WSJ What’s News - Episode: Tariffs on Canada and Mexico Go Into Effect at Midnight, Trump Says
Release Date: March 3, 2025

The latest episode of WSJ What’s News delves into pivotal developments impacting global markets, highlighting President Trump’s enforcement of tariffs on Canadian and Mexican goods, the resurgence of asset-backed securities, significant investments in the U.S. semiconductor industry, and notable shifts in the real estate landscape of Los Angeles. The episode, hosted by Alex Osola, provides comprehensive insights into these topics, enriched with expert opinions and detailed analyses.

1. President Trump Implements 25% Tariffs on Canadian and Mexican Goods

Timestamp: 00:03 - 02:46

President Trump confirmed the imposition of a 25% tariff on goods imported from Canada and Mexico, set to take effect at midnight. Alex Osola opens the discussion by highlighting the potential repercussions for the auto industry, a sector deeply entwined with the North American supply chain.

Anthony Bansi, a commentator on the show, elaborates on the complexity of the North American automotive supply chain:

“The integration of the supply chain is something that has taken decades, that won't be very easy to unwind, be easy to destroy. But to recreate and unwind is a really hard task.” [00:16]

Bansi underscores the challenges car manufacturers face as each auto part crosses borders multiple times:

“Each time the part crosses the U.S. Canada border, the U.S. Mexico border, there'd be a 25% tariff on that part… the numbers really add up very quickly.” [02:12]

The segment highlights the intricate logistics involved in automobile manufacturing, where a single transmission part may traverse the U.S., Canada, and Mexico several times before final assembly, significantly increasing costs due to the new tariffs.

2. Market Reaction and Manufacturing Outlook

Timestamp: 02:46 - 05:00

Following the tariff announcement, U.S. stock markets reacted negatively. The Nasdaq experienced a significant drop of 2.6%, while the S&P 500 and the Dow Jones Industrial Average fell by approximately 1.8% and 1.5%, respectively. The tariffs have also cast a shadow over the U.S. manufacturing sector's growth prospects.

The Purchasing Managers Index (PMI) for manufacturing dipped to 50.3 in February from 50.9 in January, falling short of economists' expectations despite remaining above the contraction threshold of 50. Timothy Fiore, chair of the ISM's manufacturing business survey Committee, commented:

“Respondents were experiencing, quote, the first operational shock of the new administration's tariff policy.” [04:30]

This decline indicates emerging challenges for U.S. manufacturing amid the new tariff regime.

3. TSMC’s Strategic Investment in U.S. Chip Manufacturing

Timestamp: 05:00 - 07:35

A significant bright spot in the episode is the announcement by Taiwan Semiconductor Manufacturing Co. (TSMC) to invest $100 billion in U.S. manufacturing facilities over the coming years. This strategic move, unveiled at the White House, aligns with President Trump’s objective to bolster the domestic semiconductor industry, deemed crucial for economic and national security.

Justin Baer, WSJ Deputy Markets Editor, provides context on the resurgence of asset-backed securities and TSMC’s investment:

“There are a couple things that have happened since then… the demand for these kinds of debt structures is grown off the charts… you had a lot of investors that were desperate to add various investments that had a higher yield to them.” [06:12]

Baer explains that the growth of private investment firms and the increased demand for higher-yield investments have revitalized interest in asset-backed securities, paralleling the strategic investments like TSMC’s in the semiconductor sector.

4. Leadership Changes at Kroger

Timestamp: 07:35 - 09:20

In corporate news, Rodney McMullen, CEO of Kroger, the largest U.S. supermarket chain by sales, has resigned amid an investigation into his personal conduct. While Kroger emphasizes that his actions were unrelated to company business and did not involve any associates, they stated his behavior conflicted with their ethics policy.

5. Resurgence of Asset-Backed Securities

Timestamp: 05:37 - 08:29

Asset-backed securities (ABS), which played a significant role in the 2008 financial crisis, are making a comeback. Justin Baer discusses the factors driving this resurgence, noting the reduced role of banks due to post-crisis regulations and the increasing prominence of private investment firms managing diverse debt forms. The quest for higher yields in a low-interest-rate environment post-COVID has further fueled investor interest in ABS.

Baer emphasizes the structural appeal of ABS:

“It's an opportunity to take a basket of loans and slice those up in different ways that would appeal to different investors… [it’s] a way to distribute those various risks to different investors.” [07:35]

This versatility allows ABS to cater to a broad spectrum of investors, from conservative insurance companies to aggressive hedge funds seeking higher returns.

6. Real Estate Boom in Post-Fire Los Angeles

Timestamp: 08:29 - 11:59

Despite recent devastating fires in Los Angeles, the real estate market in affected areas like Altadena is experiencing robust demand. Properties damaged by fires are being snapped up by investors at prices exceeding pre-fire valuations. For instance, in Altadena, land parcels are selling at an average of $69 per square foot, a substantial increase from the $22 average in previous years.

Rebecca Pichotto, covering residential real estate, explains the dynamics driving this surge:

“It's actually quite expensive to hold onto these destroyed homes… Some homeowners are doing this calculation in their head and realizing that they simply can't afford the years-long carrying costs.” [09:20]

Investors, primarily small to mid-sized, are purchasing these properties with plans to either flip the land or rebuild and resell homes. However, this trend raises concerns about the demographic shifts in historically predominantly Black neighborhoods like Altadena. Residents fear that the influx of investors could lead to gentrification and alter the community's character.

Pichotto highlights the community's response:

“You can walk down the streets and see all of these yard signs outside of homes that say 'Altadena not for sale.'” [11:20]

This grassroots movement aims to preserve the neighborhood's integrity amidst the rebuilding process.

7. Mishui: Surpassing McDonald’s as the World’s Largest Fast Food Chain

Timestamp: 11:59 - End

Contrary to popular belief that McDonald’s or Starbucks are the world's largest fast-food chains by location, a Chinese chain named Mishui holds that title. With over 45,000 stores across Asia and Australia, Mishui specializes in affordable snacks like $1 ice cream and bubble tea. The company made a successful initial public offering (IPO) in Hong Kong, raising over $400 million and witnessing its stock price surge 43% above the IPO level, valuing the company at over $10 billion.

Mishui’s rapid expansion, having more than doubled its locations in three years, underscores its aggressive growth strategy and potential to establish a global presence, posing a significant challenge to established Western fast-food giants.

Conclusion

The episode of WSJ What’s News on March 3, 2025, provides a multifaceted overview of critical economic and market developments. From the significant implications of President Trump's tariffs on North American trade and the consequential impact on the automotive industry, to the revival of asset-backed securities and strategic investments in the semiconductor sector, the discussions offer valuable insights into the evolving global economic landscape. Additionally, the resilient real estate market in post-fire Los Angeles and the meteoric rise of Mishui as the world's largest fast-food chain exemplify the dynamic nature of today’s markets. The episode effectively equips listeners with the knowledge to navigate and understand the complexities of current financial and economic trends.

Produced by Anthony Bansi and Pierre Vianname with supervising producer Michael Kosmides. Host: Alex Osola.