WSJ What’s News: China Readies Its Trade-War Arsenal
Release Date: April 10, 2025
Host: Luke Vargas
Author: The Wall Street Journal

Introduction

In the April 10, 2025 episode of WSJ What’s News, hosted by Luke Vargas, The Wall Street Journal delves into the escalating trade tensions between the United States and China, the recent prisoner swap between Russia and the US, and emerging intelligence regarding Chinese involvement in the Ukraine conflict. The episode offers comprehensive insights into how these developments are shaping global markets and geopolitical dynamics.

Global Market Relief Amid Tariff Pauses

Timestamp [00:55] – [03:01]

The episode opens with a discussion on the immediate impact of President Trump's recent policy shift regarding tariffs. After initiating a 90-day pause on reciprocal tariffs imposed on various countries, including maintaining a significantly higher tariff rate of 125% on Chinese goods, global investors experienced a brief sense of relief. Market editor Katie Barnado provides an analysis of the current market trends:

• Japanese Nikkei Index: Increased by over 9%.
• South Korean Kospi: Rose more than 6%.
• German Dax: Up by 6%.

Barnado notes, "Perhaps things are more interesting if you look into some other assets," highlighting that despite the rally in international stock exchanges, U.S. Treasury yields remain high at around 4.3%, suggesting underlying market anxieties. Additionally, the US dollar is weakening against other currencies, contrary to typical expectations under such circumstances.

China's Preparedness for a Trade War

Timestamp [03:01] – [09:12]

The core of the discussion centers on the intensifying trade war between the US and China. Luke Vargas converses with Jonathan Cheng, the Wall Street Journal's China Bureau Chief in Beijing, about China's strategic positioning and potential responses to the US's tariff tactics.

Cheng elaborates on China's readiness, stating, "China comes into this pretty well prepared psychologically. They have thought about all the bits of leverage that they have." He emphasizes that beyond retaliatory tariffs, China possesses various strategies to counteract US pressures, such as:

• Access Hindrance for American Companies: Making it more difficult for US businesses like Apple and Tesla, which are heavily reliant on Chinese manufacturing bases, to operate within China.

• Intellectual Property Pressures: Chen discusses the historical context of IP transfer through joint ventures, noting that increased coercion might compel Western companies to relinquish more proprietary information in exchange for market access.

• Market Diversification: Although tariffs on China's exports could disadvantage their competitiveness, Cheng points out that China still has approximately 200 countries as potential markets, mitigating the impact of US-specific trade barriers.

Furthermore, Cheng highlights the limited effect of the tariff increase from 104% to 125%, explaining, "After a certain level, call it 60% or higher, it really doesn't matter what the tariff level is because it will bring trade on that tranche of products basically to a standstill." This suggests that the aggressive tariff rates may effectively halt certain trade segments regardless of incremental increases.

Supply Chain Adjustments and Vietnam's Role

Timestamp [07:05] – [09:16]

The conversation shifts to the potential rerouting of supply chains amidst the trade tensions. Reporter Stu Wu provides insights from Vietnam, a country that was initially slated to face 46% reciprocal tariffs but has since seen these tariffs put on hold.

Wu notes, "It's still cheaper than China, which has an even higher tariff," indicating that despite the high tariffs, Vietnam remains an attractive destination for foreign investors due to its low labor costs and established infrastructure. However, these temporary tariff pauses offer China a brief respite, though Cheng cautions that a 90-day pause is minimal in the grand scheme, requiring long-term strategic adjustments.

Russia-US Prisoner Swap and Chinese Involvement in Ukraine

Timestamp [09:28] – [12:22]

Aside from trade issues, the episode covers the recent completion of a prisoner swap between Russia and the US. The exchange, conducted in Abu Dhabi, involved the release of Russian dual national Kisenya Karolina in return for Arthur Petrov, a dual German-Russian citizen accused by the US of exporting controlled microelectronics to support Russia's military efforts.

Moreover, intelligence reports reveal that over 150 Chinese citizens have joined Russian troops in the Ukraine conflict. Ukrainian intelligence, as reported by James Marson, uncovers detailed lists of Chinese nationals involved, raising concerns about:

• Skill Transfer: Some Chinese fighters are designated as explosive drone operators, suggesting potential knowledge transfer of advanced military techniques back to China.

• Motivations: It remains unclear whether these individuals are mercenaries driven by financial incentives or have broader affiliations with the Chinese government.

China has officially maintained a stance of economic support for Russia while denying active military involvement. However, the presence of Chinese nationals in the conflict zone complicates this narrative and poses questions about China's future geopolitical strategies.

Economic Indicators to Watch

Timestamp [12:22] – [End]

Looking ahead, the episode highlights key economic indicators, namely the upcoming US inflation figures expected to show a slight slowdown in March. Economists polled by The Wall Street Journal anticipate a drop in inflation from 2.8% to 2.6%, which could influence Federal Reserve policies and market movements.

Conclusion

The April 10th episode of WSJ What’s News provides an in-depth analysis of the mounting trade tensions between the US and China, the strategic preparations by China for potential economic confrontations, and the broader geopolitical implications involving Russia and Ukraine. With expert insights from Jonathan Cheng and on-the-ground reporting by Stu Wu and James Marson, the episode equips listeners with a nuanced understanding of the complex interplay between global markets and international relations.

Notable Quotes:

• Jonathan Cheng: "China comes into this pretty well prepared psychologically. They have thought about all the bits of leverage that they have." [03:36]

• Katie Barnado: "Perhaps things are more interesting if you look into some other assets." [01:44]

• James Marson: "There's a question here as to whether these men are pure mercenaries doing it for money, citizenship, or whether they're actually going to then transmit those skills, that information that they learn on the battlefield, back to the Chinese authorities." [11:17]

Key Takeaways:

• Trade Dynamics: The US-China trade war remains a critical issue with China showcasing considerable preparedness and multiple strategies to counteract US tariffs.

• Market Reactions: Global markets experienced a temporary rally following the US's pause on reciprocal tariffs, though underlying economic indicators suggest persistent uncertainties.

• Geopolitical Tensions: The involvement of Chinese nationals in the Ukraine conflict and the recent Russia-US prisoner swap underline the intricate and multifaceted nature of current international relations.

• Economic Forecasts: Upcoming US inflation data will be pivotal in shaping future economic policies and market trends.

For more detailed analyses and updates, listeners are encouraged to follow future episodes of WSJ What’s News.