Alex Frangos (2:38)

So, I mean, you have this kind of change in tariff regimes where the old tariffs, they're going to stop collecting. There's now new tariffs that come into effect. And then businesses are saying, wait a second, we paid like over $100 billion worth of tariffs last year that had been invalidated by the Supreme Court. We'd like that money back. So FedEx filed a lawsuit. There's Costco, a bunch of other companies as well that are like, hey, Supreme Court says we don't have to pay this. Can we have our money back? I mean, we were tax illegally and we'd like that back. That's obviously has big implications for the federal government because that money is needed for spending, for paying down debt, things like that. So there's just like lots of action going on.

Daniel Bach (3:14)

And all of that comes ahead of the President's State of the Union address this evening, where we report he'll be trying to sell the public on his handling of the economy in his first year back in office. Trump has given himself a grade of A plus plus plus plus. But our economic report card, Alex, is a bit more mixed. Right. Some measures of the economy good, some needing improvement. Yeah.

Alex Frangos (3:37)

I mean, there's a bunch of different things you can look at. If you look at the job market, job growth has been much slower than it was before the president took office, but it's historically at a reasonably low level. And then with the trade deficit, we see countries responding to these tariffs, helping their local industries navigate around tariffs, lower their own costs domestically and compete. And so net, net what you have is a bigger deficit than ever. That's probably not a, you know, not an a. On his report card, inflation has come down a bit, but ordinary Americans are not feeling really good about it. And if you look at the polls, they feel that the president has been kind of distracted by foreign policy issues and focused on tariffs, which, you know, while they haven't caused the spike in inflation the way that a lot of people thought, they have put pressure on American consumers and businesses, and people don't really like it. So I think that the State of the Union, from what we're hearing from our White House reporters, is the president is going to focus on the economy. He's going to try to sell to the American people that actually everything he's done has been really great for them and try to kind of reset the narrative that he is very focused on their pocketbook issues.

Daniel Bach (4:43)

Alex, thank you for this. Thanks. Apple says it will move some production of its Mac mini desktop computer to the US from Asia as part of its pledge to invest $600 billion in the US over four years. Apple's chief operating officer said production will begin later this year at a Foxconn facility in north Houston, part of the company's latest initiative to reshore parts of its vast supply chain. The Mini is a niche product for Apple, with estimates that it made up less than 5% of Apple sales of Mac computers last year. The news comes as Apple is pushing to boost American chip production. That includes at a plant north of Phoenix run by tsmc, the world's largest chip maker. Apple is the biggest customer for the factory, which sits on land more than two and a half times the size of Central Park. Journal tech reporter Rolf Winkler toured the site, which is expected to include six chip plants.

Rolf Winkler (5:40)

$165 billion would be one of the largest construction projects in the United States. If they ultimately spend all that and build everything there, it's going to be maybe a decade before this one facility reaches the volumes that TSMC has multiple facilities in Taiwan operating at. And moreover, there's the level of sophistication of the chip that they make in Arizona doesn't match Taiwan. What's made in Arizona is five years behind and will continue to be five years behind. There's no way Taiwan is going to allow the best technology off the island because that's to defend against Chinese invasion. It's called the Silicon Shield. Does China want to invade the island that actually makes the world's most advanced ships, like all of them, that would be ruinous to the world economy. So it's a very good deterrent.

Daniel Bach (6:23)

You can hear more from Rolf on today's episode of our Tech News Briefing podcast and you can find a link in our show Notes to his video report where he tours the Apple facility in Texas and and the TSMC plant in Arizona. Stock futures are pointing to a higher open this morning following yesterday's sell off sparked by fears of AI disruption and trade policy uncertainty. That said, bitcoin prices continue to fall with the Crypto headed toward $63,000. One of the drags on markets yesterday was airline stocks, which tumbled as the so called bomb cyclone battered the east coast, grounding thousands of flights. Airports including JFK and Logan have seen major disrupt, with another 2,000 flights canceled in the US so far today. BYD's European sales nearly tripled last month, outpacing Tesla and underscoring a growing appetite for the Chinese giant's electric and hybrid cars. The data marks a strong start to the year for BYD and comes as established rivals like Volkswagen, BMW and Renault all reported sales declines in the region and China's Commerce Ministry has banned the export of critical minerals and dual use goods to 20 major Japanese companies, escalating a pressure campaign against Tokyo. The restrictions target essential items like rare earths, machine tools and chip making equipment with potential military applications. Coming up, Ukraine marks a grim anniversary for the war. We look at the prospects for a peace deal after the break.

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Daniel Bach (8:31)

Today marks four years since Russia invaded neighboring Ukraine. And despite President Trump's pledge to end the war, there's been little progress through US Brokered peace talks and on a stalled front line, the death toll is rising on both sides. Russia continues to bombard Ukrainian cities and infrastructure. And this week European lawmakers are at an impasse on getting an aid package for Ukraine signed off. Journal correspondent Matthew Luxmore has closely covered the war and joins me now. Matthew, firstly, can you remind listeners of where things stand now?

Matthew Luxmore (9:03)

Well, the front lines in Ukraine are really pretty static. They have been for the past year. Russia has made some quite limited gains through the course of last year, far less than in 2022, the first year of the war. And really Ukraine has regained more territory since 2022 than Russia has taken. So you can't really speak of a great battlefield success for Russia. It's also happening at a colossal loss of life for Moscow's forces, something to the tune of what Western officials say is 30,000 soldiers dead per month. So Russia's capacity to keep this going is being questioned by some defense analysts. But for Russia's President Vladimir Putin, this is really a question of his legacy after a quarter of a century in power. And he really has an obsession with bringing Ukraine under Moscow's sway. As for Ukraine, the Ukrainians who have been very resilient over the past four years, weathering a real intense barrage from Russia that has cut heating to millions of homes and also water to so many people. The public opinion surveys in Ukraine show that people are not willing to sign away territory to Russia and they're willing to keep fighting if they have to. So people are very, very closely following the peace talks they want desper and then to the war. They're championing Trump's pressure on Russia. But fundamentally, people in Ukraine say that if a peace deal comes at the expense of a large swathe of territory in East Ukraine, territory where Ukraine's most robust defensive positions are, and that thousands of soldiers have given their lives defending, that is not a peace that Ukrainians are willing to accept.

Daniel Bach (10:47)

I wanted to ask you about the state of this war. The Journal has reported a lot, of course, on the advancements in drone warfare, electronic warfare, things like that. But on the ground, it's turned into a slog, like many wars in centuries past. What do you make of that?

Matthew Luxmore (11:02)

Well, I mean, drones play a large part in why this war is so stuck. In a way, there's a whole swathe of the frontline areas where drones rule the skies. And it's impossible, really, for either side to move forward, because as soon as a small group of soldiers moves forward, they are immediately targeted by drones. Both sides are pumping out to the tunes of many millions per year because they're ramping up their industries, able to build these explosive drones, which are cheap and reliable and increasingly precise. And it's made the fight much more perilous and, as we've seen in Ukraine, at least, much more static.

Daniel Bach (11:44)

You report that many observers now see the peace talks as little more than a dance to avoid angering President Trump. So if this process continues to drag on, how does the war end?

Matthew Luxmore (11:54)

Well, it's really turned into a war of a trade. Both sides are losing many, many soldiers, equipment. It's an incredibly expensive enterprise. Of course, what we've seen with Russia is that it seems to be preparing for the possibility of a long war. It's funneled a huge amount of money and resources into building up its war economy, its military industrial complex. It's recruiting very, very actively, especially in the Russian provinces, where people live poorly and they are more easily swayed by financial incentives to join the military. So this kind of model has worked out for Russia so far, but it's only a matter of question before Russia also feels much more strongly the strain of the fighting. And for Ukraine, it does have serious manpower issues. And Ukraine really is reliant on the financial lifeline and also the military aid lifeline from the West. And it can't keep this up forever. So, yes, it has turned into a war of attrition, essentially, which side buckles first? But now it's been going on for four years, and neither side has buckled so far. And both sides say that they can keep this going if they have to.

Daniel Bach (13:02)

Journal foreign correspondent Matthew Luxmore. Matthew, thank you for your time.

Matthew Luxmore (13:06)

Sure. Thank you very much.

Daniel Bach (13:07)

And that's it for what's news for this Tuesday morning. Today's show was produced by Hattie Moyer. Our supervising producer is Sondra Kilhoff. And I'm Daniel Bok for the Wall Street Journal. We'll be back tonight with a new show. Until then, thanks for listening.

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