Tariff Uncertainty Weighs on U.S. Stocks and Business Leaders

Summary

WSJ What’s News — PM Edition

Episode: Tariff Uncertainty Weighs on U.S. Stocks and Business Leaders

Date: February 23, 2026
Host: Alex Osola, The Wall Street Journal

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Episode Overview

This episode delves into the sharp drop in U.S. stocks and the swirling uncertainty facing business leaders after President Trump’s renewed tariff proclamations despite a Supreme Court ruling that declared his earlier global tariffs illegal. The episode also touches on major developments in the weight loss drug market, allegations of Chinese AI firms siphoning knowledge from U.S.-made models, high-profile scandals in the UK, and ongoing geopolitical tensions around Iran.

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Key Discussion Points & Insights

1. Market Turmoil and Tariff Uncertainty

Timestamps: [00:33]–[02:40], [03:38]–[06:06]

• Stock Market Reaction:
  • Major U.S. indexes tumbled: Dow (-1.7%), Nasdaq (-1.1%), S&P (-1%). Declines were driven by leading financial stocks: American Express, Goldman Sachs, and JP Morgan.
  • Hannah Aaron Lang (WSJ markets reporter) attributes market volatility to several factors:
    • President Trump's repeated announcements about maintaining tariffs, confusing investors and company leaders.
    • Ongoing Middle East conflict.
    • A viral Substack post outlining a hypothetical future where AI triggers massive unemployment, rattling market participants.

“You've seen the President talking about finding new ways to impose tariffs... that introduced this source of volatility back into the market.”
— Hannah Aaron Lang [01:40]

• Tariffs and Global Repercussions:
  • Supreme Court declared Trump’s earlier global tariffs illegal.
  • Trump’s weekend response: Proposed new global tariffs (10% and 15%), amplifying global market jitters.
  • EU lawmakers paused trade talks with the U.S. pending further clarity.

2. Business Leaders’ Dilemma: Caught Between Relief and Angst

Timestamps: [03:38]–[06:06]

• Executive Confusion and Legal Maze:
  • Chip Cutter (WSJ workplace reporter) describes mixed feelings among CEOs—relief from the Supreme Court ruling but renewed confusion post-Trump announcements.
  • Uncertainty about whether refunds on tariffs will be automatic, or require lengthy litigation.
  • Many companies hesitate to discuss these issues, wary of antagonizing the Trump administration.

“They felt initially a jolt of relief... But President Trump’s announcements... left many executives struggling to understand: Where do we go from here?”
— Chip Cutter [03:38]

• Preparedness and Uneven Impact:
  • Large corporations, especially multinationals, have adjusted with dedicated “war rooms” to simulate and strategize around shifting trade parameters.
  • Smaller businesses—like Dariana Bridal and Tuxedo in Pennsylvania—feel overwhelmed, fearing mass consumer demands for tariff-related refunds.

“If you’re a small mom and pop business, this is all just really tricky and you’re throwing your hands up right now.”
— Chip Cutter [04:52]

3. Weight Loss Drug Market Shakeup

Timestamps: [06:13]–[07:05]

• Novo Nordisk vs. Eli Lilly:
  • Novo Nordisk’s shares plummeted 16% after its next-gen obesity drug failed to outperform Eli Lilly’s Zepbound.
  • Lilly shares climbed 4.8% on news of regulatory approval for a new multi-dose pen for Zepbound.

4. UK Scandal and Epstein Fallout

Timestamps: [07:35]–[08:36]

• Peter Mandelson Arrest:
  • Former UK Ambassador to the U.S. arrested over alleged misconduct linked to the Jeffrey Epstein investigation.
  • DOJ files indicate Mandelson shared confidential documents with Epstein and received $75,000 in wiring.
  • Mandelson denies knowledge of the funds and investigation focus remains undisclosed.

5. Iran Tensions and U.S. Military Planning

Timestamps: [08:36]–[09:57]

• Pentagon Raising Alarms:
  • General Dan Kaine, Chairman of the Joint Chiefs, has voiced concerns about an extended military campaign against Iran to President Trump.
  • Debate within the National Security Council on strategy, with the White House emphasizing Trump “listens to others’ opinions before making a decision.”
  • Trump publicly suggests any conflict with Iran would be “easily won.”
  • Iranian civilians are bracing for possible violence, with reports of some making contingency plans for a U.S. strike.

6. U.S.-China AI Model Distillation Dispute

Timestamps: [09:57]–[12:19]

• Anthropic vs. Chinese AI Firms:
  • Anthropic alleges three Chinese AI companies (Deepseek, Moonshot AI, Minimax) used 16+ million prompts to extract knowledge from its Claude model to rapidly train their own AI.
  • Practice known as “distillation,” where one AI (the “student”) learns by querying another (the “teacher”).

“Claude acts like a teacher and the other model acts like a student... it’s kind of an end run around the very cumbersome and... expensive process of building a large language model.”
— Bob McMillan [09:57]

• National Security and Business Risks:
  • Concerns that cloned models might lack important safety guardrails (preventing fraud, terrorism, criminal misuse).
  • Distilled models can undercut U.S. firms on cost, threatening their business models.

“If you could clone a product that costs tens or hundreds of millions of dollars to make for a fraction of that, then you can sell it for a lot less...”
— Bob McMillan [11:15]

• Industry-wide Worries:
  • Not an isolated issue; OpenAI has similarly accused DeepSeek of using the same “distillation” tactic.

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Notable Quotes & Memorable Moments

• On market volatility:
  “You have other factors as well. There's concerns about conflict in the Middle East. And then another really interesting thing… a viral substack post… outlined what could be some really devastating consequences of artificial intelligence and that spooked investors.”
  — Hannah Aaron Lang [01:40]

• On business leader uncertainty:
  “Some companies realize they may need to file litigation to get [tariff refunds]... this will not be automatic and perhaps it's going to take longer than many companies might have expected.”
  — Chip Cutter [03:38]

• On small businesses’ struggles:
  “‘Oh my God, every customer on earth is going to demand a refund on their tariffs.’ And so you can see that fear among business owners right now.”
  — Chip Cutter [05:40]

• On AI ‘distillation’ as a threat:
  “Once we have the intelligence of Claude transferred onto another model, it's out of our control and it could be used for bad.”
  — Bob McMillan [10:32]

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Key Segment Timestamps

• Market Sell-off and Factors — [00:33]–[02:40]
• Tariffs and Business Impact — [03:38]–[06:06]
• Weight Loss Drug Market News — [06:13]–[07:05]
• UK Epstein Scandal Update — [07:35]–[08:36]
• U.S.–Iran Tension Coverage — [08:36]–[09:57]
• AI Distillation Controversy — [09:57]–[12:19]

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This summary provides a detailed run-through of the episode’s content, focusing on the economic, political, and business ramifications of ongoing news stories while retaining the speakers’ tone and insights.

Transcript

[Oppenheimer Wealth Management Representative]

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[Alex Osola]

Anthropic says Chinese AI companies are using Claude to train their own models. Plus Stocks slump on tariff uncertainty while US Business leaders scramble for answers President

[Chip Cutter]

Trump's announcements on Friday and Saturday reiterating that tariffs are still a big part of his agenda, I think has left many executives struggling to understand where do we go from here? What does this mean for our companies? Do we get refunds back to consumers? Ask for them.

[Alex Osola]

And in the weight loss drug market, Novo Nordisk fortunes fall while Eli Lilly's rise. It's Monday, February 23rd. I'm Alex Osola for the Wall Street Journal. This is the PM edition of what's news, the top headlines and business stories that move the world today. US Stocks have fallen sharply today. Among the major indexes, the Dow led the losses, dropping 1.7% with declines in American Express, Goldman Sachs and JP Morgan pulling down the benchmark. The Nasdaq lost 1.1% and the S&P fell 1%. WSJ markets reporter Hannah Aaron Lang says there are a few factors driving the sell off.

[Hannah Aaron Lang]

So you didn't see huge swings in the market in the immediate wake of the Supreme Court decision. However, you've seen the president talking about finding new ways to impose tariffs. And I think that introduced this source of volatility back into the market where investors are once again wondering what options the president might pursue and which companies might be impacted. So that's a part of what's going on today. You have other factors as well. There's concerns about conflict in the Middle East. And then another really interesting thing that happened was this viral substack post from Citrini Research which outlined a scenario just a couple years in the future where artificial intelligence has been successful and it's actually totally disrupted huge chunks of the economy. The unemployment rate is really high. So this post outlined what could be some really devastating consequences of artificial intelligence and that spooked investors.

[Alex Osola]

The recent uncertainty around U.S. tariffs. The Supreme Court's decision on Friday that President Trump's global tariffs were illegal and then Trump's declaration of a new global tariff of 10% and then 15% is having ripple effects around the world. In the European Union, lawmakers have agreed to shelve talks on the bloc's trade deal with the US Members of the European Parliament were going to vote on approving two legal techs that are part of a trade agreement the block reached with the US Last year. Now that's on pause. A spokesperson for the European Commission told reporters today that officials need more clarity before deciding on any next steps. Meanwhile, in the U.S. business leaders are left with a flood of questions to answer them and to try to predict what's coming next. Many business leaders spent the weekend digesting legal briefs and the president's response. Chip Cutter covers workplace and management for the Journal and has been in touch with a number of them. Chip, how are business leaders feeling right now? Do they feel like this latest tariff news is good for them or bad for them or something else?

[Chip Cutter]

They're confused. They felt initially a little bit of a jolt of relief, feeling like, hey, this was good news. We've been worried about these tariffs for so long now. Potentially they're going away after the Supreme Court ruling. But of course, President Trump's announcements on Friday and Saturday, reiterating that tariffs are still a big part of his agenda, I think has left many executives struggling to understand, where do we go from here? What does this mean for our companies? Do we get refunds back? Do consumers ask for them? Some companies realize they may need to file litigation to get this. Some lawyers have said that this will not be automatic and perhaps it's going to take longer than many companies might have expected.

[Alex Osola]

And I would imagine with a legal fight, there are pros and cons to doing that, some of the cons being, of course, money and time. But are there political concerns for some of these business leaders?

[Chip Cutter]

Absolutely. I mean, many companies are really reluctant to even talk about this because they don't want to ruffle the Trump administration, which has staked so much of its economic agenda on these terms.

[Alex Osola]

Business leaders have been here before, right? We had Liberation Day. We had the time before that and after that. So do they feel like they know how to handle this kind of uncertainty now, or does everything feel like it's on the line?

[Chip Cutter]

They've really developed this muscle. Companies have war rooms now that have been built and have stood up now for months and months that just meet regularly to deal with the kind of ever changing trade parameters. I talked with the CEO of Boston Consulting Group, Christoph Schweitzer, and he made this point that many big multinationals had set up systems and task force and algorithmic models that really let them put in all these different trade parameters and spit out answers sometimes within a matter of hours. And so he had made the case to me that companies could simulate the output of the US Ruling really quickly. But if you're a small mom and pop type of business, this is all just really tricky and you're kind of throwing your hands up right now. So one example of all of this is Dariana Bridal and Tuxedo in Pennsylvania. It's a bridal wear company that had seen bridalwear prices rise an average of 8 to 14% after the tariffs took effect. And one of the company's co owners told one of my colleagues that his first thought was, oh my God, every customer on earth is going to demand a refund on their tariffs. And so you can see that fear among business owners right now. Just wondering, what are consumers going to ask and how do we respond?

[Alex Osola]

That was Journal reporter Chip Cutter. Thanks so much, Chip.

[Chip Cutter]

Thank you.

[Alex Osola]

Shares of Danish drugmaker Novo Nordisk fell more than 16% today after a study found that its next generation obesity treatment failed to outperform Eli Lilly Zeppbound in a head to head study. The results are a setback for Novo Nordvisk and its efforts to regain ground lost to Eli Lilly. Meanwhile, Lilly shares closed up 4.8% after the company received regulatory approval for a label expansion for Zepbound. The company said the drug can now be offered in a multi dose pen that delivers four weekly injections from a single device as opposed to the single dose vials it had been available in before. Coming up, how U.S. officials and Iranians are preparing for a possible U.S. attack on the country. That's after the break.

[Goldman Sachs Markets Podcast Host]

What's driving the markets this week? What's on investors minds as they look ahead? Find out on the markets podcast from Goldman Sachs. A breakdown of market moves and macro signals in 10 minutes or less. The markets podcast from Goldman Sachs. Listen now.

[Alex Osola]

Peter Mandelson, the former UK Ambassador to the US Was arrested today on suspicion of misconduct in public office as the revelations linked to Jeffrey Epstein continued to send shockwaves through Britain's establishment. Files released by the U.S. justice Department appear to show that Mandelson emailed confidential government correspondence to Epstein and that Epstein separately wired $75,000 to Mandelson. Police didn't comment on what their investigation was focused on. Mandelson hasn't responded to requests for comment, but he's previously said that he had no recollection or record of receiving the funds. Separately, the Pentagon is raising concerns to President Trump about an extended military campaign against Iran. Current and former officials say that the warnings have largely been voiced by General Dan Kaine, the chairman of the Joint Chiefs of Staff within the Defense Department and during meetings of the National Security Council. But he's not the only one. Some officials said that such discussions are always part of the contingency planning process before military operations, but that Kaine is seen as an aide who Trump trusts and that the issues will be a factor in the president's decision on whether to attack Iran and how. A White House spokeswoman said that Cain is, quote, a talented and highly valued member of President Trump's national security team and that the president listens to others opinions before making a decision. Following media reports on Cain's warnings, Trump posted on social media, saying Kaine is not against a war with Iran, but that, quote, if a decision is made on going against Iran at a military level, it is his opinion that it will be something easily won. And in Iran, many locals are bracing themselves for the chaos and violence that might unfold if the ruling regime is actually brought down. Some who are worried about their physical safety are already making plans to leave Tehran, which they expect will bear the brunt of any airstrikes. US Artificial intelligence startup Anthropic put out a blog Post today accusing three Chinese AI companies of stealing secrets from its Claude AI model. Anthropic said that the three companies, Deepseek, Moonshot AI and Minimax, prompted Claude more than 16 million times to train and improve their own products. Representatives from Deep Seq, Moonshot and Minimax didn't respond to requests for comment. For more, I'm joined Now by Robert McMillan, who covers computer security for the Journal. Bob, the report says that the Chinese AI companies are using a process called distillation here. What does that entail and why are they doing it?

[Bob McMillan]

The easy way of understanding it is Claude acts like a teacher and the other model acts like a student. And it basically asks a bunch of preordained questions to Claude and Claude gives it the answers. And based on those answers, the people operating the little model can then tweak what are called the weights on their model. So it's kind of an end run around the very cumbersome and very expensive process of building a large language model.

[Alex Osola]

Anthropic said the activity by the Chinese developers raised national security concerns for the U.S. how exactly does that work?

[Bob McMillan]

The U.S. companies have taken great effort to make their models safe, right, to prevent them from being used for fraud or from being used for terrorism or criminal activity. And what they're alleging is that if you can basically clone Claude using this distillation technique, you basically have another version of it that might not have the guardrails that Claude has. And so the allegation is basically like once we have the intelligence of Claude transferred onto another model, it's out of our control and it could be used for bad.

[Alex Osola]

I'm sure copying effectively their model means that these Chinese companies could also be presenting a business risk to Anthropic. How much of a threat is that?

[Bob McMillan]

That's a big threat, right? If you could clone a product that costs tens or hundreds of millions of dollars to make for a fraction of that, then you can sell it for a lot less and then you can sort of get a wedge in the ins and outs of how good these distilled models are. We don't know the answer to that. But you might remember a year ago when deepsea first burst onto the scene, everyone was amazed at how good it was and people almost instantly started wondering if it had used distillation to be created because it was so good and also because it had been created for a lot less money than the sort of state of the art AI models created at the time.

[Alex Osola]

And is Anthropic the only company that's dealing with this distillation issue?

[Bob McMillan]

No. I mean, probably all of the AI companies are worried about it. OpenAI last week sent a memo to US lawmakers basically alleging the same thing, alleging that DeepSeq was using distillation to mimic OpenAI's products.

[Alex Osola]

That was WSJ reporter Bob McMillan. Thanks, Bob.

[Bob McMillan]

Hey, Alex. Thanks so much for having me.

[Alex Osola]

And that's what's news for this Monday afternoon. Today's show is produced by Pierre Biennime and Anthony Banci with supervising producer Jana Herron. I'm Alex Osola for the Wall Street Journal. We'll be back with a new show tomorrow morning.

[Hannah Aaron Lang]

Thanks for listening.

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