WSJ What’s News: "Trump Effect Starting to Show Up in Economic Data"

Release Date: July 16, 2025

Overview

In the July 16, 2025 episode of WSJ What’s News, hosted by Azhar Sucri, the Wall Street Journal delves into the emerging "Trump Effect" on the U.S. economy, examining how former President Donald Trump's policies on tariffs and immigration are beginning to manifest in inflation and employment data. Additionally, the episode explores significant developments in U.S.-Europe relations, particularly regarding support for Ukraine, and discusses upcoming changes to retirement plan investment options. Expert insights from Bojan Panchevski and Caitlin McCabe enrich the analysis, providing a comprehensive view of current economic and geopolitical landscapes.

1. The Trump Effect on the U.S. Economy

Timestamp: 00:57 - 03:56

Azhar Sucri introduces the concept of the "Trump Effect," highlighting how former President Trump's policies are now reflecting in key economic indicators such as inflation and employment. Sucri references the June inflation report, noting that while the headline figure of a 2.7% annual increase aligns with analysts' expectations, underlying factors suggest the impact of Trump's tariffs and immigration policies is beginning to take hold.

Inflation Trends

Caitlin McCabe, the Journal Markets reporter, discusses subtle signs beneath the surface of the inflation data that indicate the effectiveness of Trump's economic strategies. "Under the surface, there are signs that Trump's policies are beginning to bite," McCabe remarks at [02:20]. She points out that price increases on key imports like furniture and clothing are tangible effects of the administration's tariff policies.

Labor Market Shifts

The episode further explores changes in the labor market, particularly in industries dependent on illegally entered workers. Mark Rutte, the Chief of NATO, explains at [02:50], "Employment Growth appears to have slowed in industries that rely heavily on workers who entered the country illegally, and the foreign-born labor force has shrunk significantly since March." Despite these challenges, consumer spending remains robust, and job creation continues, though McCabe questions whether this trend is sustainable.

Impact on Trade and International Relations

Mark Rutte emphasizes the delayed impact of tariffs, noting that "the full effect of tariffs might not be felt for a little while longer," at [03:01]. Economists predict that household incomes could see a reduction equivalent to $2,800 annually due to these price increases, predominantly affecting the services sector. The discussion also ties in June's softened services inflation, particularly in shelter, airfares, and hotel rates, which could potentially ease overall inflation rates in the future.

2. Trade Tensions and International Implications

Timestamp: 03:56 - 07:53

Azhar Sucri shifts focus to international trade tensions, particularly between the U.S. and Canada. Canadian Prime Minister Mark Carney acknowledges the difficulty Canada faces in avoiding U.S. tariffs despite ongoing negotiations for an economic and security pact. Trump has set a deadline of August 1st for Canada to comply with trade agreements or face steep tariffs, including a 35% levy on non-compliant imports under the USMCA pact. Current tariffs include 25% on vehicles and a 50% levy on steel, aluminum, and copper—sectors where Canada is a major supplier.

The episode also highlights the impact on European companies, such as Dutch chip manufacturer ASML, whose stock has plummeted over the past year due to uncertainty surrounding U.S. tariffs. "ASML are falling after it said it could no longer guarantee growth in 2026 amid US tariff uncertainty," Sucri reports.

Additionally, the U.K. faces its own inflation challenges, with June's unexpected rise in prices echoing U.S. trends. Items sensitive to Trump's tariffs, like toys and clothing, have contributed to this uptick, prompting caution among policymakers at the Bank of England and raising fears of entrenched inflation despite a sluggish economy.

3. European Diplomatic Efforts and Support for Ukraine

Timestamp: 07:53 - 12:56

A significant portion of the episode is dedicated to Europe's "charm offensive" aimed at influencing U.S. policy towards Russia and Ukraine. European diplomatic maneuvers, including backchannel communications and direct diplomacy, have played a pivotal role in aligning Washington and Europe on the need to support Ukraine amidst its conflict with Russia.

Bojan Panchevski's Insights

Bojan Panchevski, the Journal's Chief European Political Correspondent, provides an in-depth analysis of these efforts. At [08:42], he explains, "European leaders have worked tirelessly to get him [Trump] to acknowledge that Putin is not interested in negotiating peace in Ukraine and is only interested in grabbing land." Panchevski details the collaborative efforts between European finance ministers and the U.S. Treasury, highlighting how European leaders have successfully persuaded Trump to adopt a tougher stance against Russia.

One notable example is the personal rapport developed through non-traditional means, such as golf tournaments. "Mark Rutte... sent flattering text messages to Trump, praising his role in defense spending," Panchevski notes at [10:11]. This relationship-building extends to high-profile meetings, including a golf tournament in Florida where leaders solidified their rapport.

Panchevski also underscores the strategic financial support Europe has marshaled to aid Ukraine, including a multi-billion dollar deal for U.S.-supplied weapons. "Trump is now exporting weapons to Ukraine in order to stop the killing," Panchevski states at [12:55], marking a significant rhetorical and policy shift towards direct support for Ukraine.

Impact on U.S.-Europe Relations

These diplomatic efforts have not only strengthened support for Ukraine but also fostered closer U.S.-Europe relations. The alignment on military support and economic sanctions against Russia illustrates a united front, despite previous tensions. The collaboration underscores the importance of coordinated international efforts in addressing global conflicts.

4. Upcoming Executive Order on Retirement Plan Investments

Timestamp: 03:56 - 07:19

Sucri also covers the anticipated executive order from President Trump aimed at expanding investment options within U.S. retirement plans. "President Trump is expected to sign an executive order to help make private market investments more available to U.S. retirement plans," Sucri reports, citing sources familiar with the matter.

This order will direct the Department of Labor and the Securities and Exchange Commission to provide guidance for employers to include private assets in 401(k) plans. Although some private fund investments are currently permissible, concerns about higher fees have deterred many companies. The executive order seeks to alleviate these legal fears, potentially broadening investment opportunities for retirees. However, the details remain pending and are subject to further review.

5. Market Reactions and Business Insights

The episode also touches upon market reactions to ongoing trade tensions and policy changes. The decline in ASML's stock, the impact on other European companies, and the anticipation of reports from major financial institutions like Bank of America, Morgan Stanley, Goldman Sachs, and Johnson & Johnson are highlighted. These developments indicate a period of volatility and uncertainty in the markets as businesses and investors navigate the evolving economic policies.

Conclusion

The July 16 episode of WSJ What’s News provides a comprehensive analysis of how former President Trump's economic policies are now influencing key indicators such as inflation and employment. Coupled with significant geopolitical developments, particularly Europe's effective diplomacy in supporting Ukraine, the episode underscores a dynamic interplay between domestic policies and international relations. Additionally, upcoming changes to retirement investment options signal potential shifts in the financial landscape for American workers. Through expert interviews and detailed reporting, the episode offers valuable insights for listeners seeking to understand the current economic and geopolitical climate.

Notable Quotes:

• Caitlin McCabe [02:20]: "Under the surface, there are signs that Trump's policies are beginning to bite."

• Mark Rutte [02:50]: "Employment Growth appears to have slowed in industries that rely heavily on workers who entered the country illegally, and the foreign-born labor force has shrunk significantly since March."

• Bojan Panchevski [08:42]: "European leaders have worked tirelessly to get him [Trump] to acknowledge that Putin is not interested in negotiating peace in Ukraine and is only interested in grabbing land."

• Bojan Panchevski [12:55]: "Trump is now exporting weapons to Ukraine in order to stop the killing."