As Trade Deal Deadline Looms, Could Trump’s Tariffs Be Deemed Unlawful?

Summary

WSJ What’s News Podcast Summary
Episode: As Trade Deal Deadline Looms, Could Trump’s Tariffs Be Deemed Unlawful?
Release Date: July 31, 2025
Host: Alex Osola

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1. Microsoft Achieves $4 Trillion Valuation Driven by AI

Timestamp: [00:53 - 03:17]

In a landmark achievement, Microsoft has become the world's second $4 trillion company, surpassing previously held valuations. This milestone was reached shortly after the company reported outstanding fourth-quarter earnings, particularly excelling in its cloud computing division, Azure.

Sebastian Herrera, Wall Street Journal’s technology reporter, attributes this success to Microsoft's significant investments in artificial intelligence (AI). “[Microsoft] is putting those chips in their data centers and renting them out to many companies who are using them to train large language models,” Herrera explains at [02:08]. This strategic move has allowed Microsoft to capitalize on the burgeoning demand for AI technologies, positioning the company for sustained profitability in the coming year.

Comparing Microsoft with Nvidia, which also recently crossed the $4 trillion mark, Herrera notes the different yet complementary roles both companies play in the AI revolution. While Nvidia manufactures the essential computer chips for AI training, Microsoft leverages these technologies to offer comprehensive AI-driven services.

Looking ahead, Herrera speculates on potential contenders for reaching the $4 trillion valuation next. Sebastian Herrera mentions Apple, which is approaching the threshold but faces challenges in the AI race, and Amazon, which is also benefiting from the growth in its cloud computing services. “[Apple] has struggled a bit more than others because they have fallen behind a bit in the AI race,” he states at [02:46].

2. Stock Market Reactions and IPO Highlights

Timestamp: [03:25 - 05:48]

The stock market experienced a mixed response as the overarching concerns about tariffs weighed on investor sentiment, despite strong earnings reports from tech giants like Microsoft and Meta Platforms. The S&P 500 and Nasdaq saw modest declines of about 0.4% and less than 0.1%, respectively, while the Dow Jones dropped approximately 0.7%, marking its fourth consecutive day of losses.

A standout moment in the market was the impressive debut of Figma, a software company that saw its stock surge over 250% on its first day of trading. The IPO opened at $85 per share and, after a brief pause due to volatility, closed at around $117 per share. This remarkable performance is hailed as one of the most successful initial public offerings in recent years, signaling renewed momentum in the US IPO market. “The enthusiastic reception from investors adds momentum to the US IPO market's recovery,” reports Alex Osola, highlighting the shift from a prolonged standstill exacerbated by market jitters from President Trump’s initial tariff announcements in April.

Other high-profile companies like Klarna, a buy-now-pay-later provider, and StubHub, an online ticket platform, are poised to list shares, anticipating favorable market conditions. Additionally, Apple reported a significant increase in iPhone sales, surpassing Wall Street’s expectations with a 13% year-over-year growth in sales to $66.6 billion. Amazon also reported robust growth, with a 13% increase in revenue to $168 billion and a 35% rise in profits, driven partly by its expanding cloud computing business.

3. Tariffs and Legal Challenges to Trump's Emergency Powers

Timestamp: [05:48 - 08:43]

As the deadline for the new trade deal approaches, the focus intensifies on President Donald Trump’s use of emergency powers to impose tariffs. In an ongoing legal battle, a coalition of businesses and Democratic-led states has challenged the legality of these tariffs under the International Emergency Economic Powers Act (IEEPA) of 1977.

Jess Bravin, WSJ Supreme Court correspondent, elaborates on the central issue: the extent of the president's emergency powers. At [06:59], Bravin states, “The central question is how far do the president's emergency powers extend.” The lawsuit contends that the IEEPA does not explicitly grant the authority to impose tariffs, arguing that such actions exceed the delegated powers under the law.

During the court proceedings held in Washington, D.C., the U.S. Court of Appeals for the Federal Circuit is deliberating whether President Trump can legally impose these tariffs in response to the trade deficit. Bravin explains at [07:59], “The question here is, can you imply into the word regulate trade with other countries the right to impose tariffs?”

The court’s decision is anticipated to have significant implications for global trade policies and the balance of executive power. “[The court] recognizes that it's an important case and they need to address it quickly,” Bravin remarks at [08:13]. However, given the case’s potential to escalate to the Supreme Court, the timeline remains uncertain, with no specific deadline set for the appellate decision.

4. Struggles in the Condo Market

Timestamp: [08:49 - 12:04]

The real estate market, particularly the condo sector, is experiencing significant challenges not seen in over a decade. With prices declining and supply increasing, sellers often find it difficult to attract buyers, sometimes feeling "lucky to get an offer."

Veronica Dagger, personal finance reporter, provides an in-depth analysis of the current condo market dynamics. She notes that regions like Texas and Florida are facing an oversupply of condos with dwindling buyer interest, leading to a softer market. In contrast, areas in the Northeast and Midwest exhibit a more competitive environment, albeit without the fervent bidding wars typical of previous years.

Several factors contribute to the downturn in the condo market:

• Affordability Issues: Higher mortgage rates, currently around 7%, make condos less attractive compared to single-family homes. “Condos have a higher list price per square foot than homes do in many major metros,” Dagger explains at [09:50].

• Lack of Control and Rising Costs: Ownership of a condo involves being part of a homeowners association (HOA), which entails paying HOA dues that can increase unexpectedly. Unlike mortgages, HOA fees are not fixed and can rise significantly, adding financial uncertainty for buyers.

• Regulatory Scrutiny Post-Surfside Collapse: The tragic collapse of a condo complex in Surfside, Florida in 2021 has led to heightened regulations and increased oversight of condo buildings nationwide. Many condos now face special assessments to address building damages and compliance issues, deterring potential buyers. “That scared potential buyers away,” Dagger states at [10:37].

Looking forward, Dagger suggests that the condo market could recover with:

• Lower Mortgage Rates: Reduced borrowing costs would make condos more affordable.

• Decreased Prices: More competitive pricing could attract buyers.

• Economic Certainty: Greater stability and confidence in the economy are essential to boost buyer sentiment.

Despite the current downturn, some buyers view condos as a lifestyle choice rather than an investment, which could sustain demand among certain segments of the market. “They don't see it as an investment, they see it as a lifestyle choice,” Dagger adds at [11:30].

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Conclusion

This episode of WSJ What’s News provides a comprehensive overview of significant developments in the technology sector, stock market trends, ongoing legal battles over trade policies, and the current state of the condo market. From Microsoft’s impressive valuation driven by AI advancements to the challenges faced by condo sellers amid economic uncertainties, the podcast delivers in-depth analysis and expert insights to keep listeners informed about the key factors shaping today's business landscape.

Transcript

[Alex Osola]

Viking committed to exploring the world in comfort. Journey through the heart of Europe on an elegant Viking longship with thoughtful service, cultural enrichment and all inclusive fares. Discover [e-mail] Microsoft becomes the world's second $4 trillion company. Plus, Figma makes a splashy stock market debut, adding momentum to the US IPO market. And ahead of tomorrow's trade deal deadline, a court weighs whether President Trump can use emergency powers to set tariffs.

[Jess Bravin]

There's not going to be any immediate effect on whatever the president does tomorrow. He can continue to alter his tariff policy as he wishes for now. But the government is on notice, as we all are, that this court and a higher court may at some point say, actually, all that stuff you did was not Lawful.

[Alex Osola]

It's Thursday, July 31st. I'm Alex Osola for the Wall Street Journal. This is the PM edition of what's news, the top headlines and business stories that move the world today. Microsoft has become the world's second $4 trillion company. The company crossed the market capitalization milestone this morning as investors reacted to yesterday's fourth quarter earnings report. I'm joined by Sebastian Herrera, who covers technology for the Wall Street Journal. Sebastian, what has driven Microsoft to this $4 trillion mark?

[Sebastian Herrera]

Well, this $4 trillion mark came shortly after Microsoft reported blowout earnings. They reported really great numbers for their cloud computing Azure, basically showing that a lot of companies are spending on cloud computing and primarily for artificial intelligence. And also what was notable is that they said this next year is also going to be really profitable for them. So they expect this AI windfall to continue for them and to reach even more new heights.

[Alex Osola]

The other company, of course, that has already passed that $4 trillion mark was Nvidia earlier this month. How is Microsoft and the balance of its business similar and different to Nvidia?

[Sebastian Herrera]

Both of these companies are cashing in on artificial intelligence revolution. And for Nvidia, it's a little bit different because they make the computer chips that a lot of these companies like Microsoft, used to train artificial intelligence technology. And for Microsoft, they're putting those chips in their data centers and renting them out to many companies who are using them to train large language models. So they're very connected in that way. They're both doing it in different manners, but it's both tied to the AI revolution and they're both cashing in on a lot of demand for artificial intelligence tech.

[Alex Osola]

You mentioned this pattern that the two companies so far that have crossed this $4 trillion mark have both been fueled by artificial intelligence. Any bets on what company might be next.

[Sebastian Herrera]

That's a great question. Apple is pretty close to 4 trillion as well. They've struggled a bit more than others because they fallen behind a bit in the AI race. Amazon, of course, is also big, and they're also cashing in on the AI boom in terms of data center usage. So we'll see how it plays out and if they can reach that soon.

[Alex Osola]

That was WSJ technology reporter Sebastian Herrera. Thanks so much, Sebastian.

[Sebastian Herrera]

Thank you.

[Alex Osola]

The tariff overhang weighed on stocks, offsetting strong earnings late yesterday from Microsoft and Meta platforms. The S&P 500 and Nasdaq gave up early gains, falling about 0.4% and less than 0.1%, respectively. The Dow suffered its fourth straight day of declines, dropping about 0.7%. Shares of software company Figma soared in their stock market debut today, rising more than 250% in one of the splashiest initial public offerings in years. The Stock opened at $85 a share, more than twice its IPO price and the best first day showing in recent memory for a major offering. The stock was paused temporarily for volatility and ended the day at about $117 each, more than triple the company's IPO price. The enthusiastic reception from investors adds momentum to the US IPO market's recovery. IPO activity has been at a standstill for years, and volatility from President Trump's initial tariff announcement in April didn't help. But now that market jitters have subsided, more companies are taking the plunge. A handful of high profile companies are waiting to list shares, including Buy Now, Pay later provider Klarna and online ticket platform StubHub reporting after the Bell Apple iPhone sales blew past Wall Street's expectations in the last quarter as some US Customers rushed to buy their devices before potential price increases from tariffs. The robust sales growth for the company's signature product was the highest increase in years, exceeding 13%. Overall sales came in at $66.6 billion, about 10% higher than the same period a year ago. And Amazon reported sharp increases in sales and profit, partly fueled by the growth of its cloud computing business. The tech giant said that revenue rose by 13% during the second quarter to $168 billion, and that profit grew 35%. Coming up, what a court decision might mean for Trump's tariffs. That's after the break with the Venmo debit card. You can Venmo everything, your favorite band's merch.

[Veronica Dagger]

You can Venmo this or their next show.

[Alex Osola]

You can Venmo that.

[Veronica Dagger]

Visit Venmo me debit. To learn more, the Venmo MasterCard is.

[Alex Osola]

Issued by the Bancorp bank in a pursuant to license by Mastercard International, Inc. The card may be used everywhere Mastercard is accepted. Venmo purchase restrictions apply. As a number of countries are tying up their trade deals ahead of tomorrow's deadline, Mexico is getting an extension. President Trump announced today that he and Mexican President Claudia Sheinbaum have agreed to extend the existing tariffs on Mexico for 90 days. Meanwhile, the entire issue of tariffs and whether Trump can impose them using emergency powers is under consideration. This spring, a coalition of businesses and Democratic led states sued the Trump administration over the White House's use of emergency powers to impose worldwide tariffs. They were pushing back against the president's claims that a 1977 law addressing economic emergencies gave him the ability to rewrite the tariff schedule. Today, that case was in front of federal appeals judges in Washington, D.C. and their decision could have implications for global trade and the executive office. WSJ Supreme Court correspondent Jess Bravin is here to discuss. Jess, this case, of course, is about Trump's use of emergency powers to impose tariffs in response to the trade deficit. But what is the central question here?

[Jess Bravin]

Well, the central question is how far do the president's emergency powers extend? The Constitution does not create any specific emergency powers, and it gives the Congress authority specifically over tariffs. But the Congress can't run them every day. And the Congress has delegated to the President some discretion in certain areas. And Congress has also given the president emergency powers in different areas when he declares an emergency or in other conditions that he believes meet similar circumstances. So here you have this law from 1977, which has the awkward acronym of IIPA, International Emergency Economic Powers Act. And it does list a lot of things the president can do to respond to an unusual and an extraordinary situation that originally originates abroad and implicates American interests like national security or the economy. But among the things it does not specifically list is tariffs. It doesn't say anything about tariffs one way or the other. And so the question here is, can you imply into the word regulate trade with other countries the right to impose tariffs?

[Alex Osola]

So, Jess, the judges heard arguments today. Where does the case go from here and what's the kind of timeline for that?

[Jess Bravin]

Well, this court, the U.S. court of Appeals for the Federal Circuit, as it's called, adheres disputes over tariffs and trade issues among other specific areas. It will take as long as it takes to make its decision. It doesn't have a deadline. We know that they recognize that it's an important case and they need to address it quickly. But they also know that whatever they decide is likely to be appealed to the US Supreme Court. So they probably want to be careful in what they say.

[Alex Osola]

Jess Raven covers the Supreme Court for the Journal. Thanks so much, Jesse.

[Jess Bravin]

You bet, Alex.

[Alex Osola]

Condo sellers haven't faced a market like this in more than a decade. Prices are down, supply is up, and sellers often feel lucky to get an offer. For more on this, I'm joined now by personal finance reporter Veronica Dagger. Veronica, what types of condos and where are doing better versus not doing quite so well?

[Veronica Dagger]

Well, this is just overall a tough market for condo sellers in general. Sellers in the south specifically, having a really tough time. Regions like Texas and Florida, there's a lot of condos on the market and not a whole lot of buyer interest. Areas like the Northeast and the Midwest, the condo market is more competitive.

[Alex Osola]

Still.

[Veronica Dagger]

Those folks aren't exactly encountering bidding wars when they're trying to sell their properties. There's still a lot of fundamental hesitations people have with condos these days, but in that way it mirrors the single family home market.

[Alex Osola]

Yeah, what are some of the hesitations that people have about condos versus single family homes?

[Veronica Dagger]

Typically, condos have a higher list price per square foot than homes do in many major metros, and that's especially a sticking point for people when mortgage rates are around 7%, which they are now. There's also the lack of control that you have with a condo. As you know, you're part of a homeowners association and you co own those shared spaces. You have to pay homeowner association dues. And unlike a mortgage homeowner association dues can rise, sometimes dramatically, year to year.

[Alex Osola]

What has changed to make condos really be feeling a more acute version of this bad housing market?

[Veronica Dagger]

People have less motivation to jump to condos right now because of affordability issues. Another issue is in 2021, there was a collapse of a condo complex in Surfside, Florida, and many people died. After that, regulations and scrutiny came to condos, especially in Florida. As a result, many condos in Florida and also around the United States had these things called special assessments. Some buildings turns out thrown up with not as much oversight as you would have thought. And there was a lot of damages they needed to fix over time. That scared potential buyers away. Meanwhile, there's a lot of more condo sellers looking to unload the properties for those very reasons.

[Alex Osola]

Sounds like a pretty dark picture for the condo market. What would it take to bring it back?

[Veronica Dagger]

Similar to the housing market Lower mortgage rates always help. Lower prices always help. Greater certainty in the economy. Even though the economy, by many measures, is doing well, a lot of people don't feel that way. Still, overall. And then when I speak to condo buyers, people who've bought recently tell me at the end of the day, they don't see it as an investment, they see it as a lifestyle choice. And so that will help carry the market for some future buyers.

[Alex Osola]

That was WSJ reporter Veronica Dagger. Thanks so much, Veronica.

[Veronica Dagger]

Oh, you're welcome.

[Alex Osola]

And that's what's news for this Thursday afternoon. Today's show is produced by Pierre Bienname with supervising producer Michael Kosmides. I'm Alex Osola for the Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.