WSJ What’s News: Markets Rattled as U.S. Tariffs Go Into Effect Episode Release Date: March 4, 2025

1. Introduction

In this episode of WSJ What’s News, hosted by Alex Osola, The Wall Street Journal delves into the immediate aftermath of President Trump's implementation of new tariffs affecting international trade. The discussion centers on the economic repercussions, market reactions, international responses, and upcoming political developments.

2. U.S. Tariffs Implementation and Market Reaction

At midnight on March 4, 2025, President Trump activated significant tariffs:

• 25% duty on goods imported from Canada and Mexico.
• 10% additional tariff on goods imported from China.

Trump’s administration justified these measures by citing concerns over immigration and the flow of illicit drugs, particularly fentanyl, into the United States. He stated that the tariffs would remain "until the crisis is alleviated."

Market Impact: The announcement sent shockwaves through global markets:

• Dow Jones Industrial Average closed down approximately 1.6%.
• S&P 500 fell by about 1.2%.
• Nasdaq ended the day roughly 0.4% lower, nearly approaching correction territory.
• The Wall Street fear gauge (VIX) saw an uptick, reflecting increased market anxiety.

Alex Osola notes, “Markets were rattled by the new levies and the countermeasures by Canada, Mexico, and China.”

3. International Responses from Canada, Mexico, and China

Canada: Prime Minister Justin Trudeau announced retaliatory tariffs:

• 25% tariffs on nearly $100 billion of U.S. imports, including alcohol, clothing, and household appliances.

Trudeau criticized Trump’s actions, declaring, “Trump was acting in bad faith” and emphasized that “the American people will be hit by the effect of the tariffs” ([04:01]).

Mexico: President Claudia Sheinbaum indicated plans for retaliatory measures, stating, “There is no motive, reason, or justification for this decision” ([04:23]).

China: China imposed additional tariffs effective March 10:

• 15% tariff on U.S. chicken, wheat, corn, and cotton.
• 10% tariff on other agricultural products, including soybeans, pork, and dairy.

Additionally, China filed a World Trade Organization (WTO) lawsuit against the U.S. tariff increases and added over two dozen American companies to its export control and corporate blacklists.

4. Economic Insights from WSJ Reporters

David Uberti on Market Sentiment ([01:53] - [03:23]): David Uberti describes the market sentiment as "negative to say the least." Despite only a 3% weekly decline across major indexes, investor confidence is eroding due to:

• The realization that tariffs are not serving as effective negotiating tools.
• Rising inflation expectations and decreasing growth forecasts.
• Specific sector downturns, particularly in financials and energy, driven by stalled mergers and acquisitions (M&A) activity and diminishing investor appetite.

Uberti adds, “There’s been this expectation and maybe wishful thinking that tariffs are this sort of ace negotiating tactic Trump might whip out to pursue new trade deals. And so to speak, that has turned out to be not the case.”

Gavin Bade on International Exposure ([05:35] - [07:07]): Gavin Bade highlights the vulnerability of Mexico and Canada due to their dependence on the U.S. as the primary export market. He warns of a significant economic shock to the entire North American economy and notes that this is just the beginning, with more tariffs slated for the following month across various sectors.

Bade states, “The US is the biggest export market for both Mexico and Canada. So this is all battle stations right now.”

5. Impact on Consumers and Businesses

Consumer Impact: Wall Street Journal’s data news editor, Anthony DeBarros, explains that consumers might start feeling the price increases within a month as tariffs take effect. However, some mitigation is expected as companies had preemptively increased imports ahead of the tariffs.

Business Responses:

• Best Buy anticipates higher consumer prices due to increased costs in the supply chain, potentially reducing demand for electronics.
• Target forecasts that its sales for the year could remain flat amidst consumer uncertainty and the imposed tariffs.

6. Upcoming Presidential Address and Key Points

President Trump is scheduled to address Congress in a speech modeled after the State of the Union, focusing on the "renewal of the American Dream." Key areas of scrutiny include:

• Plans to end the war in Ukraine.
• Justifications for government spending cuts and restructuring efforts led by figures like Elon Musk.
• Economic agenda, particularly the 25% tariffs on Mexico and Canada.
• Immigration policies and measures to reduce fentanyl-related deaths.

Claudia Sheinbaum emphasizes the need to listen for the Democratic response to Trump's agenda, noting the selection of Michigan Senator Slotkin to deliver this rebuttal.

7. Additional News Highlights

Panama Canal Ports Acquisition: A consortium led by BlackRock has agreed to purchase majority stakes in ports located at both ends of the Panama Canal for nearly $23 billion, signaling a shift toward American corporate ownership. This move aligns with Trump’s objective to reclaim control over strategic trade routes, countering China’s Belt and Road Initiative.

Ukrainian President Zelensky’s Statement: Volodymyr Zelensky described his recent meeting with Trump as “regrettable” and expressed Ukraine’s readiness to negotiate peace and a mineral rights agreement with the U.S. However, it remains uncertain whether this will lead to the resumption of U.S. military aid to Ukraine, which was halted the previous day.

8. Conclusion

The implementation of President Trump's tariffs has triggered significant market volatility, eliciting strong retaliatory measures from Canada, Mexico, and China. The economic outlook remains uncertain as additional tariffs loom, affecting various sectors and consumers alike. The forthcoming presidential address to Congress is poised to provide further clarity on the administration's trade and economic strategies amidst growing international tensions.

Produced by Anthony Banci and Pierre Bienname, with supervising producer Michael Kosmides. Presented by Alex Osola for The Wall Street Journal.

Notable Quotes:

• Justin Trudeau ([04:01]): “Trump was acting in bad faith... the American people will be hit by the effect of the tariffs.”
• Claudia Sheinbaum ([04:23]): “There is no motive, reason, or justification for this decision.”
• David Uberti ([02:56]): “We are only down roughly 3% on the week across the major indexes... weakening consumer confidence, climbing inflation expectations and falling growth expectations.”
• Gavin Bade ([05:35]): “The US is the biggest export market for both Mexico and Canada. So this is all battle stations right now.”
• Claudia Sheinbaum ([09:16]): “We have not heard the President talk about inflation and prices as much since the campaign ended.”