Recession Fears Rise as Global Selloff Continues

Summary

WSJ What’s News: Recession Fears Rise as Global Selloff Continues
Release Date: April 4, 2025

In this episode of WSJ What’s News, hosted by Luke Vargas, The Wall Street Journal delves into the escalating concerns surrounding a potential global recession amidst a significant global market selloff. The discussion spans multiple regions, including the European Union's trade negotiations with the United States, the political upheaval in South Korea, and the Trump administration's intensified scrutiny of major U.S. law firms and universities.

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1. Global Market Selloff and Rising Recession Concerns

The episode opens with an overview of the deteriorating global markets. Following Wall Street's most substantial one-day wipeout since 2020, global markets have continued to decline. Asian stocks, particularly Japan's Nikkei, have been significantly impacted, a trend analysts attribute to heightened fears of a recession.

European Markets:
European stocks are also in the red, marking a second consecutive day of decline. Katie Barnato, WSJ Markets Editor for Europe, provides insight into the factors fueling these concerns:

"Perhaps the most notable is the fall in treasury yields this morning down below 4%. That is the lowest level since October and that would appear to be on rising concerns about a US Recession or even a global recession."
[01:48]

Barnato highlights JP Morgan's updated stance, now assigning a 60% probability to a global recession occurring this year. Additionally, the U.S. dollar has weakened to its lowest point of the year, an unusual trend given that tariffs typically bolster the currency. This weakening persists despite falling global oil prices, which are also indicative of diminishing global demand.

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2. U.S.-EU Tariff Negotiations and Tensions

A significant portion of the discussion centers on the strained trade relations between the United States and the European Union. As the EU prepares to send a delegation to Washington for tariff negotiations, tension is palpable.

Interview with Bernd Lange, Member of the European Parliament for Germany and Chair of the Parliament's Trade Committee:

"European Union, they're very tough, very, very tough traders. You know, you think of European Union, very friendly. They rip us off. It's so sad to say."
[03:13]

Lange criticizes President Trump's stance on EU tariffs, noting:

"We have an average of 2% tariffs between the two regions. And this means this figure of 39%, unfair tariffs and non-tariff barriers is totally unjustified."
[04:16]

He emphasizes that the EU seeks a balanced view of the trade relationship, pointing out that while the U.S. has a negative trade balance in goods, it maintains a surplus in services and investments:

"If a man or woman in California wants to buy a Porsche instead of a fraud, so what? This is not illegal process."
[04:25]

Lange further discusses the EU's commitment to fair competition and the protection of consumers, dismissing certain U.S. criticisms as non-tariff barriers rather than legitimate trade issues.

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3. Political Upheaval in South Korea

The removal of South Korean President Yoon Suk Yeol marks a significant political shift in the region. His impeachment, driven by his declaration of martial law in December, sets the stage for snap elections within the next 60 days.

"Thousands of supporters and anti Yoon protesters took to the streets ahead of the ruling, which Yoon didn't attend."
[09:27]

This political instability complicates South Korea's relationship with the United States. The nation has faced challenges in negotiating tariffs with the Trump administration, which has criticized South Korea's trade surplus and contributions to U.S. troop deployments.

"Trump has already taken aim at South Korea's trade surplus, and in the meantime, South Korea has had difficulty holding direct talks with the administration."
[09:59]

The upcoming elections are crucial, as the new leader will inherit a nation divided between liberals and conservatives, further impacting diplomatic and trade relations with the U.S.

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4. Trump Administration’s Crackdown on Law Firms and Universities

The episode also explores the Trump administration's escalating campaign against major U.S. law firms and academic institutions.

Kirkland and Ellis Law Firm:

Kirkland and Ellis, the largest U.S. law firm by revenue, is reportedly in talks with the White House to avert an executive order targeting the firm. This move is part of a broader initiative where the administration has identified 20 firms for potential sanctions, primarily due to issues related to diversity, equity, and inclusion (DEI) practices.

"The president's executive orders so far have generally threatened lawyers access to federal buildings as well as government contracts held by their clients."
[09:59]

Impact on Universities:

The administration is intensifying its scrutiny of American universities regarding DEI policies and antisemitism. Brown University is speculated to face the withdrawal of over $500 million in federal grants from the National Institutes of Health, although the institution has denied confirming these rumors.

Harvard University is also under pressure, having received a letter from Trump's antisemitism task force outlining nine demands to retain billions in government funding. These demands primarily relate to operational aspects of the university, reflecting the administration's broader agenda to influence academic institutions' policies.

"Brown said the freeze was a rumor they couldn't confirm. At the same time, a Harvard spokesperson said Thursday night that members of Trump's antisemitism task force had sent a letter with nine demands the school must meet to avoid losing billions in government funding."
[10:50]

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Conclusion

The episode underscores a period of significant economic uncertainty and geopolitical tension. With global markets reacting to recession fears, strained U.S.-EU trade relations, political instability in South Korea, and domestic pressures on major institutions, the financial and political landscapes remain highly volatile. Luke Vargas effectively synthesizes these complex issues, providing listeners with a comprehensive understanding of the forces shaping today's interconnected world.

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Notable Quotes:

• Katie Barnato, WSJ Markets Editor for Europe:
  "Perhaps the most notable is the fall in treasury yields this morning down below 4%. That is the lowest level since October and that would appear to be on rising concerns about a US Recession or even a global recession."
  [01:48]

• Bernd Lange, Member of the European Parliament for Germany:
  "European Union, they're very tough, very, very tough traders. You know, you think of European Union, very friendly. They rip us off. It's so sad to say."
  [03:13]

• Bernd Lange:
  "If a man or woman in California wants to buy a Porsche instead of a fraud, so what? This is not illegal process."
  [04:25]

---

This detailed summary encapsulates the critical discussions and insights from the episode, providing a clear and comprehensive overview for those who have not listened to the podcast.

Transcript

[Ryan Reynolds]

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[Luke Vargas]

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[Ryan Reynolds]

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[Luke Vargas]

See full terms at Mintmobile. Do recession fears mount following Wall Street's biggest one day wipeout since 2020? Plus, as EU officials prepare to head to Washington for tariff talks next week, we'll hear why there are limits to how much the bloc is willing to negotiate and South Korea's impeached president is removed from office as political divisions grip.

[Ryan Reynolds]

The country following this vote. On one side, the crowd erupted with cheers. They were shouting things like we won. While we also saw Yoon's some of them crying, appearing devastated on the streets.

[Luke Vargas]

It's Friday, April 4th. 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. Global markets are extending declines today following yesterday's rout on Wall Street. Asian stocks were dragged down by Japan's Nikkei, with analysts chalking up the sell off to heightened recession risks. European markets are red in midday trading, continuing their slide for a second day in a row. And WSJ markets editor for Europe Katie Barnato told me several other indicators point to growing concerns about a worsening economic outlook.

[Katie Barnato]

Perhaps the most notable is the fall in treasury yields this morning down below 4%. That is the lowest level since October and that would appear to be on rising concerns about a US Recession or even a global recession. Yesterday we had JP Morgan say it now thinks a global recession is more likely than not. This year it puts the risk at about 60%. Meanwhile, we saw the US dollar weaken to its lowest of the year yesterday, but it's still holding near those lows. That's a bit of an interesting dynamic in that tariffs would typically cause the dollar to strengthen, but at the same time, it is viewed as a bit of a bet on the strength of the US Economy. The other asset of interest is global oil prices. They are continuing to fall off fairly steeply this morning, and that is on concerns about global demand and again on global recession.

[Luke Vargas]

Meanwhile, a number of US Allies are readying their next steps in response to the latest tariff moves. Among them the European Union, which is sending a delegation to Washington next week. Making that trip will be Bernd Lange, a member of the European Parliament for Germany and the chair of the Parliament's Trade Committee. I spoke to him earlier this morning and began by asking him what he made of President Trump's character of the EU in his Rose Garden speech.

[Bernd Lange]

European Union, they're very tough, very, very tough traders. You know, you think of European Union, very friendly. They rip us off. It's so sad to say. It's so pathetic. 39%. We're going to charge them 20%. So we're charging them essentially half. Yeah. First of all, it's unjustified. So we have quite low tariff level between the United States and Europe, round about 5%. But regarding the situation as we want, about 70% of our goods are tariff free. The reality is that we have an average of 2% tariffs between the two regions. And this means this figure of 39%, unfair tariffs and non tariff barriers is totally unjustified. And even this 20%, and therefore we are really clear in rejecting this measure with countermeasures. But also we are trying to negotiate and convince trade guys and the White House that this is not justified.

[Luke Vargas]

What do you make broadly of the US viewing the EU US relationship in terms of the trade balance? That really is what's going on here.

[Bernd Lange]

Yeah, but listen, we have to really look on the whole picture. The trade balance of goods, of course, is negative for the United States, but this is based on our good products because we are not doing any illegal subsidies or dumping practices or so. And if a man or woman in California wants to buy a Porsche instead of a fraud, so what? This is not illegal process. And secondly, as I mentioned, the deficit on our side on services and also regarding investment, so we need really to look for the whole picture and then I guess it's more or less balanced.

[Luke Vargas]

President Trump has said countries that want to negotiate down their US Tariffs should get rid of their own tariffs and other trade barriers. They should stop currency manipulation and start buying tens of billions of dollars of American goods. Is any of that on the table? And are you looking at other carrots, if we could call them that, to try and repair the relationship and prevent damage to the EU economy and the.

[Bernd Lange]

US Economy as well. I guess higher prices will be also the result for US consumers. Therefore, I'm not calling this day of liberation, I am calling day of inflation. Look to the reality on tariffs, I'd say on average we have 5%. But looking to the volume of trade, it's only 2%. We can look to specific tariff lines, of course, always mention 10% for cars imported to the European Union on only 2.5 for cars going to the United States. So if going to the terrorists, let's go to facts and figures and discuss it and we can do something that is an offer. Secondly, yes, it is also clear that we could buy some US goods to reduce the deficit in goods. That's also in our negotiations basket. But certainly it's totally clear that legislation inside the European Union, which is valid for people inside the European Union for domestic companies and valid for people coming from outside and foreign companies, that legislation is not on the negotiation table.

[Luke Vargas]

Could you elaborate on that? I know the US released a document this week that described EU legislation. What did you make of that?

[Bernd Lange]

Yes, there are different standards for several goods and also for agriculture goods, that's for sure. We have a different view in some cases and there was one remark, our standards are not scientific based. So what? We have a different view on that. And this is not a trade barrier. And we are convinced that our legislation is proper because it's also valid for both domestic and foreign companies. On the digital area, we have clear regulation to guarantee fair competition also online, not only offline. And we have a clear legislation to protect consumers also online. And this is not a non tariff barrier. That's a necessary instrument to secure fair competition and protect our consumer. And therefore also this is not on the negotiation table, that's for sure.

[Luke Vargas]

Finally, Bernd, going forward, does Europe need to strengthen other trade relationships in response to this? Can it afford to be, you know, so closely linked to the US if the relationship can be jeopardized as we've seen it now, of course we have.

[Bernd Lange]

A quite diversified trade and we have a lot of trade with a lot of countries worldwide. And we want to have stable relation because trade is an engine for sustainable growth and therefore we are really intensifying our relation with our trading partners. We have, as you know, 44 trade agreements with roundabouts, 70 countries worldwide. We modernize our agreement with Mexico. We are negotiating quite intensively with Indonesia. Of course we want to guarantee that an open and fair market is given and therefore we also looking to trade partners besides the United States.

[Luke Vargas]

Bernd Lange is a member of the European Parliament for Germany and chairs the Parliament's Trade Committee. Berndt, thank you so much for being with us on what's news.

[Bernd Lange]

Thanks a lot.

[Luke Vargas]

Coming up, South Korea's president is removed from office, triggering snap elections. Plus President Trump expands his University crackdown. Those stories and the rest of the day's news after the break.

[Ryan Reynolds]

This episode is brought to you by Amazon Business. How can you free up your team from time consuming office tasks? Amazon Business empowers leaders to not only streamline purchasing, but better support their teams so they can focus on strategy and growth. Free up your teams and focus on your future. Learn more about the technology, insights and Support [e-mail].

[Luke Vargas]

South Korean President Yoon Suk Yeol has been removed from office over his short lived declaration of martial law in December, paving the way for elections to be held in the next 60 days. Eight judges from the country's Constitutional Court voted unanimously to uphold Yoon's impeachment by South Korean lawmakers. Thousands of supporters and anti Yoon protesters took to the streets ahead of the ruling, which Yoon didn't attend. Journal reporter Dasil Yoon in Seoul says the stakes are high for the country's.

[Ryan Reynolds]

Next leader, so at home the new president will have to contend with this deep political divide among South Korea's liberals and conservatives. There have been many Yoon supporters who have wanted him to be back in office, and the stakes are also high when it comes to the relationship with the U.S. south Korea has been struggling with a leadership vacuum, and this has made negotiating with the Trump administration difficult, especially when it comes to tariffs. Trump has already taken aim at South Korea's trade surplus, and in the meantime, South Korea has had difficulty holding direct talks with the administration. On top of this, Trump has signaled discontent consistently over the amount of contribution South Korea is making to US Troops stationed here and has threatened to pull them out.

[Luke Vargas]

We are exclusively reporting that Kirkland and Ellis, the largest US Law firm by revenue, is in talks with the White House to avoid an executive order similar to those levied against several of its rivals. That's according to people familiar with the matter, who added that the firm is one of the White House's next targets for sanctions. It isn't clear what objections Trump and his inner circle would have to the firm's activities, though it was one of 20 firms recently questioned over diversity, equity and inclusion practices. The president's executive orders so far have generally threatened lawyers access to federal buildings as well as government contracts held by their clients. And the Trump administration is escalating its campaign against American universities, with Brown becoming the fifth Ivy League institution to face a potential loss of federal funding. The administration is preparing to pull more than $500 million in federal grants from Brown over the handling of antisemitism and DEI policies, according to people familiar with the matter. Those would be National Institutes of Health grants. But Brown said the freeze was a rumor they couldn't confirm. At the same time, a Harvard spokesperson said Thursday night that members of Trump's antisemitism task force had sent a letter with nine demands the school must meet to avoid losing billions in government funding, mostly concerning how the university operates. And that's it for what's news for this Friday morning. Today's show was produced by Kate Bullivant. Our supervising producer was Daniel Bach. And I'm Luke Vargas for the Wall Street Journal. We will be back tonight with a new show. Otherwise, have a great weekend, and thanks for listening.