WSJ What’s News - Chips, Juice and Airplanes - Exemptions Confuse as Tariffs Kick In

Episode Date: August 7, 2025

A.M. Edition for Aug 7. President Trump’s sweeping levies kicked in on dozens of countries just after midnight. But behind the scenes, negotiators are still racing to secure exemptions for key exports. Among them, chips, which are now subject to a 100% tariff - unless the importer invests in the U.S. And, the WSJ’s Stephen Wilmot and Jon Emont look at the outsize impact the trade war has had on the auto industry and the world’s poorest countries. Azhar Sukri hosts. Sign up for the WSJ’s free What’s News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

Tech stocks gain after President Trump exempts firms, including Apple, from 100% levies on chips. But confusion reigns as reciprocal tariffs kick in for U.S. trading partners around the world. And we look at just how many billions of dollars the trade war is costing everything from automakers to the poorest countries. The U.S. is the number two trading partner after China. doesn't really need Indonesian shoes. They do buy some, but they make a ton of their own shoes, right? It's Thursday, August the 7th. I'm Azhar Sukri for the Wall Street Journal.

Here is the AM edition of What's News, the top headlines and business stories moving your world today. Tech stocks are gaining after President Trump last night announced 100% tariffs on chips and to the relief of companies like Apple, exemptions for tech firms that invest in the U.S. U.S. Apple CEO Tim Cook yesterday promised to invest an additional $100 billion in the country. That's on top of the $500 billion pledge Apple made in February. Here's the president.

As you know, Apple's been an investor in other countries a little bit. I won't say which ones, but a couple. And they're coming home. $600 billion. It's the biggest there is. The company is also unveiling its ambitious. American manufacturing program, which will bring factories and assembly lines across our country all roaring to life areas that we're not doing so well or doing very well. Journal Finance editor Alex Frankos says markets, and not least, tech companies, are taking the announcements in stride. There's a lot left to play for, but the investors seem to be welcoming the bonami

between the big tech companies and Trump. There's this feeling that at the top level, Trump is throwing out these tariffs, but underneath it, he's making life palatable for everyone. And so, you know, you see markets not freaking out. Apple shares were up early this morning after this news. So it seems right now people are kind of digesting the whole thing. The levies on chips come ahead of sweeping new tariffs that went into force today. That includes a 50% levy on imports from India and Brazil, near 20% tariffs on Southeast Asian countries and a 15% rate on most industrialized economies like Japan and the EU. But as Alex explains, carve-outs and exemptions like the one Apple received are causing confusion.

The dust has definitively not settled. There was going to be a big tariff on copper and Chile, one of the world's biggest copper producers said, hey, maybe just do that on copper products, not raw copper. He slapped very high tariffs on Brazil. Brazil makes a lot of orange juice that Americans drink, makes a lot of airplanes that Americans fly in and convince that those should be exempted as well. The EU is in talks to try to carve out spirits so your negronies can not be extra taxed and things like that. So there's this baseline or kind of ceiling of tariffs around the world, but underneath it is kind of a Swiss cheese of exemptions and carve outs. And the signal seems to be they will continue to be more and more of those sorts of things negotiated.

And it's not just chip makers that are feeling the brunt. A journal tally of this earning season reveals that the trade war has inflicted almost $12 billion in losses on global automakers. Just this morning, Toyota said tariffs reduced its operating profit in the second quarter by $3.1 billion, the largest bill reported by a carmaker to date. And as Auto's reporter Stephen Wilmot explains, this may just be the beginning of a painful reshaping of the industry. So they have to pay these tariffs in the short run because they have limited room for maneuver. These are companies with high fixed costs, very inflexible production networks. But they can do a few things at the margins.

They can increase production a bit, add an extra shift here and there where they can in the US, dial down a bit of production in Mexico and Canada, in Japan. But they're tweaking a bit at the edges. They try and localise more parts. long term, it doesn't really change the strategy of the auto industry, which has increasingly been about local for local production. So producing in North America for the North American market, producing in Asia for the Asian market, Toyota has been kind of the flag bearer of this policy and confirmed today that the tariffs sort of would essentially cement the logic

of that strategy. So we're seeing the once global auto industry fragmenting into regional hubs and tariffs are part of that trend. Now, with the US effectively ending the era of free trade on practically all its trading partners, people in poorer parts of the world, reliant on exports to the West, are feeling the pressure. Journal's senior reporter John Emont has been speaking to exporters in Indonesia. John, you've been looking at the tariff impact on the developing world.

Tell us what you've learned. So, in Indonesia is one of these countries where a lot of people join the middle class after working in factories that, you know, made Barbies for Mattel, may choose for Nike. And crucially, the United States buys a lot of goods that are very labor intensive from Indonesia, like shoes, like clothing, like textiles, even like canned pineapple. And so the concern is that 19% tariffs mean that demand is going to go down, meaning the United States will buy fewer products, meaning there won't be the need for the same. amount of workers. Just how big of a trading partner is the U.S. for Indonesia? The U.S. is the number two trading partner after China, but crucially, the United States actually buys a lot of the labor-attensive products. So that's why the United States is so important for a country like Indonesia. China doesn't really need Indonesian shoes. They do buy

some, but they make a ton of their own shoes, right? It's America, which doesn't really manufacture athletic footwear, or really sew its own clothes. So the United States just buys a lot of that really labor-intensive stuff, whereas China tends to buy more commodities that tend to be less labor-intensive. So in terms of the impact on just ordinary Indonesian workers, the United States is very important. And the fact that the U.S. consumer can't be replaced by Chinese consumers. I mean, just this morning, data showed Chinese exports to countries around the world, excluding the U.S. are continuing to rise. So China is very much a seller, not a buyer. Where does that leave a manufacturing hub like Indonesia?

One option would be, for example, to react by trying to limit Chinese exports to Indonesia. So one way of protecting your own factories that might have fewer options abroad is to give them more opportunities to sell domestically, which means limiting the flow of Chinese imports. And that's something that has been discussed repeatedly without much action. So one thing that the Indonesians have discussed is sort of accepting this 19% baseline tariff, but maybe getting carve-outs for certain products that are very labor-intensive, things like palm oil, other commodities that employ a lot of farmers. And the Indonesian's point is, why does the United States want to put a tariff of 19% on Indonesian palm oil? It's not like

you can grow palm oil and basically almost anywhere in America. So the Indonesians are still negotiating with the United States. And I think they're hoping that if they play nice and try to be understanding, that they can maybe win some important concessions. So looking at it from the U.S.'s point of view, what do we think that economic logic is of hitting the world's poorest countries with tariffs, is there one? Or is it more about setting a standard for everyone and just letting the chips fall where they will? I think that Trump is very focused on trade deficits. And so inevitably, countries that are quite poor can't buy a lot of US products. And so they tend to have trade surpluses with the US, right? So I think that's one

reason why they're getting targeted the most. Sometimes it definitely feels a little bit confound. like, why would we be punishing Lesotho? Other times, it maybe makes a little bit more sense. You know, if you adopt sort of a Trumpian frame of mind, like, for example, if you take India, right, which is still a rather poor country, but Trump has been clear that he doesn't want Apple supply chain just to move from China to India. He wants it to move from China to the United States. So conceivably, one way to make them more likely would be to raise hefty tariffs on India, even though India is a poor country. So I think it's sort of dependent. depends when you look around the world. Certainly there are some examples. I would say

Lusutu being a prominent one where it is a bit confounding. There are other times where, if you look at the world the way the president does, countries like India, Vietnam, it makes more sense. Senior reporter John Emont, thank you very much indeed for your time. Thank you so much. Coming up, after centuries of debate, Italy is finally moving ahead with plans for a bridge to link the mainland with Sicily. That story and more after the break. United Airlines flights started taking off again late yesterday. A few hours after a system-wide technology issue prompted the carrier to halt departures. According to flight tracking site, Flight Aware, United cancelled more than 60 flights and had more than a thousand delays.

Ad issue was a key system called Unimatic that stores flight data and feeds it to other systems. People familiar with the matter, say work has been underway to replace the aging system. United didn't say what caused the outage, but that it wasn't related to cybersecurity concerns. Microsoft has hired one of the founders of Google's deep mind to help it catch up in the AI race. And in his new role as head of Microsoft AI, people familiar with the matter, say Mustafa Silliman, is raiding his former shop for talent and is mirroring tactic of meta-platform CEO Mark Zuckerberg to do so. Suleiman has been personally calling recruits, offering heftier pay and pitching them on the

idea that the AI division of Microsoft is a more startup-like workplace than DeepMind. According to our reporting, Microsoft has poached at least two dozen executives and other employees from Google in the last several months, with most having worked at DeepMind. Google said that its attrition rates are below industry average and that it has hired a number of employees from Microsoft. And in a feat of engineering, Italy has announced it will build the world's longest suspension bridge linking Sicily to mainland Italy.

The two-mile bridge over the straight of Messina will cost an estimated $15.6 billion and is slated for completion in the early 2030s. Our Rome correspondent Margarita Stancati says the planning goes back quite a while. This is a project that has been talked about literally since the 19th century as a way of linking Sicily to the mainland, both promoting national unity and to bring jobs and economic development to this part of Italy that has been historically impoverished.

And the government is not presenting the bridge as a security asset. That allows it to cast the project as a military expert. that is part of its spending commitments to NATO. And once completed, it will include six traffic lanes, two railway tracks, and it's supposed to have a lifespan of around 200 years. It will have two huge steel towers on each side on the mainland. The steel towers, just to put that in perspective, will be much, much taller than the golden gate bridge towers,

and roughly as tall as the roof of the Empire State Building. And that's it for what's news for this third. Thursday morning, today's show was produced by Kate Bullivant and Daniel Bark. Our supervising producer is Sandra Kilhoff. I'm Azhar Sukri for the Wall Street Journal. We'll be back tonight with a new show. Until then, thanks for listening.