\n<\/p>\n
Wall Street had been anxiously awaiting the latest quarterly results from Amazon<\/a> and Apple<\/a> to see how badly the companies \u2014 of the so-called Magnificent Seven tech giants, perhaps the most vulnerable to President Trump\u2019s trade war \u2014 would get hit by tariffs.<\/p>\n The answer: not too badly. But upcoming quarters may be messier, showing that not even hugely powerful corporations are immune to Trump\u2019s assault on global commerce.<\/p>\n The highlights:<\/strong><\/p>\n Apple exceeded analyst expectations in the most recent quarter, with $24.78 billion in profit and $95.36 billion in sales.<\/p>\n<\/li>\n Amazon squeaked past Wall Street forecasts, with $18.4 billion in operating income and $155.7 billion in revenue.<\/p>\n<\/li>\n<\/ul>\n Despite steadily climbing worries about tariffs in the just-finished quarter, Tim Cook, Apple\u2019s C.E.O., said the company hadn\u2019t seen any sign of customers pulling forward their purchases of iPhones in case levies forced the company to raise prices. That wasn\u2019t quite the case at Amazon, with Andy Jassy, the company\u2019s C.E.O., saying that there was \u201cheightened buying\u201d of certain products.<\/p>\n The future looks grimmer.<\/strong> Cook warned that despite exemptions from tariffs on Chinese-made iPhones<\/a>, won after his personal lobbying of Trump, his company may face $900 million in costs in the current quarter because of import duties. That\u2019s assuming no new fees enter the picture. (Fun fact: The word \u201ctariff\u201d came up 27 times during Apple\u2019s earnings call with analysts.)<\/p>\n<\/div>\n<\/div>\n Jassy acknowledged uncertainty, telling analysts, \u201cObviously, none of us know exactly where tariffs will settle down or when.\u201d (Tariff word count from the call: 17.)<\/p>\n Other operations are facing pressure. <\/strong>Apple\u2019s services division has often outperformed device sales. But a federal judge recently ordered the company to stop collecting commissions<\/a> from some app sales, a decision Apple is appealing. And the company could lose some of the $20 billion in annual payments that Google gives it to be the default search engine on the Safari browser if the Justice Department persuades a federal judge to impose stiff antitrust penalties on the search giant.<\/p>\n Meanwhile, Amazon\u2019s cloud computing division, a crucial business for the company, came in slightly below Wall Street expectations and lagged behind Microsoft\u2019s<\/a>. Some analysts also worry that advertising, an increasingly important source of revenue, could face pressure from tariffs.<\/p>\n The companies are taking steps to soften the blow from tariffs.<\/strong> Cook said that a \u201cmajority\u201d of iPhones sold in the U.S. during the current quarter would come from India rather than China. Other products, like iPads, would be made in Vietnam.<\/p>\n And Jassy said Amazon was \u201cpretty maniacally focused\u201d on avoiding big price increases, in part by buying up extra inventory and helping sellers on its marketplace do the same. That said, some merchants have tested how much they can raise prices<\/a> without being punished by Amazon, The Wall Street Journal reports.<\/p>\n<\/div>\n<\/div>\n Wall Street remains cautious,<\/strong> with shares in both companies lower in premarket trading. Apple has fared well for now because it hasn\u2019t had to raise prices, Ben Bajarin of the tech research firm Creative Strategies told The Times. But, he added, \u201cThe question is: If more tariffs hit, then what happens?\u201d<\/p>\n And Gil Luria of the research firm D.A. Davidson warned that shareholders<\/a> \u201cmay be a little disappointed by margins and margin guidance, which could create a concern about Amazon absorbing tariff costs.\u201d<\/p>\n DEALBOOK WANTS TO HEAR FROM YOU<\/p>\n We\u2019d like to know how the tariffs are affecting your business. Have you changed suppliers? Negotiated lower prices? Paused investments or hiring? Made plans to move manufacturing to the U.S.? Or have the tariffs helped your business? Please <\/em>let us know what you\u2019re doing<\/em><\/a>.<\/em><\/p>\n A crypto deal puts President Trump\u2019s conflicts in the spotlight.<\/strong> The state-backed Emirati artificial intelligence giant MGX said it would use USD1, a Trump-affiliated stablecoin, to make a $2 billion investment<\/a> in the crypto exchange Binance. The transaction could generate hundreds of millions of dollars for the Trump family, further raising concerns about the president\u2019s conflicted relationship with crypto. Senator Elizabeth Warren, Democrat of Massachusetts, cited the news to denounce a proposed stablecoin law<\/a> that she said would \u201cmake it easier for the President and his family to line their own pockets<\/a>.\u201d<\/p>\n<\/div>\n<\/div>\n Microsoft drops a longtime legal adviser for one that is fighting Trump.<\/strong> Lawyers from Simpson Thacher & Bartlett \u2014 which agreed last month to donate $125 million in pro bono services to Trump-favored causes \u2014 stepped back from representing<\/a> the tech giant in a lawsuit related to its takeover of Activision Blizzard. They\u2019re being replaced by lawyers from Jenner & Block, which has sued to block an executive order targeting the firm. It isn\u2019t clear why, but it\u2019s a sign that opposing Trump won\u2019t necessarily cost a law firm business.<\/p>\n Kohl\u2019s fires its C.E.O. for sending business to his romantic partner.<\/strong> The retailer said it had dismissed Ashley Buchanan, who had held the role only since November, \u201cfor cause\u201d<\/a> for directing the company to do business with a vendor with whom he had \u201cundisclosed conflicts of interest.\u201d The Wall Street Journal reports that Buchanan had Kohl\u2019s sign a multimillion-dollar consulting agreement with Boston Consulting Group, where his partner, Chandra Holt, is an adviser<\/a>.<\/p>\n<\/div>\n<\/div>\n The labor market has been on autopilot, with employers on a hiring spree that has chugged on for roughly five years. That streak is expected to continue with Friday\u2019s jobs report \u2014 but many economists predict complications as companies brace for more fallout from President Trump\u2019s trade war.<\/p>\n A lighter-than-expected readout could bolster calls by Wall Street for the Fed to lower interest rates soon, especially after Wednesday\u2019s tepid inflation report and lousy G.D.P. report. While economists and traders say they believe a rate cut in May is unlikely, the central bank will come under more pressure if Friday\u2019s numbers are especially soft.<\/p>\n What to expect:<\/strong> Hiring will probably have risen by about 135,000 in April, down sharply from the 228,000 added in March, economists polled by FactSet estimate<\/a>; that would keep the unemployment rate steady at 4.2 percent. Wage growth is expected to remain little changed from the previous report, again growing at 0.3 percent clip on a three-month rolling average.<\/p>\n (It may take several more months before federal job losses driven by Elon Musk\u2019s so-called Department of Government Efficiency start showing up in the reports.)<\/p>\n Recent economic data has been worrisome.<\/strong> ADP\u2019s private payroll report<\/a> on Wednesday showed a hiring slowdown. There tend to be discrepancies between reports by ADP and the Bureau of Labor Statistics, but weakness elsewhere \u2014 evident from Thursday\u2019s ISM manufacturing data \u2014 suggests a rough patch ahead.<\/p>\n<\/div>\n<\/div>\n \u201cFirms are pivoting towards layoffs and away from hiring freezes and attrition to control costs amid weakening demand and an uncertain economic environment,\u201d Matthew Martin, senior U.S. economist at Oxford Economics, wrote in a research note on Thursday, predicting trouble going forward for the manufacturing sector.<\/p>\n The real doozy could come next month.<\/strong> That\u2019s when economists expect to see the fallout from Trump\u2019s trade war and his crackdown on immigration eat into hiring. \u201cThe longer large tariffs last, the greater the chance for tariff-related layoffs,\u201d Veronica Clark, an economist at Citigroup, wrote in an investor note this week.<\/p>\n American shoppers looking to buy an inexpensive T-shirt or pair of shoes on Shein are in for a surprise at checkout. On Friday, Trump ended a shipping rule that has underpinned the explosion of e-commerce and its disruption of traditional retail business models. The tax exemption has let packages from China valued at under $800 come into the U.S. tariff-free.<\/p>\n<\/div>\n<\/div>\n Shein and Temu, the popular Chinese shopping apps, relied on the so-called de minimis loophole. They\u2019re already raising their prices<\/a> because of the change.<\/p>\n Calls to reform de minimis predate President Trump. But as Danielle Kaye writes for DealBook, his rollout is sowing chaos for e-commerce sellers of all sizes, not just the fast-fashion giants.<\/p>\n In Trump\u2019s view, de minimis is a \u201cscam.\u201d <\/strong>He said this week that it hurts small businesses. The president has also said that the exemption needed to end as a way to stop the flow of fentanyl. Trump tried to start taxing low-value Chinese goods in February, but he walked back the change after it caused a pileup of packages at the border.<\/p>\n He\u2019s trying again and, this time, it might stick.<\/p>\n Neither Democrats nor Republicans like the exemption.<\/strong> Last fall, the Biden administration cited similar concerns<\/a> when introducing a plan to reduce these lower-cost shipments. And traditional retailers that send big bulk shipments to their U.S. warehouses have also long bemoaned the rule, saying it puts them at a disadvantage. Companies delivered $46 billion-worth of packages<\/a> under the provision, according to a Nomura estimate.<\/p>\n Fast-fashion giants are in the spotlight. <\/strong>Shein and Temu have become shopping behemoths thanks in part to the exemption. Their customers have gotten used to the discounts and speed \u2014 $15 clothes, shoes, toys, household items, all at their doorstep within days. Together, Shein and Temu generate well over $100 billion<\/a> in gross sales.<\/p>\n<\/div>\n<\/div>\n Amazon drew Trump\u2019s anger<\/a> recently when it reportedly considered following the lead of these e-commerce sites by itemizing the tariff costs in the prices. Temu started detailing the cost that tariffs would add to their purchases, while Shein is warning that \u201ctariffs are included in the price you pay.\u201d<\/p>\n But ending de minimis is not necessarily existential for these companies.<\/strong> It might just mean changes to their supply chains. They\u2019ve already started to diversify by working with more U.S.-based sellers, and Shein has considered shifting some production outside of China, according to a report from<\/a> The Financial Times.<\/p>\n It\u2019s not just the big players.<\/strong> Lots of people who sell on sites like Etsy, eBay and Shopify rely heavily on the de minimis tax exemption.<\/p>\n Kelly Kendall, who runs a craft supplies business in the Chicago area, imports most of her products directly from China \u2014 tax-free, through de minimis. She uses those materials to make kits that she sells on Etsy. Now, her business model is up in the air. \u201cI don\u2019t think people understand the larger impact for really small businesses,\u201d Kendall said.<\/p>\n This doesn\u2019t affect just U.S. businesses.<\/strong> The new taxes apply for all goods made in China, even if they\u2019re shipped to the U.S. indirectly. Some Canadian vendors who sell Chinese-made goods said they\u2019re looking to build out their Canadian customer base in response to the de minimis change.<\/p>\n<\/div>\n<\/div>\n Deals<\/strong><\/p>\n Politics, policy and regulation<\/strong><\/p>\n Best of the rest<\/strong><\/p>\n Tariff front-running didn\u2019t just distort G.D.P. figures<\/a>, an economist argues: It also signals an actual slowdown in growth. (Apricitas Economics)<\/p>\n<\/li>\n Bill Belichick\u2019s relationship with Jordon Hudson has been fodder for gossip sites. But it also cost U.N.C., whose football team he coaches, a deal with HBO<\/a>. (The Athletic)<\/p>\n<\/li>\n \u201cTrump Wants a New Air Force One So Badly He\u2019s Refurbishing a Qatari Plane<\/a>\u201d (WSJ)<\/p>\n<\/li>\n<\/ul>\n\n
\nHERE\u2019S WHAT\u2019S HAPPENING <\/span><\/h3>\n
What to watch in Friday\u2019s jobs report<\/h2>\n
<\/div>\n<\/div>\nA $10 T-shirt might now cost $24.50 <\/h2>\n
THE SPEED READ <\/span><\/h3>\n
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