WSJ What’s News: Market Turmoil Deepens as Trump Stands By Tariffs

Release Date: April 7, 2025
Host: Luke Vargas
Produced by: The Wall Street Journal

1. Introduction: Escalating Global Market Turmoil

In this episode of WSJ What’s News, host Luke Vargas delves into the escalating global market turmoil triggered by President Trump's steadfast stance on imposing aggressive tariffs. The episode, released on April 7, 2025, provides a comprehensive analysis of the economic repercussions, expert opinions, and geopolitical tensions arising from the latest trade policies.

2. The Global Market Sell-Off

The episode opens with a stark portrayal of a severe global market sell-off. President Trump’s decision to double down on tariffs has sent shockwaves through international financial markets, exacerbating fears of a deepening trade war between the United States and China.

Luke Vargas sets the stage:

"Global markets sell off as President Trump doubles down on his tariffs" ([00:26]).

Peter Landers, Asia Finance Editor, elaborates on the gravity of the situation:

"European shares are tumbling after Asian stock markets plunged this morning" ([00:36]).

3. Impact on Asian and European Markets

The repercussions of the tariffs were immediately felt across Asia and Europe. Asian stock markets experienced significant declines, with Japanese trading face the brunt.

• Japanese Markets: The Nikkei index saw an almost 10% drop in futures, prompting a temporary trading halt. The index ultimately closed down nearly 8%.

  Peter Landers noted:

  "The two worst hit markets were Hong Kong and Taiwan" ([01:39]).

• Hong Kong and Taiwan:

  • Hong Kong’s Hang Seng index plummeted over 13%, marking its worst day since the Asian financial crisis of 1997.
  • Taiwan’s stock market declined by 9.7%, nearing the market's one-day maximum drop limit.

4. U.S. Market Concerns and Potential Bear Market

Back in the United States, Wall Street is bracing for challenging times as the S&P 500 futures indicate a potential plunge into bear market territory.

Katie Barnato, Markets Editor, highlights the growing economic fears:

"Wall street is starting to speak out as the true economic effect of tariffs comes into focus" ([02:03]).

5. Wall Street's Dire Predictions

Prominent voices from Wall Street have begun voicing their concerns regarding the tariffs' long-term economic impacts.

• Kevin Hassett, White House National Economic Council Director, cites Goldman Sachs’ alarming forecast:

  "Goldman Sachs has raised the US's recession probability over the next 12 months to 45%. That's up from 35%" ([02:21]).

• Jamie Dimon, CEO of JP Morgan, expresses reservations:

  "Whether or not it would cause a recession is in question, but it will slow down growth" ([02:21]).

• Bill Ackman, billionaire investor, warns of an economic “nuclear winter”:

  "If the US goes ahead with all these tariffs, that could cause a self-induced economic nuclear winter" ([02:21]).

  He further emphasizes:

  "We are in the process of destroying confidence in our country as a trading partner, as a place to business, as a market to invest capital" ([02:21]).

6. President Trump’s Unwavering Tariff Stance

Despite mounting warnings from financial experts, President Trump remains resolute in his tariff policies.

Luke Vargas reports on Trump’s activities:

"President Trump remains undeterred in his tariff stance, spending a long weekend at three of his Florida golf courses and firing off social media posts urging Americans to stay the course while promising a market reprieve" ([03:26]).

Trump’s administration defends the tariffs, with Hassett countering claims that consumers will bear increased costs:

"More than 50 countries have reached out to start negotiations" ([03:26]).

Robert F. Kennedy Jr., Health Secretary, adds a critical perspective:

"If US Consumers are bearing the costs, there's no reason for the countries to be angry. So the fact is the countries are angry and retaliating" ([04:02]).

7. China’s Retaliatory Measures and Economic Impact

China swiftly retaliated to the U.S. tariffs, implementing sweeping measures that could further strain global economic relations.

Luke Vargas introduces China's response:

"China has come out in front as the only country to respond to U.S. tariffs immediately, announcing Friday it would put blanket tariffs of 34% on all U.S. goods" ([05:28]).

Hannah Miao, economist covering the Chinese economy in Singapore, provides deeper insights:

"The trade fight is really hitting China at a critical part of its economy. So exports last year actually accounted for nearly a third of China's GDP growth" ([06:03]).

She further explains the cascading effects:

"Trump's tariffs also hit many Southeast Asian countries with pretty high levies... with an overall global slowdown, which many economists are expecting, if tariffs go this high around the world, could really hurt demand in general for Chinese goods around the world" ([06:03]).

8. Shifts in China’s Economic Strategy

In response to the increasing tariffs and global economic pressure, China is pivoting towards boosting domestic consumption to offset declining exports.

Hannah Miao discusses China’s strategic shift:

"China did identify boosting domestic consumption as its top policy priority for the year" ([08:23]).

Measures being taken include:

• Increasing money supply and implementing looser monetary policies to encourage spending.
• Introducing subsidies for childcare, raising wages, and expanding pensions to boost household spending.
• Expanding the goods trade subsidy program to stimulate retail sales of appliances and consumer goods.

Peter Landers queries the extent of stimulus measures:

"What we're not hearing here, Hannah, is talk of significantly bolder stimulus action... a bazooka stimulus" ([09:46]).

Hannah Miao acknowledges the anticipation for more substantial measures:

"A lot of investors have been waiting for that... China is willing to lower interest rates and also to increase deficit spending in an effort to boost household consumption, business consumption" ([09:56]).

She concludes that while efforts are underway, the effectiveness of these measures in compensating for reduced exports remains uncertain:

"We're still awaiting more details on what exactly that will look like... waiting to see if this kind of pickup in consumer spending would be enough to make up for any hits to exports as a result of tariffs" ([09:56]).

9. Additional Headlines: Measles Outbreak and Geopolitical Tensions

While the primary focus remains on economic turmoil, the episode briefly touches on other significant news:

• Measles Outbreak in Texas:
  A second child died from measles in Texas amid a broader outbreak affecting hundreds. Health Secretary Robert F. Kennedy Jr. underscores the importance of vaccination:

  "The MMR vaccine is the most effective way to prevent the spread of measles" ([11:05]).

• Geopolitical Tensions in Panama:
  Defense Secretary Pete Hegseth is set to attend a regional security conference in Panama following President Trump's accusations of Chinese interference in the Panama Canal. This has led to significant business moves, including a Hong Kong-based conglomerate selling its stake in ports near the canal to a consortium including BlackRock.

10. Conclusion: Uncertain Economic Future Amidst Trade Wars

As the episode concludes, the interplay between President Trump’s tariff policies and global economic stability remains precarious. With China’s aggressive retaliatory measures and shifting economic strategies, the world faces an uncertain financial future. The insights from Wall Street experts and economic analysts paint a picture of mounting recession risks and the potential for prolonged economic strain if the trade tensions persist.

Luke Vargas wraps up:

"That's it for what's news for this Monday morning" ([11:10]).

The episode underscores the critical need for negotiation and strategic economic policies to navigate the tumultuous waters of global trade wars.

Key Quotes Summary

• Peter Landers: "The two worst hit markets were Hong Kong and Taiwan." ([01:39])
• Kevin Hassett: "Goldman Sachs has raised the US's recession probability over the next 12 months to 45%. That's up from 35%." ([02:21])
• Bill Ackman: "We are in the process of destroying confidence in our country as a trading partner, as a place to business, as a market to invest capital." ([02:21])
• Robert F. Kennedy Jr.: "If US Consumers are bearing the costs, there's no reason for the countries to be angry." ([04:02])
• Hannah Miao: "The trade fight is really hitting China at a critical part of its economy." ([06:03])
• Hannah Miao: "China did identify boosting domestic consumption as its top policy priority for the year." ([08:23])

This comprehensive summary encapsulates the critical discussions and insights from the WSJ What’s News episode, providing listeners with a thorough understanding of the current economic climate and the far-reaching impacts of President Trump's tariff policies.