organizations:

“It's working to basically provide this large language model that's trained on the Bible and will answer questions about Scripture.” ([10:02])

This move reflects Gelsinger’s personal commitment to his faith and his desire to leverage technology to support religious communities.

Conclusion

The April 4th episode of WSJ Tech News Briefing presents a comprehensive analysis of how President Trump's tariffs are reshaping the landscape for Apple and other major tech companies. The discussions highlight the delicate balance between maintaining profit margins and managing consumer expectations in a volatile economic environment. Additionally, the spotlight on Pat Gelsinger illustrates the enduring influence of key industry leaders as they navigate new ventures and integrate personal values with technological advancements.

Notable Contributors:

• Victoria Craig – Host, The Wall Street Journal
• Dan Gallagher – WSJ Columnist
• Isabel Bousquet – WSJ Reporter

Transcript Reference Times:

• Apple’s earnings impact: [01:35]
• Consumer behavior on price hikes: [03:06]
• Supply chain diversification: [04:04]
• Risks of retaliatory tariffs: [05:27]
• Broader tech implications: [05:29]
• Pat Gelsinger’s new ventures: [07:38], [09:06], [10:02]