What’s News in Markets: iPhone Tariffs, Target Backlash, Ross Stores Trade Woes

Summary

WSJ What’s News in Markets: iPhone Tariffs, Target Backlash, Ross Stores Trade Woes

Release Date: May 24, 2025

In this episode of WSJ What’s News in Markets, host Jack Pitcher delves into significant market movements driven by escalating trade tensions, corporate policy shifts, and economic uncertainties. The episode provides a comprehensive analysis of how these factors are influencing major companies and the broader market landscape.

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1. Escalation of the Trade War

President Trump's New Tariff Threats

The episode opens with President Trump's intensified stance on international trade, which has brought the trade war back into sharp focus for markets worldwide.

• Tariffs on the European Union and iPhones:

  At [00:55], Jack Pitcher reports that President Trump has announced plans to impose a 50% tariff rate on goods from the European Union within days. Additionally, [01:10] Trump warned of possible 25% tariffs on foreign-made iPhones, underscoring his administration's aggressive approach to trade negotiations.

  "He threatened to impose a 50% tariff rate on the European Union within days and warned of possible 25% tariffs on foreign made iPhones." — Jack Pitcher [00:34]

Impact on Apple and Global Commerce

These tariff threats directly target two pivotal pillars of global commerce: Apple, one of the world's most valuable companies, and the European Union, one of the U.S.'s largest trading partners. The potential tariffs on iPhones could disrupt Apple's extensive supply chain, which is primarily based in China.

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2. Market Reactions to Fiscal Policy Changes

House Passes Tax and Spending Package

At [02:20], Pitcher discusses the passage of a sprawling tax and spending package by the House of Representatives on Thursday. This legislation is projected to increase the U.S. budget deficits by more than $2 trillion over the next decade, raising significant concerns about the nation's fiscal health.

• Government Bond Selloff:

  The market's reaction has been swift, with investors apprehensive about the growing deficit. This sentiment has led to a selloff in government bonds, as detailed by Pitcher.

Stock Market Decline

The broader market has not been immune to these developments:

• S&P 500: Dropped 2.6% for the week.
• Dow Jones Industrial Average: Fell 2.5%.
• Nasdaq Composite: Also declined by 2.5%.

"The bill is projected to increase budget deficits by more than $2 trillion over the next decade, raising anxiety over the US fiscal outlook and prompting a government bond selloff." — Jack Pitcher [01:00]

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3. Apple Under Pressure

Trump’s Tariff Threats and Apple's Response

The potential 25% tariff on foreign-made iPhones has sent ripples through Apple’s investor community. As [02:50] Pitcher explains, Apple's business model relies heavily on its extensive manufacturing network in China, with no significant manufacturing facilities in the United States.

• Apple's Manufacturing Challenges:

  Shifting production to the U.S. would require years of investment, a move that Apple and industry experts acknowledge as impractical in the short term.

Leadership Engagement

Apple CEO Tim Cook met with President Trump at the White House earlier in the week to discuss these concerns. However, Apple declined to comment on the specific tariff threats, maintaining a stance of cautious observation.

"Apple doesn’t have US Manufacturing facilities. Apple and industry experts say efforts to build iPhones domestically would take years of investment." — Jack Pitcher [02:10]

Stock Performance

In response to these threats, Apple's shares experienced a notable decline:

• Shares Fell: 3% on Friday.

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4. Target Faces Consumer Backlash

Backlash Over DEI Program Rollback

One of the episode's focal points is Target Corporation, which has been grappling with a significant consumer boycott following its decision to end certain Diversity, Equity, and Inclusion (DEI) programs in January.

• Impact on Quarterly Sales:

  Target reported a 3.8% decline in comparable sales for the most recent quarter, a decrease larger than analysts had anticipated.

"Target was once an outspoken corporate diversity advocate, but it ended its workforce and supplier diversity programs in January." — Jack Pitcher [03:30]

Consumer Behavior and Economic Factors

In addition to the boycott, softer spending on discretionary items and a decline in consumer confidence have further dampened Target's performance.

• Forecast Adjustments:

  The company has cut its fiscal year forecast, citing ongoing uncertainty around tariffs and the broader economy.

Stock Market Reaction

Target's shares have reflected these challenges:

• Shares Dropped: 5.1% on Wednesday and 4.4% for the week.

"Target's CEO told investors that [the boycott] played a role in the lackluster first quarter performance." — Jack Pitcher [03:00]

Special Series Announcement

Listeners interested in a deeper exploration of Target's situation can tune into a special two-episode series titled "Boycotting Target." A link to the series is provided in the show notes.

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5. Ross Stores Struggles Amid Tariff Uncertainty

Withdrawing Sales and Earnings Guidance

The discussion shifts to Ross Stores, a prominent discount clothing chain, which has withdrawn its sales and earnings guidance for the year due to ongoing tariff uncertainties.

• Dependency on Chinese Manufacturing:

  More than half of Ross's products are sourced from China, making the company particularly vulnerable to tariff impositions.

"A range of companies from toy, car and shoemakers to hotel chains have also slashed their outlooks this year, citing economic and trade concerns." — Jack Pitcher [03:45]

Market Impact

Ross's stock has been significantly affected:

• Shares Dropped: 9.9% on Friday and over 10.2% over the weekend.

Broader Industry Impact

The episode highlights that Ross Stores is not alone, as numerous companies across various sectors are facing similar challenges due to the unpredictable trade environment.

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Conclusion

The episode wraps up by emphasizing the interconnectedness of trade policies, corporate strategies, and market performance. The combined pressures from potential tariffs, shifting corporate policies, and economic uncertainties continue to shape the market landscape, affecting investor confidence and stock valuations across major sectors.

Production Credits:

• Produced by: Michael Lavalle and Pierre Biennami
• Supervising Producer: Tali Arbel

"And now you know what's news in markets this week. Today's show was produced by Michael Lavalle and Pierre Biennami, with supervising producer Tali Arbel. I'm Jack Pitcher. Have a great weekend." — Jack Pitcher [04:33]

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For more insights and in-depth analysis, listeners are encouraged to explore the special series on Target and stay updated with WSJ What’s News in Markets.

Transcript

[A]

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[B]

One most trusted app based on August 2024 proprietary survey. Over 500,000 new listings every month based on average new for sale and rental listings. February 2024 through January 20Hey listeners, it's Saturday, May 24th.

[C]

I'm Jack Pitcher for the Wall Street Journal and this is what's news in markets. Our look at the biggest stock moves of the week and the news that drove them. Let's get to it. The trade war was back in focus this week after President Trump on Friday launched new broadsides in his tariff campaign. He threatened to impose a 50% tariff rate on the European Union within days and warned of possible 25% tariffs on foreign made iPhones. Those are two pillars of global commerce, one of the world's most valuable companies, Apple and one of the U.S. s biggest trading partners. Another market mover this week was the president's sprawling tax and spending package. The House of Representatives passed it on Thursday, and it's headed to the Senate. The bill is projected to increase budget deficits by more than $2 trillion over the next decade, raising anxiety over the US fiscal outlook and prompting a government bond selloff. For the week, The S&P 500 dropped 2.6%, while the Dow and the Nasdaq were both 2.5% lower. Apple investors appear to be taking Trump's threats seriously. As I said earlier, the president said he expects iPhones sold in the US to be made in the US or face a 25% tariff. Apple's phones are sourced from many countries and primarily put together in China. Apple doesn't have US Manufacturing facilities. Apple and industry experts say efforts to build iPhones domestically would take years of investment. Apple CEO Tim Cook met with Trump in the White House earlier this week. The company declined to comment on Trump's most recent tariff threat. The iPhone maker's shares fell 3% Friday. Now let's talk about one of the country's biggest retailers, Target. On Wednesday, the company said a laundry list of problems dragged down its quarterly sales. One issue a boycott by shoppers who disagreed with Target's decision to end some DEI programs. Target was once an outspoken corporate diversity advocate, but it ended its workforce and supplier diversity programs in January. Then diversity advocates called for a boycott on the company, Target's CEO told investors that played a role in the lackluster first quarter performance. Target said softer spending on discretionary items, those are things that people want but don't need. And a decline in consumer confidence also hurt results. Target's comparable sales fell 3.8% in the most recent quarter, a bigger drop than analysts expected. And the company cut its forecast for the fiscal year, citing uncertainty around tariffs and the economy. The retailer shares fell 5.1% Wednesday and 4.4% this week. And you can hear more about Target's rollback of DEI policies and the impact of consumers boycott on the company and the black entrepreneurs with products on Target shelves in our special two episode series Boycotting Target. We'll leave a link to the series in the show. Notes Apple and Target are far from the only companies contending with tariffs. Ross Stores, the discount clothing chain, on Thursday withdrew its sales and earnings guidance for the year because of uncertainty from tariffs. A range of companies from toy, car and shoemakers to hotel chains have polter slashed their outlooks this year, citing economic and trade concerns. Ross expects tariffs will cut into earnings this quarter. The company said more than half of its products originate from China, and tariffs will pressure its profitability if those levies remain at current levels. Ross shares dropped 9.9% on Friday and more than 10.2% on the weekend. And now you know what's news in markets this week. Today's show was produced by Michael Lavalle and Pierre Biennami, with supervising producer Tali Arbel. I'm Jack Pitcher. Have a great weekend.

[A]

Isn't home where we all want to be? Reba here for realtor.com, the Pro's number one most trusted app, finding a home is like dating. You're searching for the one with over 500,000 new listings every month. You could find the one today, download the realtor.com app cause you're nearly home. Make it real with realtor.com pros number.

[B]

One most trusted app based on August 2024 proprietary survey over 500,000 new listings every month based on average new for sale and rental listings February 2024 through January 2025.