Investors Cheer a Tariff Rollback for the Tech Industry

Summary

WSJ What’s News: Investors Cheer a Tariff Rollback for the Tech Industry

Episode Release Date: April 14, 2025
Host: Luke Vargas, The Wall Street Journal

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Introduction

In today’s episode of WSJ What’s News, host Luke Vargas delves into the significant developments surrounding the recent rollback of tariffs affecting the technology sector. This move has been met with enthusiasm from investors, particularly within the tech industry. The discussion also touches upon the broader economic implications, including insights from a recent Wall Street Journal survey of economists regarding U.S. growth prospects amid fluctuating tariff policies.

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Tariff Rollback and Market Response

Luke Vargas opens the conversation by highlighting the positive reaction in global markets, especially among tech stocks, following the U.S. Customs and Border Protection's announcement. The filing revealed that electronics such as computers, tablets, and Apple watches would be exempt from many tariffs on Chinese products, as well as the standard 10% tariff on global imports.

Caitlin McCabe, a Journal reporter, elaborates on the market’s response:

"As expected, investors are liking this news for now at least. Looking at the Asian session, we saw that tech stocks and Apple suppliers were up modestly..." [02:08]

She notes significant gains in companies like Foxconn Technology (+3%) and Largan Precision (+5%), indicating investor optimism. Additionally, Apple’s stock saw an uptick in U.S. pre-market trading, a potentially influential signal for the broader market.

Despite the positive sentiment, Caitlin cautions that the tech giants remain vulnerable:

"Commerce Secretary Howard Lutnick over the weekend saying that tech products will face separate levies, and that's a sentiment that Trump seemed to support..." [02:46]

This statement underscores ongoing uncertainties, as the Trump administration hinted at introducing separate semiconductor tariffs, potentially affecting tech companies' cost structures and operational dynamics.

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Economic Forecasts Amid Tariff Uncertainty

Transitioning to broader economic implications, Luke Vargas introduces the Wall Street Journal's latest survey of 64 economists. Anthony DeBarros, the Data News editor, provides a detailed analysis:

"Their consensus is for a significant economic slowdown, with year-over-year GDP growth at just 0.8% for the fourth quarter, down from 2% in our January survey." [07:50]

The survey reveals a notable divergence in growth forecasts, reflecting heightened uncertainty due to the administration's erratic tariff policies. The range of GDP growth predictions spans from a contraction of 2% to an expansion of 3.1%, indicating a lack of consensus among economists.

On inflation and unemployment, the survey forecasts a rise:

"The economists are forecasting hotter inflation ahead. For December, the consensus is 3.6% year-over-year change in the consumer price index, up from 2.7% in their prior forecast." [08:54]

Unemployment is also expected to climb:

"At the end of this year, that's expected to be at 4.7%, up from 4.3% in the January forecast." [08:54]

Furthermore, the probability of a recession has increased:

"The probability that the US is going to fall into recession in the next month... is 45%. And as you say, that's up from 22% in January." [09:57]

Anthony emphasizes the unpredictability inherent in economic forecasting, especially under the current administration's shifting policies.

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Impact on International Trade and Business Models

The episode also covers the repercussions of tariff adjustments on international trade, particularly focusing on China and its trade relationships. Recent data indicates a 12% rise in China’s exports last month, driven by last-minute US importers before new tariffs took effect. However, this surge is expected to be temporary, with economists predicting a sharp slowdown.

Raphael Huang, a Journal reporter in Singapore, discusses the challenges faced by Chinese companies like Shein:

"Shein may have to change its business model in order to survive... Shein is also eyeing an IPO in London. It has aimed to go public by June, but now Trump's policies are making the prospects of an IPO bleaker." [05:09]

These tariff-induced pressures are forcing companies to diversify their supply chains and consider local production in the U.S., which could lead to higher prices and longer shipping times for American consumers.

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U.S.-Iran Nuclear Talks and State Department Changes

Beyond tariffs, the episode touches on the latest developments in U.S.-Iran relations. Indirect talks held in Oman aim to negotiate sanctions relief in exchange for Iran limiting its nuclear program. The White House views these talks as progress, while Iran's foreign minister signals a possible framework for a new nuclear accord based on the 2015 deal, which the Trump administration previously abandoned.

In a related update, Pete Morocco, a key figure in the Trump administration’s foreign aid reduction efforts, has resigned from the State Department after less than three months. Morocco was instrumental in canceling over 80% of foreign aid programs and closing the U.S. Agency for International Development (USAID). His departure coincides with an upcoming State Department reorganization plan, which is expected to integrate USAID's functions into the broader State apparatus.

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Looking Ahead: Upcoming Earnings Reports

The episode concludes with a preview of the upcoming earnings week, featuring major companies such as Goldman Sachs, Bank of America, Citigroup, Johnson & Johnson, and United Airlines. Investors and analysts will be closely watching these reports for further insights into how ongoing tariff policies are influencing the economy.

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Conclusion

Today's episode of WSJ What’s News provides a comprehensive overview of the current economic landscape shaped by fluctuating tariff policies. While the rollback has provided immediate relief to the tech sector, underlying uncertainties persist, influencing market dynamics and broader economic forecasts. The episode underscores the delicate balance policymakers must navigate to sustain economic growth while managing international trade relations.

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Notable Quotes:

• Anthony DeBarros [07:50]: "Their consensus is for a significant economic slowdown, with year-over-year GDP growth at just 0.8% for the fourth quarter, down from 2% in our January survey."

• Caitlin McCabe [02:08]: "As expected, investors are liking this news for now at least. Looking at the Asian session, we saw that tech stocks and Apple suppliers were up modestly..."

• Raphael Huang [05:09]: "Shein may have to change its business model in order to survive... Shein is also eyeing an IPO in London. It has aimed to go public by June, but now Trump's policies are making the prospects of an IPO bleaker."

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For more in-depth coverage and daily updates, stay tuned to WSJ What’s News by The Wall Street Journal.

Transcript

[Harvard Promotion]

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[Luke Vargas]

Global stocks rise as investors cheer on a rollback of tariffs for the tech sector plus, the Journal's latest survey of economists reveals an unusual lack of consensus about future U.S. growth prospects.

[Anthony DeBarros]

Typically, the consensus is a bit tighter, but the fact that the Trump administration has been enacting tariffs, pausing tariffs, we can see in the gyrations of the stock market that everyone's trying to find some certainty amidst all of the changes.

[Luke Vargas]

And an update on U. S Iran nuclear talks held over the weekend. It's Monday, April 14th. I'm Luke Vargas for the Wall Street Journal, and here is the AM Edition of what's News, the top headlines and business stories moving your world today. Global markets and tech stocks in particular are starting the week on positive footing after US Customs and Border Protection said in a filing late Friday that computers, tablets, Apple watches, other electronics will be able to dodge many tariffs on Chinese products, as well as the 10% tariff on all global imports. That news initially fueled hope that the tech industry could avoid an immediate surge in costs, though relief could be short lived with President Trump saying tech products will soon be covered by separate semiconductor tariffs, the details of which he said on Air Force One could come this week. Well, here with more on what markets are making of all of this, I'm joined by Journal reporter Caitlin McCabe. Caitlin, walk us through what we're seeing this morning in response to this latest US Trade messaging.

[Caitlin McCabe]

So as expected, investors are liking this news for now at least. Looking at the Asian session, we saw there that tech stocks and Apple suppliers were up modestly. A few notable movers from Apple suppliers that included Foxconn Technology, it gained a little bit over 3% during the Asian session. Largan Precision, which supplies camera lenses to Apple, added over 5%. And looking now at even US pre market trading, Apple itself is up as we speak. And a snapback in a name like Apple could be quite significant for the overall market.

[Luke Vargas]

Got it. And those big names had fallen further than the market on average in recent weeks. And yet, whether we're speaking about Apple or some of these other big companies in tech, they're not entirely out of the woods, are they?

[Caitlin McCabe]

Definitely not. As you mentioned, Commerce Secretary Howard Lutnick out over the weekend saying that tech products will face separate levies, and that's a sentiment that Trump seemed to support in a Truth Social post on Sunday. Stepping back a bit Regardless of where things end up, my colleague Dan Gallagher points out in a column this morning that Apple is in a tough situation. It's very much at the mercy of the Trump administration right now. They could still get hit with other tariffs. And as Dan points out, the administration remains keenly interested in onshoring production of everything designed by US Companies. And that's going to be tough on Apple in particular given how much of its manufacturing base is abroad and in countries like China.

[Luke Vargas]

That was markets reporter Caitlin McCabe. Caitlin, thanks as always.

[Caitlin McCabe]

Thanks for having me.

[Luke Vargas]

Meanwhile, new data from China today shows the country's exports rose by more than 12% last month compared to a year earlier. The surge was driven by US Importers in the waning weeks before tariffs on Chinese goods kicked in and precedes what economists expect to be a sharp slowdown in Chinese export growth in the coming months. Chinese exports to Vietnam and Thailand also showed a notable uptick last month, according to Capital Economics, possibly reflecting efforts to reroute goods to the US through those economies, a backdoor that President Trump has signaled he wants to slam shut. Meanwhile, Chinese leader Xi Jinping is in Vietnam today at the start of a trip aimed at shoring up relations with some of China's closest trading partners in South East Asia, whom Trump has targeted with high reciprocal tariffs. Well, one place many American consumers could soon feel the pinch of tariffs is on the bargain app Shein. The Chinese fashion giant is facing a double whammy with President Trump putting an end to duty free shipping for Chinese goods under $800 from next month, threatening the brand's ultra low prices that make it so popular with shoppers. In the US Journal reporter Raphael Huang in Singapore says the tariff impact is forcing a rethink of how Shein and Chinese rivals like Temu do business.

[Raphael Huang]

So many analysts telling us that Shein may have to change its business model in order to survive. Over the years, the company has already tried very hard to diversify its supply chain from China and produce in places such as Turkey and Brazil, and also people familiar with the matter telling us that Shein has also been in talks with some US Manufacturers in order to explore production locally there and then Shein is also eyeing an IPO in London. It has aimed to go public by June, but now Trump's policies are making the prospects of an IPO bleaker. So for now, US consumers will obviously have to pay higher price for some items and they will probably also have to wait longer to receive the parcel.

[Luke Vargas]

And in other markets. News today. Goldman Sachs this morning will kick off a busy earnings week with the likes of bank of America, Citigroup, Johnson and Johnson and United Airlines providing clues in the coming days on how tariffs are impacting the economy. Goldman's results are due at 7:30am Eastern. Coming up, we'll dive into the Journal's latest survey of economists and run through the rest of the day's headlines after the break.

[Harvard Promotion]

Move your career further faster in just two days with a Harvard professional and executive development program. Advance your leadership skills, craft smarter business strategies, build your network and transform how you work and think to keep your career moving forward. You'll earn a certificate and can add Harvard to your resume with Harvard Professional and Executive Development. Learn more at professional DCE Harvard.edu Spotify.

[Luke Vargas]

Well, as the effects of tariffs have come into focus in recent weeks, we have reported here on the economic forecasts coming out of a number of individual firms, including Goldman Sachs and JP Morgan. But today we can do you one better by digging into the Wall Street Journal's quarterly survey of economists. It was just published over the weekend and brings together the thinking of some 64 academic and business econom who were polled between Liberation Day and last week's reciprocal tariff pause. And here to crunch the numbers is Wall Street Journal data News editor Anthony DeBarros. Anthony, your report here shows that since President Trump took office, economists have dramatically slashed their growth estimates while raising their expectations for inflation and unemployment. Let's get granular about it. Define the coming slowdown as economists see it.

[Anthony DeBarros]

Yeah. So their consensus is for a significant economic slowdown, with year over year GDP growth at just 0.8% for the fourth quarter, and that's down from 2% in our January survey. But many of our economists also say there's a high level of uncertainty in their forecasts due to the whipsawing nature of the Trump administration's tariff policies. And you can see that reflected in the wide range of those fourth quarter GDP forecasts. They range from a negative 2% to a plus 3.1%. Typically, the consensus is a bit tighter, but the fact that the Trump administration has been enacting tariffs, pausing tariffs. We can see in the gyrations of the stock market that everyone's trying to find some certainty amidst all of the changes.

[Luke Vargas]

Take us into some of the other findings here. You asked economists about their expectations for inflation as well as employment, two ways where Americans individually could really feel the effects of tariffs. What do they project here?

[Anthony DeBarros]

Well, the economists are forecasting hotter inflation ahead. For December, the consensus is 3.6% year over year change in the consumer price index, and that's up from 2.7% in their prior forecast. And in terms of unemployment at the end of this year, that's expected to be at 4.7%, up from 4.3% in the January forecast. So both of those are reflecting some of these changes that we were talking about with the tariffs, a higher cost for imported goods because of the tariffs, and the effects of a slowing economy on the job market. So although some economists are foreseeing job losses, the consensus is still that the economy over the next four quarters is going to add about 55,000 jobs a month. Now that's down, but it's still positive growth.

[Luke Vargas]

And finally, on the risk of a recession, this probability stood at just over 20% when you asked in January, what about now?

[Anthony DeBarros]

Yeah. So the probability that the US Is going to fall into recession in the next month, the consensus from our economists now is 45%. And as you say, that's up from 22% in January. So that is a climb, but it's still lower than readings in, let's say, 22 and 23, when the Federal Reserve was battling persistent inflation by raising interest rates. One thing, though, it's important to note is that like we said earlier, forecasting the economy is hard. And even though our panel's consensus back in 22 and 23 was that a recession was likely, we never did get a recession.

[Luke Vargas]

Anthony DeBarros is the Wall Street Journal's Data News editor in Washington. Anthony, thank you so much for bringing us this report.

[Anthony DeBarros]

You're welcome.

[Luke Vargas]

Officials from the US And Iran took part in indirect talks over the weekend in Oman, with Iran seeking sanctions relief from the US in exchange for limits on its nuclear program. The White House said the meeting was a step forward, while Iran's foreign minister said the next round of talks would include discussion on a timeline for negotiations and potentially a general framework for a new nuclear accord. Iran's latest proposals were largely largely based on the 2015 nuclear deal negotiated by the Obama administration, an agreement Trump pulled out of in 2018. And we are exclusively reporting that. Pete. Morocco, a key architect of the Trump administration's campaign to slash foreign aid spending, has left the State Department after less than three months on the job. Morocco oversaw the cancellation of more than 80% of foreign aid programs and the closure of the U.S. agency for International Development working closely with Elon Musk's Department of Government Efficiency, though officials said he at times clashed with Secretary of State Marco Rubio. A State Department reorganization plan is due today to the Office of Management and Budget, which is expected to lay out, in part how USAID's previous functions will fold into State. And that's it for what's news for this Monday morning. Today's show was produced by Kate Bullivant. Our supervising producer was Daniel Pak. And I'm Luke Vargas for the Wall Street Journal. We will be back tonight with a new show. Until then, thanks for listening.