WSJ What’s News Summary: Stocks Surge as U.S. and China Slash Tariffs
Release Date: May 12, 2025
Host: The Wall Street Journal
Introduction
On Monday, May 12th, WSJ What’s News delved into significant developments impacting global markets and geopolitical landscapes. The episode primarily focused on the historic tariff reductions between the United States and China, the resulting surge in stock markets, and other critical international and domestic news. Below is a comprehensive summary of the episode's key discussions, insights, and conclusions.
U.S. and China Slash Tariffs: A Game-Changer for Global Trade
Overview of Tariff Reductions
The cornerstone of this episode was the unprecedented agreement between the U.S. and China to significantly lower tariffs, effectively ending an extended trade embargo between the two economic giants. Luke Vargas introduced the topic:
"The US and China have sent stocks and the dollar surging this morning after both sides cut tariffs by 115%, ending an effective embargo on trade."
— Luke Vargas [00:39]
Details from U.S. Officials
Jason Douglas, a Wall Street Journal reporter, and Treasury Secretary Scott Besant provided in-depth analysis of the tariff adjustments:
"They've reduced tariffs by 115%, so they're down now to about 10% at a baseline... Tariffs on most Chinese imports are about 30%, which is a lot better than 145%."
— Scott Besant [02:30]
Besant explained that while the reciprocal tariffs were significantly cut, certain specific tariffs, such as those related to fentanyl, remain in place:
"The US still has these additional tariffs that aren't related to those reciprocal ones on China. That includes the tariffs related to fentanyl."
— Scott Besant [02:30]
Fentanyl's Role in Negotiations
Fentanyl emerged as a pivotal issue that facilitated the tariff negotiations:
"We understand it does seem to be something that helped prize negotiations open... One of the attendees at the trade talks spoke at length about what China was doing on fentanyl."
— Scott Besant [02:42]
90-Day Tariff Pause for Further Negotiations
A critical component of the agreement is a 90-day pause on tariffs, intended to foster more comprehensive trade discussions:
"The 90-day pause is very similar to what Trump has offered every other country subject to the reciprocal tariffs... They would look at other things that the US is concerned about, such as Chinese currency policies and non-tariff barriers."
— Scott Besant [03:25]
Besant emphasized optimism regarding the framework established to prevent future escalations:
"They are optimistic that they've got the framework in place to give it a good go."
— Scott Besant [03:25]
Avoiding Economic Decoupling
Both U.S. and Chinese representatives expressed a mutual desire to avoid an economic decoupling, despite lingering challenges:
"Neither wants an economic decoupling... There are still serious US concerns about the trade deficit and national security issues around sensitive technologies like semiconductors."
— Scott Besant [05:13]
Jason Douglas highlighted the overarching consensus that a complete economic separation is not desired by either party, though underlying issues persist.
Stock Market Surge Driven by Tariff News
The announcement of the tariff cuts led to a significant rally in global stock markets. Futures tied to the tech-heavy NASDAQ saw substantial gains, with major companies like Amazon, Apple, and Tesla experiencing notable surges in premarket trading.
"Futures contracts tied to the tech heavy NASDAQ are driving gains this morning with Amazon, Apple and Tesla surging in premarket trade."
— Luke Vargas [05:49]
Additionally, global shipping giants such as Maersk and Hapag Lloyd soared over 10%, reflecting increased optimism in international trade logistics. Mining stocks, luxury brands, and global carmakers also trended higher, underscoring the broad market impact of the tariff reductions.
Geopolitical Developments
Ukraine and Peace Talks
Ukrainian President Volodymyr Zelensky extended a direct challenge to Russian President Vladimir Putin for peace negotiations in Istanbul:
"I will be in Turkey this Thursday, May 15, and expect Putin to come to Turkey as well, personally... We are ready to talk to end this war Thursday."
— Volodymyr Zelensky [06:40]
This move follows President Trump's support for the peace talks, aiming to broker a ceasefire amidst ongoing conflicts.
Hamas and Gaza Humanitarian Efforts
Amidst the broader geopolitical tensions, Hamas announced the release of the last American hostage in Gaza contingent upon a ceasefire and the allowance of humanitarian aid into the region. A U.S. official indicated that Middle East envoy Steve Witkoff is set to travel to Israel to facilitate the release process:
"Hamas says it will release the last American hostage held in Gaza after discussions with the US over a ceasefire deal and a deal to allow humanitarian aid to enter the strip."
— Luke Vargas [06:59]
PKK Disarmament
In a significant development, the Kurdish militant group PKK announced its decision to disarm and disband after decades of conflict with Turkish forces. This move is expected to ease longstanding tensions between Turkey and Kurdish populations across the region.
India-Pakistan Ceasefire
A tentative ceasefire between India and Pakistan has held following severe clashes, with both nations reporting no overnight incidents. This follows previous accusations by Indian officials against Islamabad for violating the pact, though current reports indicate a period of relative calm.
U.S. Domestic Policy: Drug Prices and Medicaid Cuts
Lowering Drug Prices
President Trump is set to sign an executive order aimed at reducing drug prices by tying them to international standards:
"The president is expected to sign an executive order today tying US drug prices to what other countries pay, prices that are often lower because of negotiations by their single-payer health care systems."
— Luke Vargas [11:02]
Pharmaceutical companies have expressed strong opposition, highlighting the potential financial impact:
"Pharma shares in Asia and Europe have dropped this morning significantly, especially Novo Nordisk... They are among the biggest losers in European morning trading overall."
— Helena Smolek [11:02]
Despite pushback, there is a consensus among drug makers and analysts that the wide price disparity between the U.S. and other countries is unsustainable.
Medicaid Cuts Proposed by Republicans
House Republicans have unveiled plans to cut Medicaid, which currently covers over 70 million low-income and disabled Americans. The proposed measures include:
- Instituting work requirements
- Implementing twice-yearly eligibility checks
- Cutting a 5% boost in federal incentives added during the pandemic
These proposals aim to be passed by Memorial Day but are expected to face significant opposition from Democrats, healthcare providers, and other stakeholders reliant on Medicaid funding.
Controversial Deal with Qatar
A contentious story involves the Trump administration's negotiations with Qatar to receive a new plane serving as Air Force One, potentially to be used post-presidency. While administration lawyers deem the arrangement legal, critics argue it violates the Constitution's emoluments clause:
"Democrats and good government groups criticized the pending deal, citing it as a potential violation of the Constitution's emoluments clause."
— Luke Vargas [09:35]
President Trump plans to visit Qatar to discuss the matter further, with Qatari officials indicating ongoing discussions.
Conclusion
The episode of WSJ What’s News on May 12, 2025, provided a thorough examination of pivotal developments in U.S.-China trade relations, market reactions, and significant geopolitical and domestic policy issues. The reduction of tariffs between the U.S. and China marks a potential turning point in global trade dynamics, while other international and domestic stories underline the complex interplay of politics, economics, and security worldwide.
Produced by Daniel Bach and Kate Bullivant. Supervising Producer: Sandra Kilhoff. Presented by Luke Vargas for The Wall Street Journal.