WSJ What’s News: Detailed Summary of "Markets Shrug Off Trump’s Latest Tariff Threats"

Release Date: November 26, 2024
Host: Tracy Hunt
Guest: Greg Ip, Chief Economic Commentator, The Wall Street Journal

1. Introduction

In the November 26, 2024 episode of WSJ What’s News, host Tracy Hunt delves into the latest economic and market developments, primarily focusing on President-elect Donald Trump's recent threats to impose substantial tariffs on imports from Mexico and Canada. The episode also explores the implications of these threats on global markets, corporate strategies regarding diversity initiatives, and significant developments in the pharmaceutical sector.

2. Trump's Tariff Threats and Market Reactions

The episode opens with a discussion on President-elect Trump's announcement to levy 25% tariffs on imports from Mexico and Canada, signaling a protectionist stance that has sent ripples through global markets.

Market Impact:

• Currency Fluctuations: The Canadian dollar and Mexican peso experienced declines against the U.S. dollar following the tariff threats.
• Automaker Shares: Global automaker stocks dipped as traders evaluated potential disruptions to supply chains.
• Stock Market Performance: Despite initial jitters, major indices like the S&P 500 and the Dow Jones Industrial Average reached new highs, while the NASDAQ saw a modest gain of 0.6%.

Greg Ip’s Insights: Greg Ip analyzes the situation, emphasizing that Trump remains the dominant force influencing economic policy, even amidst efforts by traditional financial leaders to stabilize markets.

Greg Ip (00:25): “What President-elect Donald Trump's threats of tariffs against Mexico and Canada say about how he'll approach the economy.”

Greg Ip (02:36): “What it tells you, I believe, is that notwithstanding the effort to reassure Wall Street and the establishment with people like Scott Besson at Treasury, it is still Trump calling the shots.”

Ip highlights that despite the nomination of Scott Besant, a hedge fund manager with market-friendly credentials, to the Treasury Secretary position, Trump's protectionist inclinations prevail. He notes Trump's dissatisfaction with the USMCA, particularly regarding the influx of cheaper Mexican goods and issues like illicit fentanyl and illegal immigration.

3. Implications for the USMCA and Potential Trade War

The imposition of tariffs directly contravenes the United States-Mexico-Canada Agreement (USMCA), the successor to NAFTA, which facilitates tariff-free movement of goods among the three nations.

Key Points:

• Violation of USMCA: A 25% tariff on imports from Mexico and Canada blatantly breaches the agreement, raising concerns about economic retaliation and a potential trade war.

Reasons Behind Trump's Stance:

• Economic Concerns: Trump aims to reduce the influx of cheaper Mexican products, which he argues jeopardizes American jobs.
• Security Issues: He attributes a rise in illicit fentanyl and illegal immigration to Mexico’s insufficient control measures, seeking leverage through the USMCA renegotiations.

Greg Ip’s Perspective: Ip suggests that Trump is using the USMCA renegotiation as a strategic point to address multiple grievances, potentially pushing for concessions beyond just trade tariffs.

Greg Ip (03:26): “Trump is basically seizing upon the renegotiation of that treaty as a leverage point to achieve a lot of different things with Trump's tariff threats.”

Ip also raises questions about the negotiation tactics, noting that Trump’s sudden announcement of high tariffs contrasts with expectations that such moves would wait until his presidency and commence with lower rates. He speculates that immediate actions might be intended as negotiating ploys, though past behaviors indicate Trump has followed through on tariff implementations, notably against China.

4. Corporate Shifts: Walmart’s Rollback of DEI Initiatives

Shifting focus from trade policies to corporate social responsibility, the episode highlights Walmart's decision to scale back its Diversity, Equity, and Inclusion (DEI) programs amidst mounting pressure from conservative activists.

Walmart’s Changes:

• Termination of DEI Programs: Walmart is winding down its Center for Racial Equity and programs supporting majority-owned suppliers from underrepresented groups.
• Reasoning: The rollback is largely attributed to backlash from conservative factions and the strategic timing ahead of the Black Friday shopping season.

Influence of Activists: Robby Starbuck, a prominent anti-DEI activist, claims responsibility for pressuring Walmart and other large corporations to abandon their DEI commitments.

Adoptive Mom (09:25): “Basically, we've hit a point where it's really been years of companies backtracking on a lot of their DEI LGBTQ corporate activities under pressure from conservative activists.”

Adoptive Mom (10:03): “He's pretty strategic about it. I talked to him and he said he waited to target Walmart, knowing it was a big fish, until he had some experience with these other companies.”

Market and Social Implications: Sarah Nassauer from The Wall Street Journal comments that Walmart's decision sets a significant precedent, given its stature as the largest U.S. retailer and private employer. This move may embolden other companies to reconsider their DEI strategies in response to similar pressures.

Adoptive Mom (10:42): “It definitely sets a precedent because it's Walmart. Walmart is the largest retailer in the country by revenue and the country's largest private employer.”

5. Pharmaceutical Developments: Amgen’s Obesity Drug

The episode also covers the mixed reactions to Amgen’s obesity drug candidate, Maritide, which showed promise in clinical trials but fell short of investor expectations.

Clinical Trial Results:

• Efficacy: Patients using Maritide experienced a 20% reduction in body weight compared to those on placebos.
• Investor Reaction: While the results are positive, analysts anticipated greater efficacy, questioning the drug's potential to challenge market leaders like Eli Lilly and Novo Nordisk.
• Patient Tolerability: Approximately 11% of participants discontinued the drug due to adverse effects, raising concerns about its long-term viability.

Policy Implications: The Biden administration proposes that Medicare and Medicaid cover these high-cost drugs, priced over $1,000 monthly. This proposal, however, faces scrutiny from Trump-appointed officials who hold divergent views on obesity treatment.

Diverse Perspectives:

• Robert F. Kennedy Jr.: Skeptical about pharmaceutical interventions for obesity, advocating for healthier eating habits instead.

  Peter Loftus (08:03): “He has expressed skepticism about these drugs, essentially saying that a better way to deal with obesity is just eating healthier.”

• Dr. Mehmet Oz: Supports recognizing obesity as a legitimate medical condition that may require pharmaceutical treatment beyond diet and exercise.

  Peter Loftus (08:03): “Dr. Mehmet Oz has said that obesity is a real condition, it shouldn't be stigmatized, it's not easily dealt with by diet and exercise alone.”

6. Conclusion

The episode of WSJ What’s News provides a comprehensive overview of the current economic and corporate landscapes influenced by political decisions and social movements. From Trump's aggressive tariff threats potentially igniting a trade war to major corporations like Walmart retracting DEI initiatives under activist pressure, the discussions underscore a period of significant change and uncertainty. Additionally, developments in the pharmaceutical industry highlight the complex interplay between medical advancements, market expectations, and policy decisions.

Produced by Anthony Bansi with supervising producer Matthew Walls, this episode offers valuable insights for listeners seeking to understand the multifaceted factors shaping today's business and economic environment.

For more updates, tune in to the next episode of WSJ What’s News.