WSJ What’s News: Chinese Manufacturing Tumbles as Tariffs Bite
Release Date: April 30, 2025
Host: Luke Vargas

Introduction

In this episode of WSJ What’s News, host Luke Vargas delves into the pressing issues stemming from the ongoing trade war between the United States and China, highlighting the significant downturn in Chinese manufacturing. The episode also covers President Donald Trump's 100-day mark in office, his stance on tariffs, and innovative moves by companies like Starbucks to enhance customer experience through technology.

China's Economic Struggles Amid Trade War

Decline in Manufacturing and Exports

The trade war's detrimental effects on China's economy are substantiated by newly released data showing a sharp decline in manufacturing activity and export orders for April. Jason Douglas, a Wall Street Journal reporter based in Tokyo, provides an in-depth analysis:

• Contraction in Manufacturing: "There was a contraction in manufacturing activity down to the worst reading for I think about a year, maybe about 18 months," Douglas explains at [01:33].

• Export Orders Plummet: Export orders have fallen to their lowest since the end of 2022, marking the worst performance since 2012 when China was still grappling with COVID-19 disruptions.

• Employment Weakness: The manufacturing sector is also experiencing weaknesses in production and employment, indicating broader economic challenges exacerbated by the trade war.

Implications for China's Economy

Douglas outlines the broader implications:

• Reduced Growth reliance on Trade: "About a third of its growth last year came from trade where previously it has had much stronger domestic spending," he notes at [02:22].

• Job Risks: Goldman Sachs estimates indicate up to 20 million jobs in Chinese factories that export to the U.S. are at risk.

• Slower Growth Projections: Capital Economics forecasts China's growth at 3.5% for the year, significantly below the government's 5% target.

Douglas raises critical questions about China's ability to stimulate domestic spending and reorient its economy to mitigate future vulnerabilities.

Impact on the U.S. Economy and Financial Markets

U.S. GDP and Trade Negotiations

As China's economic indicators reveal strain, attention turns to the U.S. economy:

• First Quarter GDP: The release of the U.S. first-quarter GDP reading at 8:30 AM Eastern is highly anticipated to assess the trade war's toll on the American economy.

• Trade Negotiations Progress: Speculation surrounds potential progress in trade negotiations, following a recent rally in the S&P 500 spurred by hints of a trade deal with an unnamed country, marking a positive note amidst economic uncertainties.

Stock Market Dynamics

Katie Barnado, the Journal Markets editor, provides insights into the equity market's behavior:

• Uneven Recovery: "Over the last few days we have seen an interesting recovery in stocks on hopes that perhaps the trade war won't turn out as badly as feared," Barnado states at [03:57].

• Tech Stocks Rebound: Major technology companies like Apple have shown notable resilience and rebounding performance despite significant exposure to the Chinese market.

• Industrial and Consumer Discretionary Gains: Traditional industrial and consumer discretionary stocks are outperforming as investors seek stability amid fears of an economic slowdown.

Corporate Innovations and Earnings Highlights

Starbucks' Technological Advancements

Starbucks is taking proactive steps to address customer concerns about long wait times:

• Order Scheduling Algorithm: A new technology pilot involving a proprietary order scheduling algorithm has successfully reduced average drink preparation times by two minutes in dozens of U.S. locations ([04:42]).

• Expansion Plans: Encouraged by the pilot's success, Starbucks plans to roll out the technology to hundreds more locations in an effort to boost sales following five consecutive quarterly declines.

Tech Industry Earnings

The episode highlights significant earnings reports from leading technology firms:

• Samsung's Strong Performance: Despite challenges from U.S. restrictions on advanced chip exports to China, Samsung reported stronger-than-expected first-quarter profits, driven by robust smartphone sales that offset weaknesses in the semiconductor sector ([04:42]).

• Upcoming Reports: Investors are keenly awaiting quarterly results from Microsoft and Meta, which are set to release their earnings after the market close.

President Trump's 100-Day Milestone

Rallying Support and Policy Focus

Marking his 100th day in office, President Donald Trump has been actively promoting his administration's achievements:

• Rally Speech: "Back in the White House, America is a free, proud and sovereign nation once more and our magnificent destiny is closer than ever before. It's closer than ever before. You have no idea how close it is," Trump proclaimed during a rally in Michigan at [06:45].

Global Trade Agenda

Alex Leary, a White House reporter, discusses Trump's aggressive approach to reshaping global trade dynamics:

• Trade Reordering: "He's kind of sought to reorder the global trading order and he has accumulated a pile of unresolved issues with dozens of countries, including China," Leary explains at [07:10].

• Strained International Relations: Trump's confrontational tactics have strained relationships with allies in Europe and Canada, and have caused friction over issues like Ukraine and Greenland ([07:52]).

Domestic Policies and Immigration

Trump's domestic agenda, particularly on immigration, remains a focal point:

• Southern Border Enforcement: Significant reductions in illegal crossings have been achieved, yet millions remain in the country illegally. Efforts to enhance internal immigration control are impeded by funding shortages and political challenges ([09:21]).

• Legislative Efforts: Proposed tax legislation aims to allocate more resources for immigration enforcement to expedite deportations ([09:21]).

Voter Sentiment and Political Implications

Voter reactions to Trump's first 100 days reflect a complex landscape:

• Mixed Confidence: While core Republicans remain steadfast, independents and moderates show growing hesitation, potentially impacting midterm elections ([10:19]).

• Economic and Policy Challenges: Fluctuations in the stock market, controversial policies, and aggressive agenda pacing have led to reduced support among swing voters, posing challenges for the Republican Party ([10:19]).

Conclusion

As the trade war continues to cast a shadow over both the Chinese and U.S. economies, the political landscape remains volatile with President Trump's assertive policies influencing domestic and international relations. Meanwhile, innovative corporate strategies, such as Starbucks' technological initiatives, highlight ongoing efforts to adapt and thrive amidst economic uncertainties. The coming weeks will be critical in assessing the long-term impacts of these developments on global markets and political dynamics.

Notable Quotes:

• Donald Trump ([00:37]): "Back in the White House, America is a free, proud and sovereign nation once more and our magnificent destiny is closer than ever before. It's closer than ever before. You have no idea how close it is."

• Jason Douglas ([01:33]): "Frankly, things are not going well."

• Katie Barnado ([03:57]): "Over the last few days we have seen an interesting recovery in stocks on hopes that perhaps the trade war won't turn out as badly as feared."

• Alex Leary ([07:10]): "Trade is going to be very dominant in these next hundred days and beyond. It's going to really test the determination and the skill of his negotiating teams."

This summary was produced based on the transcript and information provided from the April 30, 2025 episode of WSJ What’s News.