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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 Mark Filippino, and here's the news you need to start your day.
The Trump administration has called pause on some of its most aggressive tariffs.
We're going to go down to a 10 % baseline tariff.
Treasury Secretary Scott Besant 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.
We have just been overwhelmed by the response from mostly our allies who want to come and negotiate in good faith.
China, though, was singled out.
The country got hit with even higher tariffs, Bessant said, because it retaliated.
They kept escalating and escalating, and now they have a hundred and twenty -five percent tariffs that will be effective immediately.
Mr. Secretary, well, go ahead.
Still, Trump's reversal sent Wall Street stocks soaring.
The S &P 500 surged around nine and a half percent.
That was the index's best day since 2008.
Apple had a big turnaround yesterday on the tariff news.
Its stock rose more than 15 percent.
But before Trump's reversal, the company had lost about $700 billion 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 F .T.'s Michael Acton who covers Apple.
Hey Mike. Hey Mark.
So Apple's looking more seriously at India to help, you know, offset these tariffs.
How has that relationship evolved?
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 underway clearly, to build our Apple supply chain in the country for the longer term to hedge against the risk that clearly arises from Apple's reliance on China.
And was Apple done in the day since the tariffs snapped into place?
Well, we've literally seen iPhones being bundled onto 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 30 million of the 50 million 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.
But what are some of the issues Apple might face when pivoting to India?
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 going to have to deal with importing those components, and also the skilled labor 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.
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?
I think the answer from most people who closely monitor Apple's supply chains is no, but that hasn't stopped the White House press secretary this week being very vocal, reiterating the idea that the U .S. can become an iPhone assembly center.
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 $30 billion for Apple over the course of three years to move even 10 % 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.
That's the FT's Michael Acton.
Thanks so much, Michael.
Thanks. 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 cooperating with Beijing.
Both sides are rushing to contain fall out 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. Hey Marc.
All right, so tell me about this call.
What went down? 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 beat some kind of stable force in this global turmoil created by the US.
Yes. Yeah, unpack the EU's concerns when it comes to trade with China a bit more.
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 got to talk We've got to make sure that we come up with a fair solution that creates as much stability as possible between us So, how was that call between Von der Leyen and Li Qian left?
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 blocks.
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 a leadership level about solutions to trade issues, most people think is a very good thing.
So, Henry, what does this ultimately mean for the U .S. if the EU and China get all buddy -buddy?
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 and the EU, Brussels picks up the phone to Beijing, tries to sell 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 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.
That's the FT's Henry Foy.
Thanks so much, Henry.
Cheers, Mark. Thanks a lot.
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.
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