Trade Framework Emerges for the U.S. and China

Summary

WSJ What’s News — “Trade Framework Emerges for the U.S. and China”

Date: October 28, 2025
Host: Alex Osola
Featured Reporters: Gavin Bade, Keech Hagee, Peter Loftus

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Episode Overview

In this episode, The Wall Street Journal explores the breaking news around a potential trade framework between the U.S. and China, highlighting planned tariff rollbacks in exchange for action on fentanyl chemicals. The show also examines OpenAI’s shift to a public benefit corporation, major layoffs at UPS and Amazon, a new supercomputer partnership between Lilly and Nvidia, and more.

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Key Discussion Points & Insights

1. Emerging U.S.-China Trade Framework

• Breaking News: The U.S. is reportedly ready to roll back some tariffs on Chinese goods if Beijing cracks down on exports of chemicals used to produce fentanyl. This is expected to be a primary topic at the upcoming meeting between President Trump and President Xi.
  [00:49–01:44]

Key Details of the Trade Proposal

• Tariff Reduction:
  • U.S. would reduce tariffs imposed on China from 20% to 10% (in response to fentanyl-related issues), lowering the average U.S. tariff from 55% to 45%.
  • While not a massive rate drop, this is seen as a significant gesture, potentially improving the competitiveness of Chinese goods in the U.S. market.
    (Gavin Bade at [01:44–02:29])
• Agricultural Purchases:
  • Anticipated purchase agreements for U.S. soybeans and other agricultural goods by China, with details still pending.
• Rare Earth and Export Controls:
  • Prospective pause by China on rare earth export controls for about a year; corresponding U.S. export controls might also be paused.
  • Many enforcement and implementation details remain under negotiation.

State of U.S.-China Relations

• Tensions Remain:
  • The willingness to negotiate represents a lowering of diplomatic tensions, but significant hurdles and underlying mistrust persist.
  • Both economies are seeking relief, but the situation is volatile and may change quickly.
    (Gavin Bade at [03:40–04:11])

“It lowers the temperature, but we’re not at cool heads quite yet… The real test is going to be, can we find a framework that has more shelf life than the agreements of earlier this year.”
— Gavin Bade ([03:41])

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2. President Trump’s Asia Tour and U.S.-Japan Relations

• U.S. and Japan Alliance:
  • From the USS George Washington, President Trump and Japanese Prime Minister Sanay Takaichi affirmed new cooperation in security and trade.
  • Trump says Toyota plans to invest $10 billion in U.S. auto plants (unconfirmed by Toyota as of report time).
  • These moves are framed as a “foundation of peace in the Pacific.” [04:18–04:48]

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3. Expanding U.S. Military Actions Against Criminal Groups

• Joint U.S.-Mexico Actions:
  • For the first time, Mexico's military was involved as the U.S. carried out three strikes on alleged drug smuggler vessels in the eastern Pacific.
  • 14 suspects reportedly killed, 1 survivor unaccounted for.
    [04:48–05:38]

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4. OpenAI’s Corporate Restructuring

Transition to Public Benefit Corporation

• New Structure:
  • OpenAI has converted its for-profit subsidiary into a public benefit corporation, clarifying its ability to raise funds and possibly pursue an IPO.
  • Allows issuance of equity to employees and investors, making funding easier.
  • Investors had reportedly made further fundraising contingent upon this conversion. (Keech Hagee at [06:36–06:59])

“It lets them give equity to employees and investors, most importantly. So this is something investors were really, really hungry for…”
— Keech Hagee ([06:36–06:59])

• ‘Public Benefit’ Meaning:

  • Obligates OpenAI to pursue social good—in this case, the safe development of artificial general intelligence (AGI)—in addition to fiduciary responsibilities to shareholders.
    [07:04–07:17]

• Legal Backdrop:

  • Elon Musk’s lawsuit against OpenAI, arguing the change betrays OpenAI’s original mission, continues but is not expected to block the restructuring.
    [07:28–07:50]

Microsoft’s Stake and Partnership

• Microsoft now holds a 27% stake; its share price surpassed $4 trillion valuation on news of OpenAI’s restructuring.

“Microsoft is going to be our partner for a really long time. So they’re kind of locked in.”
— Keech Hagee ([08:00–08:19])

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5. Corporate Layoffs and Market Moves

• UPS Job Cuts:

  • 48,000 roles cut (management/operations), exceeding previous estimates. Shares rose 8%.
    [08:19–09:00]

• Amazon Layoffs:

  • 14,000 initial corporate layoffs; up to 30,000 expected overall.

• Stock Markets:

  • U.S. markets hit record highs, led by AI sector deals and strong corporate earnings.

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6. Eli Lilly and Nvidia: Supercomputing for Drug Discovery

• New Partnership:
  • Lilly and Nvidia will build what’s said to be the most powerful pharma-run supercomputer.
  • The collaboration aims to greatly accelerate drug discovery—analyzing data to identify useful compounds and speed up R&D cycles.
  • Lilly hopes system will be operational by January. (Peter Loftus at [09:51–10:58])

"...using AI at least has the potential to apply lightning speed analysis to reams of data. In often cases, it's data that Eli Lilly and other drug companies themselves have accumulated over the years."
— Peter Loftus ([10:32])

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7. Other Headlines

• Substrate Raises $100M:
  • Startup claims to have reinvented part of microchip manufacturing; now valued at over $1 billion.
    [10:58–11:13]
• Texas Sues Tylenol Maker:
  • State alleges Kenview hid risks linking acetaminophen to autism; company denies, citing inconclusive evidence.
    [11:13–11:35]

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Notable Quotes & Memorable Moments

• “We’re looking at a reduction of 10% in the tariffs that the US has applied to China...not a huge difference in the overall tariff rate, but there is some movement here and importantly, it makes a difference with how competitive Chinese goods are compared to others in the region...”
  — Gavin Bade ([01:44])

• “It shows that both countries really need a little relief from this trade war right now for their economies for different reasons.”
  — Gavin Bade ([03:40])

• “It lets them give equity to employees and investors, most importantly. So this is something investors were really, really hungry for…”
  — Keech Hagee ([06:59])

• “Microsoft is going to be our partner for a really long time. So they're kind of locked in.”
  — Keech Hagee ([08:19])

• "...using AI at least has the potential to apply lightning speed analysis to reams of data. In often cases, it's data that Eli Lilly and other drug companies themselves have accumulated over the years."
  — Peter Loftus ([10:32])

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Important Timestamps

• 00:49 — Headline: U.S.-China tariff-for-fentanyl trade framework emerging
• 01:44 — Details on tariff reduction; implications for U.S.–China competition
• 02:36 — Rare earths and agricultural purchases: evolving trade terms
• 03:40 — U.S.–China diplomatic temperature and framework longevity
• 04:18 — Trump and Japan’s PM affirm closer alliance; news on Toyota investment
• 04:48 — U.S.-Mexico cooperation in anti-narcotics operations
• 06:36 — OpenAI’s restructuring: what public benefit corporation means
• 07:04 — Explanation of “public benefit” concept
• 08:00 — Impact of OpenAI’s move on Microsoft
• 09:51 — Eli Lilly and Nvidia’s supercomputer for R&D breakthroughs
• 10:58 — Substrate’s fundraising and tech breakthrough
• 11:13 — Texas v. Tylenol maker Kenview lawsuit

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Summary

This episode delivers deep reporting on a possibly pivotal turn in U.S.–China economic relations, highlighting fresh efforts at negotiation and their possible economic reverberations. Listeners also get expert breakdowns of OpenAI’s behind-the-scenes restructuring (with outsized implications for Microsoft and the tech sector), major labor changes at UPS and Amazon, new AI-powered pharma innovation, and additional business headlines. Together, these segments provide a compact but thorough snapshot of a transformative day in global business, technology, and geopolitics.

Transcript

[A]

This episode is sponsored by Morgan Stanley's Thoughts on the Market. Today's financial markets move fast. Morgan Stanley moves faster with their daily podcast, Thoughts on the Market. Thoughts on the Market covers daily trends across the global investment landscape with actionable insights from Morgan Stanley's leading economists and strategists. And with most episodes under five minutes long, staying informed has never been easier. Listen and subscribe to Thoughts on the Market wherever you get your podcasts.

[B]

OpenAI has turned its for profit subsidiary into a public benefit corporation, opening the door for more fundraising and a possible ipo.

[C]

This is something investors were really, really hungry for and were sort of making some of their fundraising contingent upon them being able to do.

[B]

Plus, Texas is suing the company that makes Tylenol, alleging that it hid autism risks. And Mexico gets drawn into the Trump administration's campaign against transnational criminal groups. It's Tuesday, October 28th. 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. We're exclusively reporting that the US Would roll back some tariffs on China if Beijing cracks down on the export of chemicals that produce fentanyl on under a trade framework that President Trump and Chinese leader Xi Jinping are set to discuss Thursday. That's according to people familiar with the talks. The expected agreements are subject to change and dependent on the meeting of the two leaders. WSJ trade and economic policy reporter Gavin Bade joins me now with more. Gavin, what do we know about this deal as it exists right now?

[D]

Broad strokes mostly and not many details. We're looking at a reduction of 10% in the tariffs that the US has applied to China. So as a reminder, Trump put 20% percent tariffs on China in response to its role in the fentanyl trade. We would see him reduce those tariffs by half and what that would do Is bring average US tariffs on China from around 55% down to 45%. So we're not talking about a huge difference in the overall tariff rate, but there is some movement here and importantly, it makes a difference with how competitive Chinese goods are compared to others in the region and other trading partners. So a significant move there. If it does pan out from the.

[B]

US Side, what does this mean for other topics on the table between the US And China, like rare earths and soybeans?

[D]

So we do expect some purchase agreements from the Chinese government on soybeans and other agricultural goods. Still waiting to suss out the details on those. And then the other big question is these export controls on rare earth minerals from China and the retaliatory export controls that we've put in place from the US Side. The broad understanding here is there would be a pause in a lot of these, that the Chinese would delay implementation of their export control regime for about a year. But the devil's going to be in the details there. There's still a lot of uncertainty and still a lot of discussions happening between the sides about exactly which provisions would be included, how long they would be paused, and how you would actually enforce these things and make them a lasting agreement.

[B]

The relationship between the US And China has been kind of tense leading up to this meeting. I mean, there was a question about whether the summit would even happen. What does that show us about where this relationship stands now? Does having a framework like this, even if the details don't all pan out, lower the temperature between the two countries?

[D]

It lowers the temperature, but we're not at cool heads quite yet. We still will have much higher tariffs now than we did on China in the start of Trump's second term. It's a positive indication for US China relations. It shows that both countries really need a little relief from this trade war right now for their economies for different reasons. These things can flare up at any time. As we've seen. The real test is going to be, can we find a framework that has more shelf life than the agreements of earlier this year.

[B]

That was WSJ reporter Gavin Bade. Thanks, Gavin.

[D]

Thanks, Alex.

[B]

President Trump has had a few stops on his Asia tour before going to meet Xi in South Korea. Today, he and Japanese Prime Minister Sanay Takaichi visited the USS George Washington, an aircraft carrier docked near Tokyo. In an address given there, the two leaders pledged to usher in a new era of cooperation on security and trade, reinvigorating an alliance that Trump described as the foundation of peace in the Pacific. Trump said that the Japanese prime minister told him that Toyota would be investing some $10 billion in US auto plants. Toyota didn't immediately respond to a request for comment. Separately, Defense Secretary Pete Hegseth said today that the US Carried out three new lethal strikes on four vessels allegedly operated by drug smugglers in the eastern Pacific yesterday for the first time drawing Mexico's military into President Trump's expanding campaign against transnational criminal groups. Hegseth wrote in a social media post that in total, 14 alleged narco terrorists were killed in the three strikes, which left one survivor. Mexico's Navy said it hasn't found the survivor. Coming up, what a change in OpenAI's corporate structure means for a longtime partner Microsoft. That's after the break.

[A]

Hi, this is Gunjan Banerjee and this is Telus Demos.

[B]

We're reporters at the Wall Street Journal and The hosts of WSJ's take on the Week. Take on the Week is a weekly show that gives listeners a leg up in the world of markets and investing. From the Fed's moves to market bubbles, we dive into the biggest deals, key players, and business news ahead.

[A]

If you're looking for more news and tools that can help you navigate the markets, consider becoming a subscriber to the Wall street journal.

[B]

Visit subscribe.WSJ.com takeontheweek to subscribe OpenAI has successfully converted to a more traditional corporate structure, a move that cleared an obstacle for a potential initial public offering and pushed the valuation of longtime partner Microsoft higher, closing above $4 trillion for the first time. For more, I'm joined now by Keech Hagee, who covers media and technology for the Journal. Keech, what does this new structure enable OpenAI to do?

[C]

Well, the most important thing is that it lets it raise money and maybe even to IPO sooner rather than later. It restructures the for profit subsidiary underneath the nonprofit in a way that is a public benefit corporation, a little bit more like a normal company. It lets them give equity to employees and investors, most importantly. So this is something investors were really, really hungry for and were sort of making some of their fundraising contingent upon them being able to do.

[B]

What does the public benefit part of that phrase really mean?

[C]

It means that the company has a fiduciary duty not just to investors and shareholders, but to sort of larger social principles. So in this case, it's making AGI that benefits all of humanity.

[B]

AGI, of course, stands for artificial general intelligence. There's been a debate, to put it mildly, about OpenAI's corporate structure for some time. Does this move settle it?

[C]

I think for the moment it does, although you do still have Elon Musk's lawsuit against OpenAI winding its way through the courts. Musk has argued that they are betraying their mission by doing this and has tried various times to get an injunction and to block the conversion. So that that's still happening. But in general, I do think this puts this matter to bed.

[B]

Microsoft has invested billions of dollars in OpenAI, and with this move, it has a 27% stake. What does that show about the relationship between OpenAI and Microsoft at this point?

[C]

Well, it's a pretty good deal from Microsoft. They've had a lot of tension. Over the past year, we've written a number of stories about how they're kind of frenemies and they're increasingly competing with each other. But this really does show what Sam Altman and the CEO of OpenAI had said, which is that Microsoft is going to be our partner for a really long time. So they're kind of locked in.

[B]

That was WSJ reporter Keech Hake. Thanks so much, Keech. Thank you. United Parcel Service said today that IT has cut 48,000 management and operations positions through a combination of layoffs and buyouts. The job cuts were greater than the shipper announced in April when it said it would cut about 20,000 operational jobs. UPS CEO Carol Tomei has been under pressure to reverse a long slump in the company's stock price. UPS shares rose, closing up 8%. Additionally, Amazon announced job cuts of 14,000 corporate workers today. It was a first move in layoffs that, as we mentioned on this morning's show, are expected to affect as many as 30,000 corporate jobs. US stocks drove to new record highs, helped by new artificial intelligence deals and solid corporate earnings. The Nasdaq led indexes rising 0.8%. The S&P 500 added 0.2% and the Dow rose 0.3%. Drug maker Eli Lilly and artificial intelligence chip maker Nvidia announced today that they plan to build what the companies say will be the most powerful supercomputer run by a pharmaceutical company to be used to boost the discovery of new medicines. The company has declined to disclose financial terms of the deal. Lilly expects the system to be online by January. Peter Loftus, who covers the pharmaceutical industry for the Journal, explained what Lilly hopes to get out of the deal.

[E]

The companies hope that the deal will help solve a problem for pharmaceutical companies and drug research and development generally, which is that drug companies, when they try to find new treatments, they have a tough time actually getting them all the way to pharmacy shelves because a lot of times these drugs will fail in clinical testing and it'll take years and years. The success rate is actually relatively low and there's probably many potential medicines and molecules that the companies haven't even conceived of yet. And so using AI at least has the potential to apply lightning speed analysis to reams of data. In often cases, it's data that Eli Lilly and other drug companies themselves have accumulated over the years. So the hope for Eli Lilly is that this kind of a supercomputer can really ramp up their efforts to find new medicines to develop them more quickly and then get them into the hands of patients.

[B]

In other news, Substrate, a San Francisco startup founded by a protege of investor Peter Thiel, has raised over $100 million. The company says it has reinvented a key link in the microchip production process and plans to use its innovation to build more manufacturing facilities in the U.S. the funding values the company at more than $1 billion. Texas has sued Tylenol maker Kenview, alleging the company hid autism risks of its popular pain reliever despite doctors saying it is safe to take during pregnancy. The lawsuit claims that research shows a link between autism and prenatal and early childhood use of Tylenol's active ingredient, acetaminophen. Studies examining a link between acetaminophen and autism are inconclusive. Ken View called the lawsuit's claims baseless and said in a statement that the company was concerned by misinformation spread about the drug. Before we go, Heads up, we've made a correction to this episode. OpenAI's nonprofit parent owns a stake in its for profit subsidiary, which has become a public benefit corporation. An earlier version of this podcast incorrectly said OpenAI had become a for profit company. And that's what's news for this Tuesday afternoon. In case you missed it, heads up. We dropped a new episode of what's News in Earnings earlier today, looking at how airlines are planning their pricing strategies ahead of the busy holiday travel season. That's in the feed now. Today's show was produced by Pierre Bienname and Zoe Kolkin. Our supervising producer was Yolanda McBride, and I'm Alex Osola for the Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.