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.

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.

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]

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.

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.

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.

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]

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.