China May Exempt Some US Goods From Tariffs as Costs Rise

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The latest news from China is the Chinese government reportedly considering the suspending its one hundred and twenty five percent tariff on some US imports like medical equipment, industrial chemicals like ethane.

So is this the.

First step towards actually coming up with some kind of deal. Shawn don and Is, Bloomberg News senior economics writer joins us now Sean is it.

I think what we're seeing here is some of the same things that we've seen from the Trump administration so far, and that is giving exceptions to the tariffs on imports for kind of key things that the economy needs.

Right.

These are key inputs that Chinese people, are, Chinese companies rely on from overseas. I see this not so much as a as an accommodation aimed at Trump or at the US terraffs, or at setting the state for negotiations, more kind of shoring up the domestic constituencies and kind of getting ready potentially for a more protracted trade war.

Sean, is this the type of news cycle we should get customed to, which is country by country by country, bilateral back and forth, press conferences, tweets about what we might do, what we may not do. Is that how we're going to go or is there going to be something more I don't know, unified pronounced.

Look, I think for now we are really in this kind of land of trying to figure out what's coming down the pike, right, and that is in terms of the impact of tariffs, and you see that in kind of corporate earnings, people talking about a future impact right as opposed to what has happened in quarters past. It's all about the outlook ahead. And I think the same apply to the economy. Now we'll get next week the

Here's a really basic question for you. Are China and US administrators actually talking to each other about trade?

Well?

Look, I mean that's the huge question, and we don't know the answer to that, right because it depends on which side you believe. The US says they're talking, the Chinese say they're not. And meanwhile, you know, we have these tariffs that remain in place with a few exceptions. We've also, you know, heard from the President again this morning that you know, maybe a deal with Japan is close. We've heard more cautious noises out of the Japanese side. We had heard that perhaps a deal with India was

All Right, Sean, Let's say I'm China or Japan or France or whomever, and I want to strike a deal. Who do I call? Do I call Howard Ludnik, Secretary Commerce? Do I call mister Benett? Do I call the President? Who do I call?

Look?

I think at this point you try to call everyone, but maybe the answer is you don't call anyone because you just wait. And I think we've seen this week, really how the markets are affecting the decision making in Washington and inside the Trump administration, and how the US in some ways may be negotiating with itself before it really sits down and negotiates with the rest of the world.

All right, thanks so much, Tommy, really appreciate it, Sean donn and he covers trade and economics right here on Bloomberg Television.

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University of Michigan senment data came out better than expected. Just looking at the headline number, fifty two point two versus fifty point five was the consensus inflation. One year inflation, which ticked up significantly last period, came in a little bit better and expect it's six point five percent versus the expectation of six point eight percent. So let's break all this down with Joanne Shoe, Surveys of Consumers Director

Well, things came in a little bit better than what we might have expected based on what we saw two weeks ago. It's still a pretty negative read altogether. Consumers are not feeling confident at all about labor markets, about business conditions, or their personal finances, and that's something that that definitely does not bode well for their spending going forward.

Why though, like, what are the biggest reasons for that? And even though it's still a not great reading, it's still a little bit better. So what accounts for that.

The number one thing on people's minds when it comes to the economy is tariffs. So consumers did see a little bit of relief after April nine, when a lot of the reciprocal tariff announcements were paused temporarily, and we saw inflation expectations come down just a touch after that happened. But overall, consumers are still expecting inflation to come surging back, They're expecting business conditions to weaken, and most critically, they

Do we have any sense as to spending at the consumer level.

Join, consumers are telling us that they're really bracing for a downturn in the economy, and you know, buying conditions for big ticket items are really poor. It's sort of a combination, though, of people who believe that if you were to buy something literally right now you might be able to avoid the price height that comes from tarffs, along with people who realize that it takes more than one day to make these big ticket purchases, and they're really concerned it's too late.

On the flip side before let you go. The inflation expectation numbers, though came down. I appreciate they're still elevated, but at least with the five to tenure that stayed steady. How sticky do you think that inflation where he is?

I think as long as tariff policies remains unresolved, things will will still be hairy with inflation expectations. The consumers are attuned and are highly aware of the major developments in terariff policy. They're not necessarily watching day by day. But the April second announcement, the April ninth announcement, those were things that we clearly saw people reacting to in the data.

All right, Joanne, thanks so much. We really appreciate the instant breakdown, that instant analysis on the data. Joanne Schue joining US University of Michigan Surveys of Consumers Director.

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Staying on big tech, take a look at Google. Batstock is up by about two and a half percent off the highs of the overall trading session if we count a pre market trading. But the net net here is the first quarter results beat expectations. You had continued strength in that search advertising business, plus YouTube also continue to crush it despite estimates. A teeny tiny bit light there, I Dan, I have global head of technology research at

I'd rate it an A.

I mean, especially in terms of cap backs, when you saw in terms of cloud spend, I think advertising relative to the uncertainty, I mean, this was I think a robust quarter across their book. There's still obviously anti trost and concerns and obviously powerful concertainty, but I think it's actually a good sort of sign going into the rest of big tech next.

Week, Dan, how do you think about the threat to Google's core search business from AI?

Now, look, there's definitely a threat, and I ironically that threat actually is actually a support Froma's anti monopoly right in terms of some of the anti trust. But to me, it's a threat. But look at the advertising. I mean the reality is like I'm not saying it's not a long term headwind, but they're also going to benefit when it comes to AI significantly on the cloud and Google, as we've seen again and again, they're going to be able to pivot.

And that's I just.

Don't view it as a massive threat like maybe some others would view it.

Well, let's go to the cloud then, so it's AWS, Microsoft and then Google. How quickly is Google catching up?

They're narrowing the gap.

I mean, look, Microsoft is their backyard right when it comes to core enterprise core cloud. So Microsoft continues to have just a I think of just the iron cloud grit. You've seen success from AWS, but what Google, what Curiam's done there, It's been a massive success story in terms of.

As it's played out.

I think that's important because that to me is gonna be a big part.

You think some of the parts.

I mean, that's how you get an incremand we have two hundred dollars press target like thirty for eight hours upside. I think more and more as the cloud story plays out.

Hey, Dan, we saw that President Trump. He's kind of made some comments about towards some of the European regulators about maybe stepping back some of the regulation of artificial intelligence AI. How important is that.

Well, Paul, I mean, and we've talked about before, right, I think it's all part of this broad negotiation because big tech has had a bullseye on their back from Brussels an EU for years, right, I mean, fines for big tech rooms aget a cup of coffee when it comes to what's happened in.

Europe the AI. Look there.

I mean, this is a hard line stands, and I think it's actually all part of even the broader tariff negotiations in terms of them softening the stands. And that's look, and that's something big tech has obviously been a huge advocate for because they essentially Europe's like off almost off touch.

You can't even go into that market right now.

Fair enough, before we go to next week, what we're going to expect, let's just kiss on Tesla here. So your note earlier in the week before earnings, the code red note caused a flurry in selling in the stock. Do you still feel like it's a code red after earnings or maybe change the color?

No, I mean I think we and the read it was a code red because Musk had to make the choice cock struck midnight Doge or Tesla cheers Tesla, and I believe despite I'll say one two days a week, it's the beginning of the end for Musket Doge. I think in the Trump White House at such an important time for Tesla in terms of autonomous in terms of the lower cause vehicle, terms of robotics testing needs.

It's weed or back.

And that's why I think it's gonna be viewed historically. It's probably the most important conference called Musk has ever had.

Talk to us about Apple. We're gonna hear from them in just a few.

Days here, Dan, That's gonna be so fun.

That is what's the what's the call on Apple? What are you gonna be looking for? What's the street looking for?

Look?

I think the quarter itself almost takes a back seat, because you know, that's everyone's focused on just giving the uncertain like how is Apple going to navigate this?

And to some extent like I'd be surprised if.

They actually gave guidance, or maybe they'd give guidance with a huge caveat, because the reality is, especially when it comes like the two thirty two TIFFs, in terms of that, and you need to come out. You know, they're basically going through logistics nightmare terms of chaos, the demands or the longer term demands.

So the reason to own Apple, that doesn't change. But in terms I think many.

On the street, they're basically going to toss out the June quarter. I mean their focus is basically Junes them all again. Yeah, and now you look to see what happens ultimately come out of the White House from the negotiation perspective.

So two questions on that. One, what we hear about shifting supply chains quickly? There was an article out today about getting a lot of sourcing from India, and too, do we get any insight potentially into how much a new iPhone with tariffs will cost?

Now they're going to I mean this is going to be they're going to keep that very very close and they're not going to discuss because because the reality right now, they got to be careful, right because they are in the eye of the.

Storm, just like gens in a video.

And that's why they they're ultimately beholden to what happens in negotiations. But it's it's why it's so important. We've talked about despite all the articles, and the reality is it would take them years to even move ten percent of the supply chain. So that's the reality that Cook an Apple or seeing. But that's why the you know, this call is going to be important to kind of leigh out the scenarios at least how they're going through it.

In your broader world of technology, Dan, are there any areas that are safer havens to be at given all this global uncertainty?

Yeah, I mean we talked about it, you know, and no, yes, I think like the safety blanket area is software. And that's why the hyperscalers I think you saw from Goole, I think that, I'll say the same thing from Microsoft. You look at names like a Oracle, I think IBM, despite that sell off, is a safe haven. Then themes like Palanteer, like AI driven memes, that's some of the

No one wants to lose their place in.

Line, okay, but to the to the solid cap X is it shifting within that? So you don't want to lose your place online?

I get that.

But at the margin, are we seeing any money flow from say, enterprise to AI or out of AI and the enterprise or some shifting on the margin there?

Yeah, I think you.

I mean, I think from a priority perspective, like within IT departments, there's so much kind of freezing uncertainty. If you're AI, you're you're with the cool kids. If you're not, it's tough to get things approved. So I think that's if you're on an AI focused project, that that's a lot of stuff that's getting green with despite so much uncertainty.

Dan, thank you so much. Appreciate that as always, Dan ives, oh real quick, then good first round for your Penn State football players.

But I'm wearing my look, abdual Carter, I think it's going to change the Giants along with Dart. You got two penn Stators right top fifteen. You know, a huge, huge day for Giants and pen Stators.

Yep, absolutely, so we appreciate that, Dan, huge, huge, Penn State fan of Penn State grad there, so I want to give the heads up again to Penn State football players taken in the first round of the draft. Once of Mike, you're a giant, So that's a good thing. Dan, I've Schlobe ahead of Technology Research, Web Bush Securities. Let's be honest. He peaked at Penn State, but he's kind of doing the best he can.

He's doing all right, here's just okay, he's doing okay.

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All right, let's get to another stock on the move, and that's Apple. The reporting is that potentially it's going to move some iPhone manufacturing to India on a rograna Bloomberg Intelligence and your technology analyst joins us, Now, how much stock should I put in this headline on a rug?

I mean, it is a very big deal for them to double the production of Apple in India. This is mostly assembly, but you know, frankly speaking, it's gone from nowhere to just about twenty percent by the end of for this year, so I mean last year. It's just a big number frankly, and it was surprising to us at this point, I'd sell.

What's surprising to me is you actually shaved You found your razor and he shaved off his beard. So I am all in favor of that, correct, Yeah, so anx so. In reality, though, how do you and how does the street think about Apple's ability to I don't know, reduced to some degree. It's kind of reliance on China as an end market, as a as a source in its supply chain. How does the streak get comfortable with that?

See?

On the other hand, I do want them to stay in China because that is their biggest growth market. That that's the market where they have the most phones out there right now. One of I don't think people understand that they have more iPhones as an install base in China than they have anywhere else in the world, and yet their market share in that area is only twenty percent. So for me, that's a very important end market. D couple is not going to help Apple's growth story, but.

Does it help Okay, it doesn't help its growth story, but does it help it manage tariff and margin pressures over the next few decades, though, yes it does.

But at the same time, Apple is a company where it has navigated the Chinese politics very well, probably better than anybody else out there. Now, if they decide to say, Okay, we're going to take a lot of this capacity and move it outside, I do not know what kind of backlash there's going to be by the Chinese government or the Chinese consumer. Now that's we will still find out what that happens. But you know, for me, it's an

Right, So anrag in a world that is kind of reeling from trade uncertainty, global trade uncertainty emanating from all the tariff talk is replaced in technology to hide.

That's a very good question.

When you look at a direct impact, Apple is the one with the highest direct impact. There are other companies that really have no major exposure to China. I'm going to bring up Microsoft as one of those names.

And this is where I think they will show.

I think the street over the next one to two years that their growth rate will continue irrespective of what's happening to the macro because of all the investments that they are putting in GENNI. I think that story is still not fully understood by the street just because all the investments they are making. People are only considering capax. But I think they're going to go ahead and take more market share in cloud just because of all these investments.

Before I let you go. We got Google this week, we got Texas Instruments next week, do get Apple. What themes are emerging for you in some of these tech earnings, I.

Think the capital expenditure and what's going to happen, and that is going to be one important thing. The second thing I think, at least for now, things are not as bad as we expected then to be. You know, when you look at results from SAP service now you know things things are not that bad. But having said that, I think we have not seen the biggest brunt of the slowdown coming in that probably motive is a second

Right, Hona Agrana, thank you so much. We appreciate that. On Agrana, he does the technology thing for Bloomberg. Intelligency's spaced out there in Chicago, which is most people don't know is a burgeoning tech hub, and Anorog's blazing the trail out there in Chicago certainly, So anyway we're going to get here from Apple next week. That's gonna be

So well, I mean, but also what are you saying it's not just about making it, it's not selling it. Yep, And that is a huge question mark there as well.

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