WSJ What’s News: President Trump Threatens New Tariffs on the EU and Smartphones

Release Date: May 23, 2025
Host: The Wall Street Journal
Episode Overview: In this episode of WSJ What’s News, host Alex Osola delves into President Trump's latest moves in the global trade war, including his threats to impose hefty tariffs on European Union imports and smartphones. The episode also explores the repercussions of these threats on the stock market, Apple's legal battles in Texas, Nvidia's strategic deals amidst geopolitical tensions, fluctuations in the U.S. bond market, and a significant legal decision affecting Harvard University's international student enrollment.

1. President Trump's Escalation in the Trade War

New Tariffs on the European Union

At [00:28], Alex Osola introduces President Trump's latest stance in the ongoing trade conflict, highlighting his threat to impose a 50% tariff on imported goods from the European Union. Additionally, Trump hinted at applying similar duties on smartphones manufactured overseas, including brands like Apple and Samsung.

Alex Osola [00:28]: "President Trump threatened 50% tariffs on the European Union as well as new duties on iPhones made overseas."

Discussion with Trade Expert Gavin Baid

In an insightful conversation at [01:43], Gavin Baid, a trade correspondent for the Wall Street Journal, elaborates on the implications of Trump's remarks.

Gavin Baid [01:43]: "The European diplomats really felt like they were making progress in these trade talks. But Trump is dissatisfied with the pace and wants to push harder."

Baid explains that the EU was optimistic about advancing trade negotiations, but Trump's declaration has disrupted these efforts. He notes the multifaceted frustrations from the U.S. side, including ongoing disputes over non-tariff barriers and legal actions against companies like Google.

Gavin Baid [02:40]: "There is a lot of ongoing frustrations from the US Side."

Potential EU Response

When queried about the EU's reaction, Baid anticipates a concerted effort from the European side to reaffirm their commitment to reaching a deal, despite the recent setbacks.

Gavin Baid [02:42]: "There's going to be a redoubling of an effort to get to a deal here."

2. Impact on the Global Technology Sector

Tariffs on Smartphones and Apple

Trump's threats extended to the smartphone industry, particularly targeting Apple. At [03:08], Osola discusses how these tariffs could affect both consumers and manufacturers.

Gavin Baid [03:24]: "A 25% tariff is going to be felt by consumers of phones in the United States. It’s all about the industrial ecosystem."

Baid highlights the challenges Apple would face in maintaining its pricing structure if such tariffs were implemented, given that the U.S. lacks the industrial capacity to fully absorb or offset these costs.

Market Reactions

The immediate market response was negative, with U.S. stocks declining as a result of Trump's aggressive trade posture.

Alex Osola [04:01]: "President Trump's threats against the EU and Apple sent U.S. stocks lower, with the iPhone maker stock ending the day down 3%."

Major indices reflected the unease, with the Dow Jones Industrial Average dropping by 0.6%, the S&P 500 declining 0.7%, and the Nasdaq falling 1%.

Apple's Legal and Legislative Challenges

Beyond tariffs, Apple is embroiled in a legal battle against Texas legislation aimed at enforcing age verification for device users. Tim Cook has actively engaged with Texas Governor Greg Abbott to advocate for amending or vetoing the bill.

Alex Osola [04:22]: "Apple is fighting Texas legislation that would require the iPhone maker to verify the ages of device users."

An Apple spokesperson emphasized the company's commitment to online safety while expressing concerns over potential infringements on user privacy.

3. Nvidia's Strategic Position Amid Trade Tensions

As the episode progresses, attention shifts to Nvidia and its maneuvers in the AI chip market, a sector heavily influenced by U.S.-China trade relations.

Global Deals and Geopolitical Challenges

Nvidia has been actively securing deals with countries like Saudi Arabia and India to supply AI chips for infrastructure projects. However, these deals come with significant political complexities.

Dan Gallagher [05:34]: "These AI chips are front and center in the trade war with China. It's going to be a much more complicated business than Nvidia just getting the country to sign on the dotted line and make some sales."

Gallagher, a columnist for WSJ's Tech News Briefing, explains that Nvidia's ability to sell chips is increasingly contingent on geopolitical factors, including whether recipient countries might later divert these chips to China. This intertwining of technology and politics makes the market environment particularly volatile.

4. Bond Market Turmoil and Economic Implications

Weak Auction Performance and Yield Increases

At [07:00], the focus shifts to the bond market, where a weak auction for 20-year bonds has heightened concerns about the U.S. government's fiscal trajectory. The 30-year treasury bond yield reached its highest point since 2023, signaling investor apprehension.

Insights from Greg Ip on Bond Market Dynamics

Greg Ip, the Wall Street Journal's chief economics commentator, provides an in-depth analysis of the bond market's recent volatility.

Greg Ip [08:03]: "Investors are becoming specifically quite nervous or uneasy about owning U.S. treasury bonds and are asking for higher returns associated with the risk."

Ip attributes the rise in long-term bond yields to the U.S.'s substantial budget deficits, which are projected to exceed 7% of GDP under the upcoming budget package spearheaded by President Trump and Congressional Republicans. This fiscal strain necessitates increased bond issuance, compelling investors to demand higher returns.

Inflation Concerns and the Federal Reserve's Role

Ip also connects the bond market's instability to broader inflationary pressures and the Federal Reserve's monetary policies.

Greg Ip [09:30]: "The overall environment you have out there is one where inflation used to be very benign... now it's no longer benign."

The interplay between rising inflation and large budget deficits exacerbates the difficulty in borrowing long-term, contributing to investor unease and higher yields.

The Dollar's Reserve Currency Status Under Scrutiny

A pertinent question arises regarding the potential erosion of the U.S. dollar's dominance as the world's reserve currency.

Greg Ip [10:14]: "There's really not an alternative [to the dollar]. But that doesn't mean people aren't going to look for alternatives."

Ip notes subtle signs of shifting investor confidence, such as the dollar weakening despite rising bond yields, indicating a gradual but ongoing search for alternatives like gold and Bitcoin. While the dollar's status remains robust for the foreseeable future, these developments suggest a slow but steady diversification in global reserve holdings.

5. Legal Battle: Harvard vs. Trump Administration

In the concluding segment at [11:15], the episode covers a significant legal victory for Harvard University. A federal judge has temporarily blocked the Trump administration's attempt to revoke Harvard's authorization to enroll international students. This temporary restraining order allows Harvard to continue accepting foreign students while the legal proceedings unfold.

Alex Osola [11:15]: "A federal judge has temporarily blocked the government's bid to prevent Harvard University from enrolling international students."

The White House has objected to this ruling, maintaining its stance against the administration's policy. The outcome of this legal battle could have profound implications for U.S. higher education and international student demographics.

Conclusion

This episode of WSJ What’s News provides a comprehensive overview of the current geopolitical and economic tensions influenced by President Trump's aggressive trade policies, the subsequent market reactions, and the broader implications for major corporations like Apple and Nvidia. Additionally, it sheds light on the complexities of the U.S. bond market amid rising deficits and inflation concerns, as well as significant legal actions affecting higher education institutions. For listeners seeking to understand the intricate web of global trade, economic indicators, and legal developments, this episode delivers valuable insights backed by expert analysis and real-time data.

Notable Quotes:

• Gavin Baid [02:42]: "There's going to be a redoubling of an effort to get to a deal here."

• Gavin Baid [03:24]: "A 25% tariff is going to be felt by consumers of phones in the United States."

• Dan Gallagher [05:34]: "These AI chips are front and center in the trade war with China."

• Greg Ip [08:03]: "Investors are becoming specifically quite nervous or uneasy about owning U.S. treasury bonds."

• Greg Ip [10:14]: "They will look for alternatives. They seem to be buying a lot of gold. They're buying a lot of Bitcoin."

Timestamps Reference:

• [00:28] – Introduction of Trump’s tariff threats
• [01:43] – Conversation with Gavin Baid on EU tariffs
• [02:40] – Discussion on US frustrations
• [03:08] – Shift to Apple and smartphone tariffs
• [04:01] – Market impact of tariff threats
• [05:34] – Nvidia's deals and geopolitical challenges
• [07:00] – Introduction to bond market concerns
• [08:03] – Greg Ip on bond yields and deficits
• [09:30] – Inflation’s role in bond market
• [10:14] – The dollar's reserve currency status
• [11:15] – Harvard’s legal victory