This is an audio transcript of the FT News Briefing podcast episode: ‘Trump’s tariff reversal’
Marc Filippino
Good morning from the Financial Times. Today is Thursday, April 10th, and this is your FT News Briefing. Wall Street jumped for joy after the Trump administration backed off its trade war. And the EU is looking to collaborate more with China. Meanwhile, Apple is taking a harder look at its operations in India. I’m Marc Filippino, and here’s the news you need to start your day.
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The Trump administration has called pause on some of its most aggressive tariffs.
Scott Bessent voice clip
We’re gonna go down to a 10 per cent baseline tariff.
Marc Filippino
Treasury secretary Scott Bessent told reporters on Wednesday that most of Trump’s so-called reciprocal tariffs would be paused for 90 days. That’s to make time for countries to negotiate new trade deals with the White House.
Scott Bessent voice clip
We have just been overwhelmed by the response from mostly our allies who want to come and negotiate in good faith . . .
Marc Filippino
China, though, was singled out. The country got hit with even higher tariffs, Bessent said, because it retaliated.
Scott Bessent voice clip
They kept escalating and escalating, and now they have 125 per cent tariffs that will be effective immediately.
Marc Filippino
Still, Trump’s reversal sent Wall Street stocks soaring. The S&P 500 surged around 9.5 per cent. That was the index’s best day since 2008.
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Apple had a big turnaround yesterday on the tariff news. Its stock rose more than 15 per cent. But before Trump’s reversal, the company had lost about $700bn in market value in the past week. It’s been one of the hardest hit businesses by the tariffs, and that’s because its iPhone is largely built in China. So the solution? Rely more on nearby India. I’m joined now by the FT’s Michael Acton who covers Apple. Hey, Mike.
Michael Acton
Hey, Marc.
Marc Filippino
So Apple’s looking more seriously at India to help, you know, offset these tariffs. How has that relationship evolved?
Michael Acton
So Apple’s history in India actually goes back quite a few years, but it really started to make that move around the time of the pandemic when a lot of its supply chains in China had to basically shut down because of the COVID restrictions there. Since then, it’s sort of steadily built its presence in India, and there are now five active iPhone assembly plants there. We’ve also seen some examples of key Apple suppliers opening new plants there even in just the last few months. So, there are efforts under way, clearly, to build out Apple’s supply chain in the country for the longer term, to hedge against the risk that clearly arises from Apple’s reliance on China.
Marc Filippino
And what has Apple done in the days since the tariffs snapped into place?
Michael Acton
Well, we’ve literally seen iPhones being bundled on to planes in India and flown to the US. The reason being, India’s much more conciliatory towards Trump than China. And so the prospects of India potentially reaching a trade deal seem safer at this stage. Not only that, but according to the estimates that we have from analysts, around 30mn of the 50mn or so iPhones that are exported to the US each year could technically come from India, and they don’t at this stage. So one short-term solution to the tariff impact on Apple’s China imports is to sort of pivot to India and really earmark that iPhone output for the US market to reduce the impact on prices in the short term.
Marc Filippino
But what are some of the issues Apple might face when pivoting to India?
Michael Acton
Well, there’s all kinds of issues. One of them is the fact that, you know, hundreds of components go into an iPhone at the final point of assembly, and you just need to look at Apple’s public records of its key suppliers to see that really the vast majority of them have a manufacturing presence in China or Taiwan. That in itself becomes an issue because while you can assemble an iPhone in India, you’re still gonna have to deal with importing those components and also the skilled labour into India to help build out these extremely complex supply chains. And there are levers that China can pull to make that more difficult. And indeed, we’ve seen them doing that.
Marc Filippino
One thing that’s been floated out there by Trump’s team is that Apple can just do the production in the United States. Can it actually do that?
Michael Acton
I think the answer from most people who closely monitor Apple supply chains is no, but that hasn’t stopped the White House press secretary this week being very vocal, reiterating the idea that the US can become an iPhone assembly centre. There are a number of challenges with that, one of which goes to this component issue again. I mean, even if the US started building iPhones in the US, it would still need to import all of the pieces that go into the iPhone and those too could be subject to tariffs, so it’s actually a real nightmare to calculate how much it would cost Apple. One estimate from Wedbush says that it would cost around $30bn for Apple over the course of three years to move even 10 per cent of its supply chains to the US. I spoke to one analyst about this who said, one of the reasons that we don’t actually crunch the numbers on this is because it just doesn’t make economic sense.
Marc Filippino
That’s the FT’s Michael Acton. Thanks so much, Michael.
Michael Acton
Thanks.
Marc Filippino
The EU wants a, quote, negotiated resolution with China over US tariffs. That’s what Commission president Ursula von der Leyen said after a call with China’s premier earlier this week. Brussels wants to make sure it’s co-operating with Beijing. Both sides are rushing to contain the fallout from Donald Trump’s trade policies. Here to explain what that could ultimately mean for global trade is our Brussels bureau chief Henry Foy. Hey, Henry.
Henry Foy
Hey, Marc.
Marc Filippino
All right, so tell me about this call. What went down?
Henry Foy
So this call took place on Tuesday and president Ursula von der Leyen of the European Commission spoke to the Chinese premier Li Qiang. And essentially, this was prompted by Donald Trump’s tariffs on both China and the EU, and the sort of stress that that put through the global financial system and trade tensions. And really, von der Leyen’s main point was, look, we’re a massive market, you’re a massive market, we need to have a quote unquote negotiated resolution to this current situation to avoid further escalation. And also say, look, we need some structural solutions here to make sure that our trade is not massively impacted by this, and we can sort of be some kind of stable force in this global turmoil created by the US.
Marc Filippino
Yeah, unpack the EU’s concerns when it comes to trade with China a bit more.
Henry Foy
Yeah, so for a long, long while, the EU has been increasingly concerned about what it sees as massive over capacity in China and the unwillingness of the domestic Chinese market to absorb that over capacity and essentially Chinese goods flooding the EU market. So for a while now, they’ve been tightening the screws on the Chinese and saying, look, we need to have a free and fair market here. We don’t think we’ve got as much access to your market as you’ve got to ours, and we need to find solutions to that. Just at a time when European goods themselves are also being priced out of the US market by Donald Trump’s tariffs. So a lot of concern in Brussels that they could end up one of the big losers of this global turmoil. And so the call was basically to say, look, Beijing, Brussels, we’ve gotta talk, we gotta make sure that we come up with a fair solution that creates as much stability as possible between us.
Marc Filippino
So how was that call between von der Leyen and Li Qiang left?
Henry Foy
Well, the European side said it was constructive. The Chinese side was slightly less effusive and said that there were still some big issues they have with European trade policy. But ultimately, I think most interpretations are that it’s a very good thing that the two sides are talking. I mean, if you take the European Union as one big market, there’s really the EU, US and China — these are the three big trading blocs. They trade hundreds of billions of dollars’ worth of goods between each other every year. The fact that two out of three, at least, are talking openly at leadership level about solutions to trade issues most people think a very good thing.
Marc Filippino
So Henry, what does this ultimately mean for the US if the EU and China get all buddy-buddy?
Henry Foy
Well, look, it’s hard to tell right now where this will end up. And it is important to stress that the call from the EU was mainly defensive. It was primarily to say, look we don’t want this to result in a massive influx of Chinese goods into the EU. But the fact that as a direct result of Donald Trump putting tariffs on China or in the EU, Brussels picks up the phone to Beijing, tries to start a conversation on trade. That’s a sign that maybe the two sides see themselves as people that can work together. For as long as I can remember, the US has been trying to push Europe away from China. Of course, if the Americans are putting tariffs on Brussels and squeezing European economies, there’s a lot less incentive for the Europeans to do what the US want them to do. And with regards to China, there’s definitely scope for that relationship to get slightly warmer. However, of course, the fundamental issues on trade that were there before still remain.
Marc Filippino
That’s the FT’s Henry Foy. Thanks so much, Henry.
Henry Foy
Cheers, Marc. Thanks a lot.
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Marc Filippino
You can read more on all these stories for free when you click the links in our show notes. This has been your daily FT News Briefing. Check back tomorrow for the latest business news.
