Investors Hold Their Breath as Trump Tariffs Loom

Summary

WSJ What’s News: Investors Hold Their Breath as Trump Tariffs Loom The Wall Street Journal | Release Date: April 2, 2025

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Introduction

In this episode of WSJ What’s News, The Wall Street Journal delves into the imminent announcement of President Donald Trump’s long-awaited tariff measures, examines the outcomes of a pivotal Supreme Court race in Wisconsin, explores potential developments in the TikTok saga, and touches upon significant geopolitical and economic shifts impacting global markets. Host Luke Vargas guides listeners through these multifaceted stories, providing expert insights and exclusive reports.

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Trump’s Imminent Tariff Announcement and Market Implications

Anticipation of New Tariffs

The episode opens with the anticipation surrounding President Trump’s scheduled announcement of new US tariffs at a White House press conference set for the end of market trading hours. These tariffs are expected to be reciprocal, impacting major trading partners and potentially reshaping the global trade landscape.

Expert Insights with Maya Bhandari

Maya Bhandari, Chief Investment Officer for Multi Asset EMEA at Neuberger Berman, provides a comprehensive analysis of the possible content and repercussions of the tariff announcement.

• Potential Tariff Measures: Bhandari suggests that the tariffs may include non-tariff measures targeting currency undervaluation and Value-Added Tax (VAT). She notes, “This is likely to include some non-tariff measures, capturing things like currency undervaluation… and VAT, an area of particular focus here in Europe” (02:05).

• Tariff Rates and Negotiations: She anticipates initial tariff rates could be as high as 20% for major trading partners but expects negotiations to possibly result in lower final rates. “We wouldn’t rule out a high starting point… but a final number is likely to be lower” (02:05).

• Scope and Impact: The tariffs are projected to affect approximately 15 countries, representing about 90% of US imports. Bhandari emphasizes the potential for significant disruption in a highly integrated global economy, highlighting uncertainties around international responses. “These are likely to be targeted… they together account for about 90% of U.S. imports” (03:20).

Market Reactions

The discussion shifts to market implications, with a focus on small-cap stocks on the Russell 2000 index, which have been underperforming amidst recent uncertainties.

• Stock Performance: Bhandari observes that US tech stocks have faced a notable decline—“down 14%, 15% this year, about three times the broader index” (05:29).

• Investment Strategy: Neuberger Berman has adopted a neutral stance on equity markets, favoring non-Mag 7 stocks within the S&P 500, which have performed relatively well. Small caps remain vulnerable without clear triggers for recovery. “One of the consequences… has been a really significant shift in European fiscal policy” (05:29).

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Supreme Court Race in Wisconsin: A Political Bellwether

Judicial Election Outcome

Voters in Wisconsin have elected liberal Judge Susan Crawford to a seat on the state Supreme Court, resulting in a 4-3 liberal majority. This outcome is interpreted as a potential voter backlash against President Trump and a setback for Elon Musk, who financially supported Crawford’s conservative opponent.

• Candidate’s Reflections: Crawford reflects on her victory with humility and determination: “As a little girl growing up in Chippewa Falls, I never could have imagined that I'd be taking on the richest man in the world for justice in Wisconsin. And we won” (07:15).

Political Implications

The election serves as an indicator of shifting political sentiments, suggesting possible resistance to Trump’s policies and influence. The outcome also impacts Musk’s political endeavors, given his significant financial involvement in the race.

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TikTok Takeover Deal Under Scrutiny

Potential Sale and Regulatory Challenges

The podcast explores the ongoing efforts to secure a takeover deal for TikTok as the U.S. faces a deadline to either sell the platform or cease its operations. Cloud computing giant Oracle, along with other investors like Blackstone, are in talks to partner with existing US investors to acquire TikTok’s US operations.

• Deal Structure and Challenges: Rafael Huang, a reporter for the Wall Street Journal, highlights technical and regulatory hurdles, including control over content recommendation algorithms and approval from Beijing. “If the proposed deal allows Biden's to keep its control over the algorithm, then that would leave some room for negotiation” (11:35).

• Geopolitical Tensions: Any new tariff plans announced by President Trump could complicate negotiations, as Beijing views additional tariffs as a barrier to compromise. “Additional tariff highs on China could again limit the rooms for compromise, in Beijing's view” (12:19).

Potential Outcomes

While a deal remains possible, the complexities surrounding algorithm control and international relations pose significant risks to its timely completion. Delays or a complete collapse of the negotiations remain on the table.

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Additional Key Stories

Migration Policies and International Agreements

The Trump administration is actively seeking agreements with several countries to accept migrants deported from the U.S. This strategy mirrors the February deal with Panama, involving detention and processing for repatriation. Potential new partners include Libya, Rwanda, Benin, Eswatini, Moldova, Mongolia, and Kosovo, contingent upon financial arrangements.

Pentagon’s Middle East Strategy

In response to ongoing conflicts, the Pentagon is expanding its military presence in the Middle East. US forces are intensifying airstrikes against Houthi militants in Yemen and exerting pressure on Iran to dismantle its nuclear program. President Trump has threatened severe retaliation should Iran fail to comply with these demands, although officials clarify that these deployments are not immediate precursors to an attack but part of a broader campaign.

House Elections and Democratic Challenges

Republicans Jimmy Petronas and Randy Fine secured victories in special House elections in Florida, enhancing the GOP’s majority in the House to 220-213. Concurrently, New Jersey Democrat Cory Booker delivered the longest speech in Senate history, spanning over 25 hours, in protest of presidential actions. Booker acknowledged the Democratic Party’s struggles, stating, “We have contributed to where we are… Democrats have to own up for a lot” (07:15).

Visa’s Competitive Move with Apple

Visa is reportedly offering Apple approximately $100 million to manage the tech giant’s co-branded credit card, following Goldman Sachs’ exit from consumer lending. Apple is poised to select a new network, pitting Visa against competitors like Mastercard and American Express. This move echoes a similar strategy Visa employed with Costco a decade ago, aiming to secure a prominent partnership in the expanding fintech landscape.

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Conclusion

WSJ What’s News provides a thorough examination of the critical developments influencing today's economic and political environment. From the anticipation of Trump’s new tariffs and their potential market disruptions to significant judicial elections and high-stakes corporate negotiations, the episode offers listeners a nuanced understanding of factors shaping global and domestic landscapes. As the situation continues to evolve, the insights shared by industry experts like Maya Bhandari underscore the importance of staying informed and adaptable in a rapidly changing world.

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Notable Quotes:

• Maya Bhandari: “This is likely to include some non-tariff measures, capturing things like currency undervaluation… and VAT, an area of particular focus here in Europe” (02:05).
• Maya Bhandari: “These are likely to be targeted… they together account for about 90% of U.S. imports” (03:20).
• Maya Bhandari: “Every risk has attached to it a price” (05:29).
• Susan Crawford: “As a little girl growing up in Chippewa Falls, I never could have imagined that I'd be taking on the richest man in the world for justice in Wisconsin. And we won” (07:15).
• Cory Booker: “Democrats have to own up for a lot… we also have a lot of responsibility for meeting this moment” (07:15).

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Produced by Kate Bullivant and Daniel Bach, with supervising producer Sandra Kilhoff. Special thanks to Reuters for additional sound contributions.

Transcript

[Luke Vargas]

Ryan Reynolds here from Mint Mobile with a message for everyone paying big wireless way too much. Please, for the love of everything good in this world, stop with Mint. You can get premium wireless for just $15 a month, of course, if you enjoy overpaying. No judgments. But that's weird. Okay, one judgment anyway. Give it a [e-mail] Switch upfront payment of $45 for three month plan equivalent to $15 per month required intro rate first three months only, then full price plan options available, taxes and fees extra. See full terms at Mintmobile. Do investors hold their breath ahead of President Trump's long awaited tariff announcement later today? Plus a liberal judge wins the Supreme Court race in Wisconsin in a rebuke of Trump and Elon Musk, Wisconsin stood up and said loudly that justice does not have a price. Our courts are not for sale and we'll look at a potential TikTok takeover deal just days ahead of a deadline to sell the platform or shut it down. It's Wednesday, April 2nd. 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 today. We are mere hours away from the announcement of new US Tariffs which President Trump is set to unveil at a White House press conference after the close of markets. We report that so called reciprocal tariffs are expected and that whatever measures are announced will effect immediately, though the precise contours of the likely sweeping announcement remain under wraps. Well, as we await the news, we've got Maya Bondari with us to preview the coming trading day and beyond. She is the Chief Investment Officer for Multi Asset EMEA at asset Manager Neuberger Berman. Maya, we half expected that by this point we would have a sense of what was going to be announced today. Alas, as it stands, we don't. Could you read the tea leaves though a bit on what might be coming?

[Maya Bhandari]

It does seem likely that what we learn today is going to include some non tariff measures, capturing things like currency undervaluation as a possible gauge, which is about 15 odd percent when you weigh it by US trade partners VAT, an area of particular focus here in Europe, also around 15%. And as you see with these numbers Luke, the ranges is wide uncertain. And at Neuberger Berman we wouldn't rule out a high starting point, perhaps even as high as 20% for major trading part. But we would also emphasize two other points here. First, and importantly, this is likely to be a negotiation, a point Treasury Secretary Besant made quite clearly, including yesterday reflecting on Today's announcement as quote, unquote, a cap. So a final number is likely to be lower. And second, kind of in keeping with this conclusion, tariffs to date sort of take the US effective rate from about 2.5% to about 7%. So the numbers we're speaking of here are a meaningful increase that would take us back to, you know, the sort of tariff regime we last saw in the 1940s. And so on balance, our judgment is that these are unlikely in full force.

[Luke Vargas]

And we do know, Maya, 15 countries are likely to be targeted here, just a few out of the whole world, and yet there could be some massive economies directly affected here with repercussions for a big chunk of global trade.

[Maya Bhandari]

Absolutely. And so we're talking about some of the US's largest trading partners, countries like Mexico, Canada, Canada, Europe, China, of course. But when we put these countries together, these 15 countries, they together account look for about 90% of U.S. imports. So we are covering, if you will, the Lion's share of U.S. trade partners. Now, there's been a little bit of toing and froing on that overnight. So I think for our listeners, perhaps the most important takeaway here is that what is being discussed could be very disruptive indeed to a highly integrated global economy. But this is going to be a negotiation and uncertainty is here to stay because what we didn't come to is how other countries respond. And I think that is perhaps one of the bigger risks out there. So, for example, sitting where I'm sitting in Europe, there have been discussions of deployment of the anti coercion instruments or the ACIS in jargon, in order to respond to the tariffs that may be.

[Luke Vargas]

Announced today, namely to go after the services sector. Right. Taking this beyond goods.

[Maya Bhandari]

Yeah, I mean, these are a serious toolkit. It absolutely takes the trade war, if you will, to services in addition to goods. But in practical terms, the ACI can be used to restrict the activities of banks, it can be used to revoke patents, it can be used to prevent companies receiving revenues from software updates or streaming. So it is significant. And in addition, so far we've also heard from the US administration that any such counter response will be met with another response. So you can see how this could get quite messy.

[Luke Vargas]

A bit of a messy outlook there. What does that mean for markets? Small stocks, for instance, on the Russell 2000 have been suffering more than other corners of at least the US markets lately.

[Maya Bhandari]

Absolutely. I like to say that every risk has attached to it a price. For example, the US tech stocks that have been hit harder by this uncertainty, they're down 14%, 15% this year, about three times the broader index. Now, I should say that at Neuberger Berman we have been neutral equity markets overall, but actually have been favoring the non mag 7 stocks. So the other 493 stocks in the S&P 500, and that's played out relatively well so far, I'd say. More recently. While small cap is clearly an area that's baked in some bad news, you do need typically a trigger for these companies to start outperforming and we can't quite see what that trigger will be. More recently, we have actually been expecting a broadening out away from the US to the rest of the world, in particular areas like Europe and Japan. One of the consequences of recent geopolitical developments, of course, has been a really significant shift in European fiscal policy. And that's something that we're quite keen to capture in our asset allocation as well.

[Luke Vargas]

Maya Bhandari is the chief investment officer for Multi Asset EMEA at asset manager Neuberger Berman. Maya, thank you so much for joining us on what's news.

[Maya Bhandari]

My pleasure.

[Luke Vargas]

Coming up, results from a closely watched Supreme Court race in Wisconsin seen as a bellwether of support for President Trump and Elon Musk. And we'll look at a potential TikTok takeover deal days ahead of a deadline to sell the platform or shut it down. Those stories and more after the break. McDonald's meets the Minecraft universe with one of six collectibles and your choice of.

[Maya Bhandari]

A Big Mac or 10 piece McNuggets.

[Luke Vargas]

With spicy nether Flame sauce. Now a available with a Minecraft movie meal. I participate in McDonald's for a limited time, a Minecraft movie only in theaters. Voters in Wisconsin have elected liberal judge Susan Crawford to a seat on the battleground state supreme court, cementing its 4 to 3 liberal majority. The result could suggest a voter pushback against President Trump 10 weeks after his inauguration and deals a blow to Elon Musk, who, along with groups tied to him, spent at least 20 million to support Crawford's conservative opponent. Here was Crawford after her victory as a little girl growing up in Chippewa Falls, I never could have imagined that I'd be taking on the richest man in the world for justice in Wisconsin. And we won. Meanwhile, in Florida yesterday, Republicans Jimmy Petronas and Randy Fine won a pair of special House elections. Though the results in traditionally deep red congressional districts were closer than expected, the win bolsters the GOP's majority in the House of Representatives to 220 to 213. Well, back in Washington, New Jersey Democrat Cory Booker set a record for the longest speech in Senate history after wrapping up 25 plus hours of remarks in protest of the president's actions. The speech, which attracted cable news attention and was spliced into clips for TikTok, comes as Democrats struggle over whether and how to resist Trump and rebuild their brand, a challenge that Booker acknowledged after leaving the Senate floor. My team and I have really been struggling in this period. Democrats have to own up for a lot. I think that we have contributed to where we are. I'm not just talking about losing an election. I'm talking about a lot of the ways that the partisan politics of this country have worked. And we should be stepping up and saying we accept a lot of responsibility for this moment, but we also have a lot of responsibility for meeting this moment. We are exclusively reporting that the Trump administration is trying to strike agreements with several more countries to take in migrants deported from the U.S. officials say the desired model would be similar to a deal struck with Panama in February in which over 100 migrants, mostly from the Middle east, were sent there for detention and processing in order to be sent back to their home countries. Some countries have been slow to take back their nationals or simply refuse to, leading the administration to explore whether the likes of Libya, Rwanda, Benin, Eswatini, Moldova, Mongolia and Kosovo would take in migrants, possibly in exchange for financial arrangements. Meanwhile, the Pentagon is rapidly expanding its forces in the Middle east as the US Military continues airstrikes against Houthi militants in Yemen and looks to put pressure on Iran. In recent days, President Trump has threatened to bomb Iran if Tehran doesn't agree to a deal to roll back its nuclear program, two officials said. The deployments aren't preparation for an imminent attack on Iran, but rather to bolster the US Campaign in Yemen. Iran has provided arms and training to the Houthis, who've been attacking ships transiting the Red Sea and nearby sea lanes. President Trump will be briefed today on a potential deal to keep TikTok operational ahead of a pending U.S. deadline to sell it or shut it down. That's according to people familiar with the matter, who said that cloud computing company Oracle, along with several others, would join with existing U.S. investors to make an offer to TikTok owner ByteDance. Blackstone is among the investors in talks to potentially participate in the deal. The exact value of TikTok and the size of investments are expected to be ironed out in later negotiations once the general structure is agreed upon. Though, Journal reporter Rafael Huang says the deal could still face extended delays or even fall apart.

[Rafael Huang]

So to separate TikTok's US operation from its global business, one of the technical questions that remains to be answered is who will control TikTok's content recommendation algorithms? The deal eventually will need approval from Beijing. So if the proposed deal allows Biden's to keep its control over the algorithm, then that would leave some room for negotiation. And the authorities in Beijing have signaled that China would be open to a deal, but they also see it as part of a cluster of issues that they hope to negotiate with Washington. So Chinese officials are now awaiting the president to unveil new tariff plans today, and any additional tariff highs on China could again limit the rooms for compromise, in Beijing's view.

[Luke Vargas]

And we are exclusively reporting that Visa is offering Apple roughly $100 million to operate the tech giant's co branded credit card, which is up for grabs as Goldman Sachs exits consumer lending. Apple is expected to select a network before it picks the bank to replace Goldman, a competition pitting Visa against incumbent mastercard as well as American Express, according to Journal reporting, Visa offered a similar upfront payment when Costco was selecting a network for its credit card about a decade ago. And that's it for what's news for this Wednesday morning. Additional sound in this episode was from Reuters. Today's show was produced by Kate Bullivant and Daniel Bach, 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, we're thanks for listening.