China Vows to Fight U.S. Tariffs ‘To The End’

Summary

WSJ What’s News: China Vows to Fight U.S. Tariffs ‘To The End’
Release Date: April 8, 2025

In this 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 consequential shifts in global markets, and the broader geopolitical impacts. The episode also explores significant developments in U.S. immigration policy, nuclear negotiations with Iran, and the current state of the U.S.-Mexico border.

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1. Escalating US-China Trade War

Trump's Additional Tariff Threats

The episode opens with President Donald Trump's recent announcement threatening to impose an additional 50% tariff on Chinese goods, a move that has significantly heightened tensions between the two economic giants. Luke Vargas contextualizes the gravity of this threat:

“China is vowing to fight until the end in response to new US Tariffs a day after President Trump threatened to raise duties on Chinese goods by an additional 50%.” (00:32)

China's Determined Response

China has responded steadfastly, pledging to counteract these tariffs fiercely. Alex Frangos, the Journal's finance editor for Europe, provides an in-depth analysis:

“If a country imposes massive tariffs on you, you would expect your currency to weaken as a way to adjust to that condition and make your goods cheaper vis a vis the tariffs that were just imposed.” (01:40)

Frangos explains that China recently set the yuan at a weaker level than in months, a strategic move aimed at boosting exports and supporting domestic markets amidst the tariff pressures.

Monetary Policy Shifts and Market Support

The weakening of the yuan is part of a broader strategy to stabilize China's economy. Frangos notes:

“The Chinese government's trying to support the economy, support the market as a show of force against what Trump has thrown at them.” (02:32)

China has also encouraged state-owned enterprises to purchase stocks, leading to a modest recovery in Chinese and Hong Kong markets. This intervention is intended to counteract the negative impact of the tariffs and demonstrate resilience.

2. Shifts in US Corporate Supply Chains

Corporate Relocation Efforts

In response to the looming tariffs, U.S. businesses are actively seeking to mitigate potential disruptions. Notably, Apple is reportedly shifting parts of its iPhone production from China to India as a temporary measure:

“Apple, reportedly looking to shift their supply chain and source more iPhones from India.” (03:54)

Challenges in Supply Chain Realignment

Despite these efforts, changing supply chains is proving to be challenging. A report commissioned by the U.S. Chamber of Commerce Foundation highlights that many American companies intend to maintain or even strengthen their ties with China due to the complexity and time required to restructure supply chains effectively.

“...changing supply chains is a lot easier said than done.” (05:00)

Businesses are navigating a delicate balance, attempting to limit price increases while managing the uncertainty surrounding potential long-term tariff implementations.

3. US Supreme Court Rulings on Deportations

Deportation of Venezuelan Gang Members

In Washington, the Supreme Court has recently lifted a block on the deportation of suspected Venezuelan gang members to El Salvador. This 5-4 ruling allows the Trump administration to expedite removals under the ancient Alien Enemies Act, albeit with a provision for detainees to contest their deportation in federal court.

Case of Kilmar Abrego Garcia

A notable case involves Kilmar Abrego Garcia, a Maryland resident mistakenly deported to El Salvador. Despite an immigration judge ruling that he would likely face persecution, the administration has paused his deportation after Chief Justice John Roberts extended a midnight deadline.

“Abrego Garcia's lawyers panned Robert's move for enabling the executive branch to violate court orders...” (06:02)

This case underscores the tension between the executive branch's immigration policies and judicial oversight, highlighting potential vulnerabilities in the separation of powers.

4. US-Iran Nuclear Talks

High-Stakes Negotiations

The United States and Iran have agreed to engage in high-stakes talks in Oman to address Tehran's nuclear program. These negotiations are critical, as President Trump has signaled a willingness to consider military action if no agreement is reached.

“The talks will test Trump's ability to roll back Iran's nuclear program that's left it closer than ever to a workable weapon.” (07:24)

Strategic Implications

Alex Frangos emphasizes the importance of reaching a deal:

“Doing a deal would be preferable to doing the obvious, and the obvious is not something that I want to be involved with...” (07:37)

A successful negotiation could stabilize regional tensions, while failure might escalate conflict involving key allies like Israel.

5. Quiet at the US-Mexico Border

Dramatic Decline in Illegal Crossings

Cajel Villas, the Journal's correspondent, reports an unprecedented reduction in illegal crossings at the U.S.-Mexico border. Recent U.S. Customs and Border Patrol data indicate over 7,000 encounters last month, a stark decrease from nearly 190,000 in the same period the previous year.

“We've seen the number of people trying to illegally cross into the US just plummet more than 90%.” (09:18)

Enhanced Border Security Measures

This decline is attributed to intensified law enforcement efforts and heightened surveillance. Villas describes the border area as "eerily quiet," with both U.S. military and Mexican state police deploying extensive operations to monitor and control the border effectively.

Impact on Cross-Border Trade

The strict border measures have also affected trade between the two nations. Cross-border commerce, valued at over $800 billion last year, has seen a significant slowdown. Specifically, truck crossings in Ciudad Juarez have dropped sharply following the imposition of tariffs, with a 14% decline on the third day of the tariff trial run.

“...we're coming across this very pivotal moment where this could very much be disrupted or even ruptured.” (11:13)

Potential Consequences for US-Mexico Relations

The strained trade environment threatens to disrupt the highly integrated economies of the U.S. and Mexico. Additionally, Mexican officials fear that severe tariffs could undermine cooperation on migration and security fronts, potentially jeopardizing successful joint operations against drug trafficking.

“...we've heard this from Mexican officials directly that if they are slapped with very painful tariffs, it could affect their cooperation on the security and migration front.” (12:18)

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This episode of WSJ What’s News provides a comprehensive overview of the current geopolitical and economic landscape, highlighting the intricate interplay between U.S. policy decisions and global market reactions. From the intensifying US-China trade war to the quiet on the US-Mexico border, the Wall Street Journal offers valuable insights into the forces shaping today's world.

Transcript

[Advertiser]

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[Announcer]

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[Luke Vargas]

A Minecraft movie only in theaters. Beijing pledges more countermeasures if President Trump follows through on a threat for an additional 50% tariff on Chinese goods. Plus global equities regain ground after yesterday's market whiplash.

[Alex Frangos]

This is a standoff between markets and the White House. And markets are desperate for any sign that the White House is open to negotiate, depositing the tariffs. And the White House is basically saying don't even think about it.

[Luke Vargas]

And we'll get an Update from the U.S. unusually quiet southern border. It's Tuesday, April 8th. I'm Luke Vargas for the Wall Street Journal and here is the AM Edition of what's news, the top headlines and business stories moving your world. China is vowing to fight until the end in response to new US Tariffs a day after President Trump threatened to raise duties on Chinese goods by an additional 50%. That pledge is cementing expectations that Beijing and Washington are set for a deepening trade war. And within China, it's beginning to lead to a shift in monetary policy as the country seeks to boost exports and prop up domestic markets. Here with more is Journal finance editor for Europe, Alex Frangos. Alex, we report China is now easing its grip on the yuan. Walk us through what exactly is going on here.

[Alex Frangos]

Yeah. So the Chinese government every day sets a level for its currency and this morning they set the level weaker than it's been in a number of months. Now, that's what you would expect. If a country imposes massive tariffs on you, you would expect your currency to weaken as a way to adjust to that condition and make your goods cheaper vis a vis the tariffs that were just imposed. Now, what they did today was minuscule, very tiny, but noteworthy enough and has people talking about whether China will continue with that path and maybe slowly or maybe quickly, we don't know, allow the yuan to weaken in the days, weeks, months ahead as its own countermeasure against the tariffs that Trump has imposed on China. All right.

[Luke Vargas]

This yuan strategy, as you mentioned, could help boost Chinese exports. Is it also part of a strategy to support stock prices within the country?

[Alex Frangos]

In some ways, yes. For companies that are listed, companies in China that do a lot of exports, a cheaper currency is certainly a good thing. But the government has done other things. It's encouraged some of its state owned enterprises to go in and buy stocks today. And so we've seen the market go up a bit, especially after yesterday's absolute shellacking. And the Hong Kong market recovered a little bit. So the Chinese government's trying to support the economy, support the market as a show of force against what Trump has thrown at them.

[Luke Vargas]

Alex, we are seeing in Hong Kong, in Shanghai, a recovery in markets in the 1 to 2% range today, though more profound is what's occurring over in Japan, the Nikkei up around 6%. Are we seeing markets at least just using the Asian snapshot here, finding a floor of sorts?

[Alex Frangos]

Well, we won't know if it's a floor for many days or weeks after the floor has been reached. So I will make no predictions. What we saw in Japan was a big snapback today because Treasury Secretary Besant basically said Japan is first in line for negotiations. Japan has already nominated one of its ministers to go and do those negotiations. They seem very eager to get something going so that their very export oriented economy is not hit too hard by very, very high tariffs which are meant to come into force tomorrow.

[Luke Vargas]

Alex Frangos, thank you so much for stopping by.

[Alex Frangos]

Thank you.

[Luke Vargas]

In morning trading, European stocks are following Asia higher, as are US futures with contracts tied to the Dow, Nasdaq and S&P 500 all making gains off hours. Meanwhile, businesses are trying to navigate the new tariff landscape with some, including Apple, reportedly looking to shift their supply chain and source more iPhones from India. According to people familiar with the matter, that's a temporary stopgap to offset the high tariffs on China. Peter Landers is our Asia corporate news editor and says businesses are looking for solutions that can limit prices increases.

[Announcer]

In Apple's case, whether it's made in China or made in India, there's no way to avoid a certain level of price increase if these tariffs stick. And I think businesses are investigating what they can do. However, with the tariffs set to go into effect tomorrow, it's probably too late to really boost production in the next 24 hours. But they are considering how they can use their existing manufacturing footprint most effectively.

[Luke Vargas]

That said, a new report commissioned by the U.S. chamber of Commerce foundation says many American companies plan to hold on to or even increase their ties with China. And as Peter explains, that's because changing supply chains is a lot easier said than done.

[Announcer]

A lot of businesses are trying to figure out where is the location they can manufacture with the lowest tariffs to the U.S. some countries had 50% or more like China. Vietnam at 46% was quite high. So they're looking for places like India or perhaps Mexico or the U.K. however, what they're also telling us is that it's too soon to make long term decisions. If you already have factories in two places and one has a lower tariff, then you're going to try to use that one to export more to the US but they don't know whether Trump will stick to his plan and that's why it's too soon to make long term decisions that might take years to implement.

[Luke Vargas]

In other news from Washington, the Supreme Court has lifted a block on the deportation of suspected Venezuelan gang members to el Salvador. The 54 ruling allows the Trump administration to keep expediting removals under the 18th century Alien enemies act, though the court said that detainees were entitled to an opportunity to challenge their deportation before a federal judge in Texas. In a separate move, Chief Justice John Roberts agreed last night to pause a midnight deadline for the Trump administration to return a Maryland man who was deported to El Salvador by mistake. The administration has conceded that Kilmar Abrego Garcia should not have been sent to El Salvador because an immigration judge found he'd likely face persecution by local gangs. However, they say he's no longer in US Custody and the government has no way to get him back. Abrego Garcia's lawyers panned Robert's move for enabling the executive branch to violate court orders and then invoke the separation of powers to insulate its unlawful actions from judicial scrutiny. And the US And Iran have agreed to hold high stakes talks on Tehran's nuclear program. Officials from both sides are expected to meet in Oman on Saturday, with President Trump suggesting he could take military action if no deal is reached.

[Alex Frangos]

Doing a deal would be preferable to doing the obvious, and the obvious is not something that I want to be involved with or frankly that Israel wants to be involved with if they can avoid it.

[Luke Vargas]

The talks will test Trump's ability to roll back Iran's nuclear program that's left it closer than ever to a workable weapon. Coming up, Journal correspondent Cajal Villas will take us to the normally bustling U. S Mexico border, where an eerie quiet has set in. That's after.

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[Luke Vargas]

Two and a half months into the Trump presidency, what's the situation at the US Mexico border? The Journal's Cajel Villas recently traveled to Ciudad Juarez in Mexico, across the border from El Paso, Texas, to check in on migration trends as well as the flow of goods between the two countries, which was valued at more than $800 billion last year. And Cajul joins me now with more Cajel. Before we talk trade, let's discuss border security and illegal crossings, a big focus for the president. U.S. customs and Border Patrol reports there were just over 7,000 encounters by law enforcement at the Southwest border last month, compared to nearly 190,000 the same month last year. It sounds like a lot has changed.

[Advertiser]

Yeah, Luke, it's quiet. I would say eerily quiet. We've seen the number of people trying to illegally cross into the US just plummet more than 90%. I had the chance of speaking to a few Mexican nationals who were recently deported there and they had very sad stories and almost were convinced that now is not the right time really to cross, putting their plans of living out the American dream on pause for the moment. We're not really expecting the level of surveillance and the level of security that has been deployed by both sides to the border. And so it's really kind of made a lot of people think twice. A lot of migrants from third countries are just stuck in limbo in Juarez and other cities around northern Mexico, just kind of really figuring out where to go from here.

[Luke Vargas]

You, in your reporting sort of described a bit of a beehive of law enforcement activity on both sides of the border. Tell us a bit more about what you saw.

[Advertiser]

We had a chance to accompany Mexican state police for the state of Chihuahua, which actually has the longest border with the US and they've been running these so called mirror operations almost daily where both sides just patrol their respective sides of the border, check in on, on areas where there's no wall or mesh fence, also pick up any migrants stragglers that they find, which they still do find occasionally, but they're nowhere near the numbers that we saw early 2024 and late 2023. So there's no real congregations of migrants at the border. There was a lot of like impromptu camps of people if you just were there about a year ago. So you just see this very prevalent police deployment and from the US Side, military deployment.

[Luke Vargas]

Okay, border crackdown really on Both sides of the border. Tell us about the trade environment. Folks who've been down there before will know just how much infrastructure, particularly on the Mexican side there is to facilitate cross border trade. What are you seeing there on the business front?

[Advertiser]

Both Mexico and the US have had this very integrated economy for decades. And at the moment we're just seeing very nervous business actors about where Trump's plans to apply tariffs could lead and what kind of disruption it could entail. They did already see a pretty substantial drop just in the three day trial run that we saw the US Apply tariffs in early March. So just from Juarez, there's about 3,700 trucks that cross into the US every day with merchandise. And we saw the numbers drop off pretty fast in those three days. We saw a 7% drop in day one, a 9% drop in day two, and a 14% drop on day three, just before President Trump decided to push off the tariff application for another month. And this really is a big change from how things have been playing out for border commerce in recent years. And so we're coming across this very pivotal moment where this could very much be disrupted or even ruptured.

[Luke Vargas]

And I guess Mexican cooperation on migration isn't a given either, especially if the trade relationship were to meaningfully sour.

[Advertiser]

Absolutely. And we've heard this from Mexican officials directly that if they are slapped with very painful tariffs, it could affect their cooperation on the security and migration front. The message I often heard from people was, you know, we've done drug busts. Mexico handed nearly 30 high profile drug kingpins to the US recently. They've had numerous seizures of money and people have been really applauding that in Mexico. But the question is, what more are you looking for? And they're really working hard to avoid the tariffs which will have a serious knock on effect on the country.

[Luke Vargas]

I've been speaking to Wall Street Journal South America correspondent Kejal Vias. Kejal, thank you so much for the update.

[Advertiser]

Thank you.

[Luke Vargas]

And that's it for what's news for this Tuesday morning. Today's show was produced by Daniel Bach and Kate Bullifant with supervising producer Sandra Kilhoff. And I'm Luke Vargas for the Wall Street Journal. We will be back tonight with a new show. Until then, thanks for listening.