Morning Brew Daily - What Goods Will Be Impacted By Tariffs & Amazon Buying TikTok?
Episode Date: April 4, 2025Episode 554: Neal and Toby recap the big effects from Trump’s latest baseline tariffs on countries all over the world, mainly with everyday goods likely to see price increases. Then, Apple’s manuf...acturing hubs throughout Asia are hurt the most while tech stocks are suffering one of their worst selloffs resembling the start of the COVID-19 pandemic. Plus, how countries are responding to the US tariffs. Meanwhile, Amazon throws its bid to buy TikTok as the list keeps growing. Also, Microsoft turns 50 and the ‘Minecraft’ movie hopes to give the box office a jolt. 00:00 - NYC updates its subway map 3:00 - New tariffs in town 8:50 - Pricer goods coming? 11:30 - World leaders react 15:00 - TikTok deadline coming up 18:45 - Microsoft turns 50 23:00 - Minecraft movie Subscribe to Morning Brew Daily for more of the news you need to start your day. Share the show with a friend, and leave us a review on your favorite podcast app. Checkout TaxAct for more! Listen to Morning Brew Daily Here: https://link.chtbl.com/MBD Watch Morning Brew Daily Here: https://www.youtube.com/@MorningBrewDailyShow Learn more about your ad choices. Visit megaphone.fm/adchoices
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Good morning for Daily Show.
I'm Neil Fryman.
And I'm Toby Howell.
Today, Liberation Day was more like liquidation day
as stocks plunged to their worst trading session since 2020.
Then everyone is lining up to buy TikTok,
but can a deal get done before the app has to go dark in the U.S.?
It's Friday, April 4th.
Let's ride.
When all of you come to visit New York next, first of all,
say hi to me and Toby.
Second of all, you might notice something a little different
on the walls of subway stations.
The New York City subway got 8.000.
a new map this week, its first redesign in almost 50 years. In many ways, the new map is a throwback
to the 1972 Unimark map, which has a modernist streamlined feel and features as many
straight lines as possible. That was replaced in 1979 with Michael Hertz's so-called spaghetti
diagram, which has remained in use until this week. Toby, on a scale of Jaguar to HBO Max,
how would you rate this redesign? I think it's very, very understandable, which is the main point here,
because think about a transit map.
It has to be, you know, available to be seen by people with different levels of vision.
It has to be seen by people who have different levels of understanding of what New York City is.
It's not just locals taking it.
So there's a lot of things to kind of take into account.
And what this map is good at is that it finally gets away from reality a little bit.
It's a lot more abstract than the previous more geographically representative map.
And it prioritizes visual clarity over pure accuracy.
which I think is a good thing for a lot of people,
because the good thing it does, too,
is improve the visibility of transfer points at the busyest hubs.
You can clearly see, all right, Union Square's got a lot of stuff going through it,
so this is where I have to make my transfer.
So I do think that this is not a new debate.
I mean, you talked about the 72 map that changed over in 79.
So we've been having this geographic versus visually representative debate
for a long time now, and now we're swinging back towards, you know,
visually representative.
And it looks cool.
That's my main baseline.
It looks cool.
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After President Trump unleashed the biggest hike in American tariffs
in more than a century,
markets responded similarly to when I tried Vegemite
for the first time. It was a historically gruesome day on Wall Street. The S&P 500 tumbled
4.8% erasing $2.5 trillion in value, and the NASDAQ plunged nearly 6%. That was their biggest
one-day losses since March 2020 when the world was shutting down due to COVID. Investors consider
these tariffs a severe economic shock that threatens to crush corporate profits, raise prices
for consumers, and slow growth in the U.S. and around the world. To recap on Wednesday,
a.k.a. Liberation Day, Trump upended decades of U.S. trade policy when he instituted a 10% tariff on virtually
all-American imports. With much higher duties on 60 countries, he considers the worst trade offenders
against the United States. It is an earth-rattling gambit by Trump to reshore manufacturing
back to the U.S. and swallow short-term pain for a longer-term build-up of the industrial base.
The president brushed off the market panic yesterday, saying his tariff plan is going very well
in adding that I think our markets are going to boom. Got to give it.
it a chance, got to give it a little bit of time. But Toby, as it stands, it's the end of the
economic order as we know it. And Trump feels fine. Investors, on the other hand, are panicking.
Right. The damage was immediate and it was widespread. Over 80% of the companies in the S&P 500
were in the red as of 10.20 a.m. in the morning. And then over 80% finished the day in the red
as well. And the hardest hit companies were those that rely on manufacturing abroad. So think
about your apples, your Nikes of the world.
Retailers, too, that source a lot of their products from abroad also took hit.
Target was down over 10%.
Dollar Tree was also down double digits.
Big Tech was also feeling the pinch a lot.
The Magnificent Seven saved more than $1 trillion off of their market cap, and Apple had
its worst day in over half a decade.
So those were just some of the biggest names and why you saw such, you know, a deeply
red day is that from the very top to, you know,
of the tech world all the way down to Dollar Tree and the retail world, there was a lot of people feeling the pinch here.
Yeah, let's talk about Apple first tech because they really were the poster child of this selloff, especially in tech.
You know, Apple has manufactured its iPhones and everything we buy from it in China for a long time.
It has these vast factories from its suppliers there.
And in 2018, over the past five or so years or decade, it's been trying to diversify away from China because
Trump threatened tariffs on China in his first term. So where did they go to Vietnam? So they set up all
and India. So they set up these big factories to make iPhones and iPads, Macs and other accessories
in Vietnam and India. And then what does Trump do yesterday is slaps a 46% tariff on Vietnam and a 26%
tariff on India. So this diversification around Asia that Apple tried to do starting in 2017,
2018, just completely backfired and fell 9% yesterday because it is going to bear the brunt of tariffs.
And overall, the hardware sector, everything we get from China, which is absolutely crushed.
Yeah, Apple has some very tough choices to make now because it already is one of the more expensive
phones and more of the expensive products on the market.
So they can't necessarily raise prices.
I mean, maybe they can.
They're Apple.
Or they'll just have to eat the profits.
That's what a lot of companies are kind of facing right now.
It is fascinating, though, because big tech, even though, we kind of lump them.
together. Apple's business model is very different from Amazon's, which is very different from
Medas. But yet we saw both of those companies also take a major hit. Meta is actually exposed
because remember, we've talked about how much Chinese e-commerce retailers spend money on their
platform. Shian Tamu just dump billions of dollars into meta advertising. And if they start to pull back
due to these tariffs, then it hurts meta as well. So you start to see these effects kind of start,
even if meta doesn't manufacture anything.
I mean, I guess they manufacture Rayban glasses in the headsets at this point.
But they're mostly an advertising company.
But that is another reason how these tariffs affect, even companies that aren't manufacturing direct goods in those countries.
And then another sector that was hit so badly was retail, as you mentioned, five below gap, urban outfitters,
Coles Best Buy.
They all posted losses of more than 15%.
And if Apple was the poster child of the tech white,
out, then I think R.H., formerly known as Restoration Hardware, will be the poster child of the
retail wipeout. So they make high-end, or they make high-end furniture in China. And on Wednesday,
as Trump was announcing these tariffs, the CEO was on an earnings call, giving a pretty downbeat
earnings call as it was. And what the transcript shows is that he looks at the screen and says,
oh, bleep as he's seeing these tariffs roll out. And later, he's explaining to the analyst,
anybody of scale in the home business has a high percentage of their content coming out of Asia.
Among all furniture stocks that got wiped out, R.H. suffered a 40% drop.
And then finally, one blip of green in that sea of red yesterday, where some stocks did go up.
Consumer Staples was a big one because even that's the classic go-to protection in times of downturn.
You still need to buy goods like toilet paper, food, et cetera.
Then utility health care sectors also didn't fall as hard.
as the rest. Also, companies that make American-made products rose pretty well. Some automakers actually
weather the storm quite well. Ford was a survivor, if you want to call it. They said yesterday that they're
going to lower some prices on its vehicles to match the same level it charges employees to try to capitalize
on this surge of Buy America. So there were a few companies there that were green, even though most of the
market was red. The other angle of these post-tariff shockwave that is reverberating through the economy is that a lot of
things are on their way to becoming more expensive.
According to the Yale Budget Lab,
this round of tariffs could bump up
fresh produce prices by 4%,
and overall food costs by nearly 3%.
That means you can expect some sticker shock
on your favorite foods and drinks.
To name a few, coffee in the U.S. is almost entirely imported
with 99% grown outside U.S. borders.
Same with shrimp, where over 90% comes from just four countries
now facing new duties of up to 46%.
Chocolate and vanilla, same story.
even a cheat day McDonald's burger could get more expensive thanks to a 10% tariff on Australian beef,
which is blended with American cuts to create their patties.
Outside of the grocery aisle, tech is another industry that not only had a rough day in the market,
but it's also likely to see higher prices.
China and Vietnam supplied the vast majority of laptops and tablets, nearly $47 billion worth last year,
with new tariffs of up to 50%. Price hikes are likely to follow.
And then finally, everyday things like shoes are also staring down higher.
input costs. China and Vietnam account for nearly 70% of shoes sold in the U.S.
and tariffs of 54 and 46% are going to hurt. So, Neil, those are some of the categories
where economists are forecasting the tariffs to impact. And one other one that you didn't
mention is Toys, the Toy Association, which is the Toy Industry Lobby Group, estimates that
77% of all toys in the U.S. are manufactured in China alone. The toy industry operates on
very slim margins, so you can't expect them like an Apple to absorb.
the hit that come from tariffs. So the Toy Association estimates that it will cost consumers at least
30% more to buy toys purchased from China than they currently do. But yeah, it's a very interesting
education and where things are made. I mean, 94% of shrimp comes from not the U.S. The shrimp
lobby is very happy. The Manufacturing Association here or the shrimp producer association said,
we are grateful for the Trump administration's actions today. It will preserve American jobs,
food security and our commitment to ethical production. So you see here, things that the United
States does make, at least in small quantities, the job creators here, the companies here, are very
happy. But for other things that we just simply can't make, bananas, vanilla, all comes from
Madagascar. Shrimp comes from India. Coco comes from everywhere else. Coffee beans. We import 99%.
There's no American substitute for that. So if there are tariffs on these products, then their
prices are likely to go up. So now that Trump launch.
the trade war, the big question is, how will the world react and what does that mean for the economy?
The overall sentiment abroad was outrage, threats of retaliation, and bafflement over how these
tariff rates were chosen. In the EU, a major trade partner of the U.S. that was hit with
20% tariffs, president of the European Commission, Ursula von der Leyen, said the global
economy would, quote, massively suffer from the tariffs and urge negotiation. U.K. Prime Minister
Kier Starrmer promised to respond with cool and calm heads. In France, President Mbanzhi
Macron did not keep his cool, encouraging European companies to avoid investing in the United
States because of the tariffs. Switzerland said it was confused why it was hit with a 32% tariff,
higher than other U.S. trade partners with similar economies, when 99% of U.S. goods can be
imported into Switzerland without a duty. The calculations of the U.S. government are not clear to
the Federal Council, the Swiss Federal Council said. Meanwhile, in developing countries that
were walloped with tariffs, leaders are spooked fearing the decimation of key industries
centered on sending products to the U.S.
Clothing-focused Cambodia,
which counts the U.S. as its top export market,
was hit with a 49% tariff.
As a small country, we just want to survive,
said a spokesperson for Cambodia's ruling party.
Toby, these tariffs reached every part of the globe.
What you're seeing right now is sort of a jockeying period
amongst world leaders where they, one,
try to figure out if this is a jumping off point
for negotiations with the United States
or if it is something that is here to stay.
That being said, you said it touched,
every corner of the earth, including some truly random places, and I just want to highlight some of those.
One of those are the Herd Island in McDonald Islands. They are in external Australian territory.
They face what Trump is calling a reciprocal tariff of 10%, even though the islands had zero trade with the U.S.
last year, and the reason why they had zero trade with the U.S. last year is that they have no human
population. They are home to only a large population of marine birds and mammals, including seals,
avatrosses and penguins. So that was kind of held up as a meme yesterday of like, we are literally
terrifying every corner of the earth, even those corners that don't have humans and just have penguins.
All right. So investors won't have any time to take a deep breath today because the March
Jobs report is out at 8.30 a.m. and we'll see what picture of the labor market that paints.
But it's just been a wild week on Wall Street. Trump yesterday said that there would
be room for negotiation. Remember, the tariffs are not going into effect until April 9th next
week. His aides had been going out all over the media in saying, these are the final rates.
We're not negotiating. They're not negotiable. And then Trump, to reporters yesterday, as he was
boarding his helicopter, said, you know, I'm down to negotiate. If somebody offers something
spectacular in return, then we can talk. So you can bet they will be fielding calls.
They will be negotiating for the next couple days until these tariffs go into.
to affect but clearly a shockwave across global markets.
Up next, we got a deadline for TikTok coming up.
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In some non-tariff news, TikTok's clock is getting mighty close to midnight.
The April 5th deadline for Bytance, the platform's Chinese parent company,
to sell its U.S. operations or face nationwide ban, is less than a day away.
the final countdown has a slew of bachelors from PE Giants to big tech power players
lining up to win the social media platform's final rows.
Right now, the leader in the clubhouse, according to the Financial Times,
is a deal that would spin off TikTok's U.S. business into a new entity backed by investor powerhouses
like Inresen Horowitz, Blackstone in Silver Lake.
Oracle would oversee U.S. data, while Bight Dance would retain a minority stake under the 20%
cap required by law.
Meanwhile, Amazon entered the chat late in the game, making a Hail Mary bid via letter to the Trump administration.
They joined a bizarrely wide field of other suitors, including Perplexity AI, which wants to rebuild the app's algorithm from scratch, mobile tech company app Lovin, and even Mr. Bees, who says he's been approached by some backers to be the face of a bid.
Whether a deal is actually completed by the deadline or the deadline is extended remains unclear, with a major sticking point being the app's all-important.
algorithm. Byte dance has floated an idea to license it out to new owners while U.S. officials
want it fully controlled domestically. What is clear, TikTok has become a geopolitical football to
be tossed around until Trump can push it across the finish line and get a deal done or get
stuffed at the goal line for good. You said it wasn't tariff news, but in a way it is because everything
ties back into tariffs now. Trump said that he would be willing to lower tariffs on China. Right now,
they're at 54% if Beijing would approve a deal. And it's a very interesting quirk of this acquisition
or buying process because how do you buy a company that's not for sale? China does not want to
sell this app. BightDance does not want to sell this app. They're trying to force this to happen.
Maybe they can use tariffs as a negotiating tool. And then you have the host of major investors
in the United States like Blackstone, Andreessen, Horowitz, Silver Lake, these big P.E. firms that appear
to be able to step in to buy TikTok, should there be a spinout. But just a quick recap of how we
got here. I mean, this has been years in the making, and it could be extended even further.
But last year, a bipartisan group of lawmakers in Congress passed this ban or sell law for TikTok
where you either had to, you know, the bite dance either had to sell TikTok to a U.S. owner
or it would go dark in the United States. The deadline was January 20th a day.
after Trump was inaugurated.
Trump extended the deadline for 75 days as soon as he was in office.
And so that's kind of where we're at.
The 75 days is up.
And J.D. Vance, who has been tasked by Trump, the vice president, with overseeing a
potential TikTok deal said it is highly unlikely that TikTok will go dark again.
All signs point to a deal or another extension.
Yeah, Vance is being very confident that a deal would be reached before Saturday's ban
enforcement deadline.
I mean, literally, yeah, it is coming up.
But literally yesterday, he said in an interview with Fox that it'll come out before the deadline.
So it looks like he's saying that something is about to come together.
Now, I do think maybe that talking point from Vance is the fact that they will have a bid lined up with that big PE conglomerate, not Mr. Beast, unfortunately, or fortunately, whatever your perspective is.
But I don't know if that bid will actually be accepted.
That's just another case.
So I do think maybe the most likely thing is somehow the can will get kicked down the road once again because this is just such a.
complex negotiation for a very valuable asset in this geopolitical trade war.
Today is a big birthday in the corporate world. Microsoft turns 50. The American tech juggernaut
best known for creating Clippy and, well, I guess ushering in the PC revolution also,
has managed to reinvent itself from one technological disruption to the next, amassing a market
value that now stands at nearly $3 trillion in making its co-founder, Bill Gates, one of the richest
people in the world. He wasn't always that rich, of course. Back in the spring of 1975, Gates was a
Harvard dropout, who on April 4th of that year launched a tiny software company with his childhood
friend Paul Allen in Albuquerque, New Mexico. Their mission was as simple as it was ambitious
to put a computer on every desk in every home. But how they aimed to do that, differentiated them
from the pack, whereas all the other companies in the very small tech sector at the time were focused
on hardware, Gates and Allen decided to go all in on software.
That decision and the execution of it in the subsequent decades has made Microsoft a nearly
ubiquitous part of the world's computing infrastructure from MS DOS to Windows to the
cloud and now AI.
All the while, it's been a model of stability in its 50-year history.
Microsoft has had just three CEOs, Gates Steve Ballmer, and the current one, Satya Nadella,
who's occupied the corner office since 2014.
Toby, it hasn't always been.
been smooth sailing for Microsoft for the past half century, but it's been as proficient as my
skills for Office Suite. Very proficient, Neil. Yeah, I think you said it well. The real power
of Microsoft has just been ubiquity. You cannot do knowledge work in the modern era without
bumping into some product that Microsoft created. And it's also been able to find a way to
reinvent itself throughout various tech cycles. It's basically actually created tech cycles.
This first act was probably Windows. The second act was Office and then this dominance of
the desktop. And then its third has been cloud infrastructure and AI. So it's just very much a
chameleon that is adapted to the new ways we work and has become just this absolute juggernaut
that at one point became the most valuable company in the world. Also, I will say it's had
more impact on culture than maybe we'd give it credit for. I know Apple is like the cool tech
company that everyone wants an iPhone. But think about what Microsoft has done. Gaming. It's got
Xbox, Halo, Gears of War, some of the biggest franchise in history. The memes you can't overlook.
either. I mean, everyone knows Clippy, even if you never really interacted with Clippy.
Word art just has this second life on the internet as well. And then also, shout out to Encarta,
which it invented. It was basically Wikipedia before there was Wikipedia. So there's just,
you cannot talk about the tech or really even the modern world without talking about Microsoft.
It's just that big of a player. And what's remarkable is it kind of missed the internet and mobile.
I mean, Steve Balmer in 2007 has this very infamous quote where he says, there's no chance that the
iPhone is going to get any significant market share. Microsoft Internet Explorer. Their browser
was completely eaten by Google Chrome, and yet they continued to persist. Their stock took a
beating for a while, but then Satya and Adela came in in 2014, wrote the stock price got
juiced by 10x over his first 10 years in the company. And now, you know, they made a $13 billion
investment in Open AI. And they are seen as one of the leaders in AI. Before we leave Microsoft,
the verge, the tech publication, ranked their top five things that Microsoft has ever created.
I'm just going to run them down, and I want your take, Toby.
Number five, Windows XP.
Thought it be higher, honestly.
Number four, Xbox 360.
Oh, that's good.
That's solid.
Number three, the Surface Pro 3.
The things that they look at on the sidelines of NFL games, that's number three.
It's number three.
Number two is Halo, which is perhaps the killer app for Xbox when it came out in 2001.
and number one, Windows 95.
That introduced sort of the modern desktop,
as we know it with File Explorer,
the Task Bar notification area,
the Start button recycle bin.
Now, I think one thing that's missing from this list
is Bliss, the wallpaper from Windows XP.
Oh, yes, that is iconic too.
Yes, I forgot about that.
But honestly, a pretty solid top five list,
but they did my boy, Clippy,
a little dirty right there.
I think he's top five material.
If you're looking for a way to kill time and bond with your 12-year-old nephew this weekend,
maybe we suggest heading to see the Minecraft movie this weekend.
Starring Jack Black in Jason Momoa, it's hitting theaters today,
as the best-selling video game of all time looks to see if you can translate that success to the big screen.
Minecraft is massive, 140 million monthly players,
over $3 billion in lifetime revenue, one trillion YouTube views of its content.
Just by virtue of its subject matter, the Minecraft movie is shaping up.
to be one of the biggest box office swings in gaming to film history.
It has all the raw ingredients to be a billion dollar franchise.
A global fan base that spans generations marketing firepower from a big studio and some
beloved IP has usually been a recipe for success if you look across this genre.
The most recent Sonic the Hedgehog movie pulled in $500 million running a similar playbook,
while the Super Mario Bros movie grossed over $1.36 billion worldwide, making it the most
successful video game adaptation of all time. Now, will this movie be good? Who knows? Rolling Stones
described it as exactly what you think it will be and less. It's got Jack Black and is directed
by the dude who made Napoleon Dynamite. So it's at least going to be weird. That's for sure.
But weird might just be the ticket to the next billion dollar movie game app video game adaptation,
Neil. Minecraft owned by Microsoft, by the way, another sign of some of those savvy acquisitions
made by the company we just talked about.
What's interesting about Minecraft that differentiates it from the other video game adaptations
that we've seen be successful in recent years is that it doesn't have a narrative structure.
The game has become so successful because it's called a sandbox game.
You go in and play and it's a really choose-your-own adventure.
You can do whatever the heck you want.
So every person's experience who plays Minecraft is completely different.
So there's not a, you know, popular set of characters like Super Mario Brothers can
can rely on or there's not a propelling narrative that these these filmmakers can use.
So they said we're calling it a Minecraft movie because we're respecting the fact that there's
no one story that drives the game.
We're not the official story.
We're not canonizing anything.
We're just one of a zillion stories.
So that's what makes this a little bit different.
But this is a very interesting IP because it really hasn't been tested outside of the
video game sphere now.
But there's been a run of successes in video game two movie.
adaptations and we'll see whether this run can continue.
And expectations for it have slowly risen.
Three weeks ago, box office projections were sitting at around $58 million.
Those slowly creeped up to $60 million.
Now they're sitting at about $75 million conservatively.
So there's clearly been some indicators in and previews that it's going to get off to a hot start.
But also, maybe people are talking crazy forecasts right now because it's been a pretty long time since the movie industry has had a hit.
I mean, only one weekend to date in 2025 has exceeded a hundred.
$100 million across all titles, and that was when Marvel's latest, you know, Hulk
Abomination movie came out. And so maybe some of this is manifestation on the movie industry's
part that we're like, finally, we got some like reliable IP that we think can generate a big
hit. So we'll see if it gets out of the gate pretty fast, but then that lack of, you know,
narrative structure might lead it to fizzle or maybe the fan service that it provides will
bring in this global audience. So I can see it going a lot of different directions. One thing is
for sure is Jack Black has his weirdness factor turned up to 11. Everything I've read and everything I've
seen, he's going hard in this movie. Yeah, and apparently he went full method because the director
handed out Minecraft to everyone on set for their trailers and he just went full in. He logged more
than 100 hours playing Minecraft and was just obsessed with the game. You can imagine that every kid out
there this weekend is going to be tugging on their parents shoulder being like, we need to go see
this movie. We need to go see this movie. So I am bullish on a Minecraft movie. Let's wrap it up there.
Thanks so much for starting a morning with us. Have a great Friday and an even better weekend.
For any questions, comments or feedback, send an email to Morning Brew Daily at Morningbrew.com.
We love hearing from you. Let's roll the credits. Emily Milliron is our executive producer.
Raymond Lou is our producer. Olivia Graham and Olivia Lake are our associate producers.
Yuchinawa Ogu is our technical director. Scoop Starteris is on audio. Hara makeup needs a
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and our shows of production of Morning Brew.
Great show today, Neil. I wish you all
well.
All. Pay off your home, travel for life, drive a Ferrari.
In celebration of the world premiere of the
Monopoly Big Board Buckslot Machine by Aristocrat Gaming,
Yamava Resort and Casino at San Manuel
is giving one person a $1.6 million dream package.
The biggest prize in Yamaba's history.
Club Serrano members can earn daily instant prizes
and secure a spot in the finale May 29th.
Don't pass go and own it all.
only at Yamava, celebrating its 40th anniversary.
UN. Details at Yamava.com
must be 21-20.
Please gamble responsibly.
Monopoly is a trademark of Hasbro.
Hasbro is not a sponsor of this promotion.
