Trump Effect Starting to Show Up in Economic Data

Summary

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.

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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.

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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.

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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.

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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.

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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.

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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."

Transcript

[Ryan Reynolds]

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[Azhar Sucri]

Of $45 for a three month plan.

[Caitlin McCabe]

Equivalent to $15 per month required new customer offer for first three months only. Speed slow after 35 gigabytes of networks busy. Taxes and fees extra.

[Luke Vargas]

See mintmobile.com hey, it's Luke Vargas. And before we start the show today, I've got a little announcement, which is that I'm going on parental leave, or should I say I'm actually already on it, which means you won't be hearing from me for a few months while I'm out. Azhar Sucri will be filling in for me until early winter. You're in great hands until then. And I'll be back before you know it. And with that, over to the what's News team for today's episode.

[Azhar Sucri]

It's being called the Trump Effect. The president's policies are starting to show up in inflation and employment. Plus, the Trump administration is planning on making it easier for your retirement plan to invest in private markets. And Europe's charm offensive. We look at how flattery and back channeling with Washington could help Ukraine.

[Bojan Panchevski]

Mark Rute, the chief of NATO, he sent flattering text messages to Trump, the president of Finland. He's a great golf player. So they played this tournament in Trump's golf club in Florida. And ever since they've been actually talking on the phone, communicating quite intensely.

[Azhar Sucri]

It's Wednesday, July 16th. I'm Azhar Sucri for the Wall Street Journal. Here is the AM edition of what's News, the top headlines and business stories moving your world today. New data show that President Trump's policies, particularly on tariffs and immigration, are starting to be reflected in the economy. As we reported on our PM show yesterday, the June inflation report, one of the key meas that economists and investors watch closely was up in line with analysts expectations of a 2.7% annual increase. However, Journal Markets reporter Caitlin McCabe says that under the surface, there are signs that Trump's policies are beginning to bite.

[Mark Rutte]

There were price bumps on what Americans pay for key imports such as furniture and clothing. Meanwhile, another closely watched indicator of economic health is the labor market. And that is starting to show some cracks, too. 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.

[Azhar Sucri]

Despite these cracks, Americans are still spending and employers are continuing to add jobs. But Caitlin says the big question now is whether this will hold.

[Mark Rutte]

Amid all of these tariff announcements, it's important to keep in mind that the full effect of tariffs might not be felt for a little while longer. So much of this situation remains in flux. The tariff rates that we've seen and the announcements that we've seen by no means are those final, but economists and others are actually projecting that we could see price increases feed through to households at some point. The Yale Budget Lab, for example, projects that the resulting price increases could amount to the equivalent of a $2,800 hit in yearly household income, and you could see that show up in certain parts of the services sector already. Tuesday's inflation report found that services inflation has softened, particularly for shelter. Airfares and hotel rates were also weak. And to bring this conversation full circle, that could actually soften inflation down the road.

[Azhar Sucri]

Canadian Prime Minister Mark Carney has said it may not be possible for Canada to escape U.S. tariffs even if the countries reach a economic and security pact that has been under negotiation. Trump has given Canada until August 1st to reach a deal with the White House on trade or face a higher 35% levy on imports not compliant with the USMCA trade pact. Currently, Canadian goods are subject to Trump's sectoral tariffs, including a 25% tariffs on vehicles made north of the border and a 50% levy on steel and aluminum, of which Canada is the largest foreign supply supplier. Canada is also a major foreign supplier of copper, which Trump also plans to impose a 50% duty on in markets news Shares of Dutch chip making equipment supplier ASML are falling after it said it could no longer guarantee growth in 2026amid US tariff uncertainty. The stock is down more than 30% over the past 12 months. The warning from ASML comes days after Trump sent a letter to the European U.N. union threatening 30% tariffs on imports from the bloc beginning Aug. 1 as trade talks between Brussels and Washington continue. A group of EU trade negotiators are in Washington today. On Monday, the bloc proposed retaliatory tariffs targeting U.S. imports in a bid to revive talks, including on aircraft and alcohol, but said it doesn't plan any countermeasures before Trump's deadline. In the UK Inflation rose unexpectedly in June, echoing the situation in the US where prices rose. Among items sensitive to Trump's tariffs such as toys and clothes. The rise will likely keep policymakers at the bank of England cautious despite a limping economy, stoking fears of entrenched higher inflation and earnings. Season continues today with reports expected from bank of America, Morgan Stanley, Goldman Sachs and Johnson and Johnson after yesterday's Consumer Price Index print. We'll also get another US Inflation gauge for June, this time for producer prices. We're exclusively reporting that President Trump is expected to sign an executive order to help make private market investments more available to U.S. retirement plans. That's according to people familiar with the matter, who added that the order would instruct the Labour Department and the securities and Exchange Commission to provide guidance to employers on including investments like private assets in 401k plans. Although retirement plan sponsors can already put some investments in private funds, many companies have been concerned about being sued by employees over higher fees associated with private market investment products. The details of the order aren't yet final and are still subject to review. Coming up, how a surprise late night phone call on German Chancellor Friedrich Mertz's cell phone signaled a turn in U.S. european relations over Ukraine. That story after the break.

[Caitlin McCabe]

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[Azhar Sucri]

A European charm offensive aimed at getting Trump to toughen his stance against Russia seems to be working. Earlier this week, Trump set a 50 day deadline for Putin to begin negotiating in earnest, announced a major arms package for Ukraine to be financed by NATO countries, and threatened to impose additional economic sanctions on Moscow if it didn't move to end the war. And now we report that European back channel contacts with the Trump administration, direct diplomacy and a multi billion dollar deal for US Weapons have helped align Washington and Europe on arming Ukraine. Bojan Panchevsky is the Journal's chief European political correspondent. Bojan, talk us through what we know about how European leaders have steered Trump's thinking on Ukraine.

[Bojan Panchevski]

Well, they worked really hard in the past couple of months or so to essentially get him to acknowledge that Putin is not really interested in negotiating peace in Ukraine and is only interested in grabbing land. This is an early bet that the European leaders made when Trump came into office in January, you know, they worked at all levels. The Finance Minister of Germany was working with the Secretary of Treasury, kind of back channeling the Secretary of Treasury. Besant emerged as actually a proponent of the sanctions and of a tougher stance towards Putin. So he seems to have worked behind the scenes to persuade President Trump to take that tougher stance. They worked with Congress, they worked with the Senate, they worked with Marco Rubio, the Secretary of State, who's also kind of positively predisposed towards Kyiv, I suppose. And at the end, I think we saw on Monday when Trump for the first time openly threatened Putin with a specific measure, that in 50 days he would impose these very heavy economic measures on every country that buys energy from Russia. And he also pledged to open the floodgates for exporting American weapons to Ukraine, provided that NATO countries pay for them.

[Azhar Sucri]

You mentioned about the money there. That's absolutely crucial, I think, to this deal. But also the different European countries have been taking slightly different approaches, haven't they?

[Bojan Panchevski]

Yes, exactly. You've got Mark Rutte, the chief of NATO. He's a former Dutch Prime Minister of many years and now he's head of the military alliance. And he sent flattering text messages to Trump praising his role in getting the Europeans to spend more on defense, which they did. All of them pledged to spend around 5% of their GDP on defence, which is a major boon for Trump. The President of Finland visited Trump and he's a great golf players. So they played this tournament in Trump's golf club in Florida and apparently won the tournament in double. So Trump and President Stubb. So that was a great thing for Trump. He tweeted extensively about it. And ever since, they've been actually talking on the phone, communicating quite intensely.

[Azhar Sucri]

And you report that Germany's leader has also been key to all of this.

[Bojan Panchevski]

So Maz has emerged as the kind of new leader in Europe and he's also got access to much more money than his predecessor because they changed the German constitution and made themselves able to borrow from the markets in order to give Ukraine what it needs to defend itself. He made certain fortune in the private sector. He pilots his own airplane. So he's a figure that I think Trump understands. Last Friday, the 11th of July, Trump was watching television, apparently, and he saw some footage of this horrible destruction wrought by Russian aerial attacks on Ukraine. And he picked up his mobile phone and he just called Friedrich Matz out of the blue, and he immediately agreed to an offer that Mats had previously made to buy American Patriot system, the famous aerial defense that Ukraine desperately needs. So that was a great success. And things like that eventually led to this change of tack that we're seeing now. So for my report, the White House spokeswoman said that that Trump is now exporting weapons to Ukraine in order to stop the killing. That's a major, major shift in rhetoric because I think a couple of months prior they were saying that weapons will bring nothing and that diplomacy is required. And I think now they've come to the conclusion that Putin is not really interested in diplomacy. He's interested in winning more land. And therefore, they've changed to a position that's much closer to that of the Europeans. And, of course, all of that must be followed with a ginormous caveat that we don't actually know what Trump will do next. So this week, it seems like the Europeans feel fairly triumphant with the caveat that you never know what happens next.

[Azhar Sucri]

Bojan Panchevski, thank you so much.

[Bojan Panchevski]

Thank you for having me on.

[Azhar Sucri]

And that's it for what's news this Wednesday morning. Today's show was produced by Kate Bullivant. Our supervising producer was Daniel Bark. I'm Azhar Sukri for the Wall Street Journal. We'll be back tonight with a new show. Until then, thanks for list. Sam.