Trump Weighs 25% Tariffs on Cars, Chips, Pharmaceuticals

Summary

WSJ What’s News: February 19, 2025

Episode: Trump Weighs 25% Tariffs on Cars, Chips, Pharmaceuticals
Host: The Wall Street Journal
Release Date: February 19, 2025

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1. President Trump's Proposed 25% Tariffs on Key Sectors

In a significant move that could reshape international trade dynamics, President Donald Trump announced his consideration of imposing hefty tariffs on automobiles, semiconductors, and pharmaceutical products. Speaking to reporters at his Mar-a-Lago residence, Trump emphasized the breadth of his plans:
“President Trump says he's considering imposing tariffs on automobiles, semiconductors, and pharmaceutical products, telling reporters in Mar? A Lago yesterday that he's just getting started.”
(01:02)

Trump specified the tariff rates, indicating they could escalate over time:
“It’ll be 25% and higher and it’ll go very substantially higher over a course of a year.”
(01:28)

These tariffs are slated to be implemented after a comprehensive review of the administration's trade policies, expected to conclude on April 1. Trump also hinted at potential adjustments, allowing companies to relocate production to the U.S. to circumvent the tariffs and opening the door for negotiations to lower the imposed rates.

2. Implications for the European Union and Global Trade Relations

The proposed tariffs have heightened tensions with the European Union, particularly impacting the EU's struggling automotive sector. Stephen Wilmot, the Journal’s European autos reporter, highlighted the precarious position of the EU’s trade commissioner, who is set to visit Washington amidst these developments:
“The EU’s trade commissioner faces the difficult task of sticking up for the continent's struggling auto sector.”
(01:34)

Adding complexity to the situation, Trump accused the EU of reducing its tariffs on U.S. car shipments from 10% to 2.5%, a claim the EU has officially denied. Paul Kiernan, another Journal reporter, dissected the potential repercussions within the World Trade Organization (WTO) framework:
“If it reduces its tariff from 10% to 2.5%, then the question is what's it going to do for all the other countries?”
(02:04)
He explained that such unilateral tariff adjustments could undermine the EU’s leverage in broader trade negotiations, given the WTO’s most-favored-nation status requirement.

3. Trump’s Executive Order to Control Independent Agencies

In a move that consolidates executive control over previously independent federal agencies, President Trump signed an executive order targeting bodies like the Federal Election Commission and the Securities and Exchange Commission. This order mandates that major regulations proposed by these agencies undergo review by the White House Budget Office. Furthermore, it grants the White House chief, Russell Vogt, authority to adjust agency budgets and define performance standards for agency heads. The order also compels agencies to align their legal positions with the president or the Attorney General, potentially diminishing the autonomy that Congress intended for agencies such as the Federal Trade Commission or the Consumer Product Safety Commission.

4. Labor Department Nomination: Lori Chavez Darimer

On Capitol Hill, President Trump’s nominee for the Labor Department, former Republican Congresswoman Lori Chavez Darimer, is undergoing a critical confirmation hearing. Paul Kiernan provides insight into the political dynamics at play:
“Her nomination could shed light on where the GOP is heading in its approach to workers, given that Chavez Darimer's support cuts across traditional party lines.”
(03:59)

Chavez Darimer has garnered bipartisan support, notably from Teamsters President Sean O'Brien, who deviated from his usual practice by not endorsing Democratic candidates during the 2024 campaign. Her legislative record includes co-sponsoring the PRO Act, aimed at facilitating union formation:
“She was one of only three Republicans in the House to co-sponsor the PRO act, which tries to make it easier for workers to form a union and fight back against employers that don’t want their workplaces unionized.”
(04:34)

However, her confirmation faces opposition from within her own party. Kentucky Senator Rand Paul criticized her PRO Act endorsement as disqualifying, projecting that up to 15 Republicans may oppose her confirmation:
“Her endorsement of the PRO ACT is disqualifying.”
(04:34)

5. Former Brazilian President Jair Bolsonaro Charged with Coup Plotting

In international news, former Brazilian President Jair Bolsonaro faces serious charges accusing him of orchestrating an attempted coup to overturn the 2022 election results. The charges allege that Bolsonaro and 33 of his right-wing allies conspired to prevent President Luiz Inácio Lula da Silva from assuming office in 2023, including purported assassination plans. Bolsonaro vehemently denies these allegations, labeling them a "witch hunt" orchestrated by political and judicial adversaries. Additionally, he remains ineligible to run for office until 2030 but has expressed intentions to seek support from the Trump administration to facilitate a future political comeback:
“Bolsonaro denies the accusation, saying he's the victim of a witch hunt by opposition politicians and judges.”
(04:34)

6. China’s Strategic Move Towards Economic Self-Sufficiency

Amidst escalating trade tensions with the United States, China is accelerating its efforts to insulate its economy from external dependencies. Bryan Spiegel, the Journal’s China correspondent, elucidates the scope and implications of this strategy:
“China is racing to become more self-sufficient, part of a decade-long effort by Chinese leader Xi Jinping to make the country's economy less reliant on products and technology from the outside world.”
(07:10)

Spiegel outlines China's comprehensive approach, targeting ten key sectors including electric vehicles, biotechnology, and robotics. The state-led initiative leverages substantial subsidies and investments, costing an estimated $250 billion annually as of 2019, despite economic slowdowns and stagnant government revenues: “The way they've managed to do this is through a state-led, top-down approach to economic development and technology development.”
(07:38)

This push for self-sufficiency has yielded notable successes, such as the dominance of Chinese electric vehicles and the emergence of advanced domestic technologies. However, the strategy incurs significant costs, including exacerbated trade tensions with Western nations and surplus production leading to increased exports. Spiegel emphasizes the paradox of China's approach: “China is seeking to protect its national security by promoting this mass manufacturing. But at the same time, this sort of strategy is also serving to undermine its relations with other countries.”
(08:35)

Economists remain divided on the sustainability of this model. While technological advancements are evident, macroeconomic indicators suggest that the strategy has yet to substantially boost overall economic growth: “Will it spur the sort of gains in productivity that the Chinese economy needs to actually make its people wealthier over the long term? And so far we're not actually seeing very much evidence that this is actually good for the economy overall.”
(10:07)

Furthermore, Western firms operating in China face increasing challenges. American companies, in particular, find themselves squeezed by advanced domestic competition and restrictive U.S. government policies limiting exports of critical technologies like semiconductors: “American companies are really finding themselves in the middle, being squeezed from both sides.”
(11:00)

Conclusion

Today's episode of WSJ What’s News provided an in-depth analysis of President Trump's aggressive trade policy initiatives, the internal political dynamics affecting key federal agencies, international legal challenges facing former leaders, and China's ambitious drive towards economic self-sufficiency amidst global tensions.

Looking ahead, the podcast teased upcoming segments, including an analysis of Apple’s new product launch and a review of housing starts data for January, alongside important Federal Reserve policy meeting minutes.

Produced by Daniel Bach and Kate Bullivant, with supervising producer Christina Rocca, Luke Vargas delivered a comprehensive briefing on the major headlines shaping the global economic and political landscape.

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For those who missed the episode, this summary encapsulates the critical discussions and insights shared, complete with timestamped quotes for deeper reference.

Transcript

[Luke Vargas]

I can say to my new Samsung Galaxy S25 Ultra hey, find a keto friendly restaurant nearby and text it to Beth and Steve. And it does without me lifting a finger so I can get in more squats anywhere I can. 1, 2, 3 will that be cash or credit?

[Stephen Wilmot]

Credit. 4 Galaxy S25 Ultra the AI companion that does the heavy lifting. So you can do you get [e-mail].

[Bryan Spiegel]

Compatible with select apps.

[Stephen Wilmot]

Requires Google Gemini account results may vary based on input. Check responses for accuracy.

[Luke Vargas]

President Trump floats 25% tariffs on chips, pharmaceuticals and cars, setting up high stakes talks with the EU's trade commissioner this week. Plus, Brazil charges former President Jair Bolsonaro with plotting a coup, and China races to insulate its economy.

[Bryan Spiegel]

As much as anything, this is about national security. This is about an insurance policy, if you will, that if relations with the west or just the world becomes more turbulent, China has what it needs at home sustain itself.

[Luke Vargas]

It's Wednesday, February 19th. I'm Luke Vargas for the Wall Street Journal, and here is the AM edition of what's news, the top headlines and business stories moving your world today. President Trump says he's considering imposing tariffs on automobiles, semiconductors and pharmaceutical products, telling reporters in Mar? A Lago yesterday that he's just getting started.

[Stephen Wilmot]

It'll be 25% and higher and it'll go very substantially higher over a course of a year.

[Luke Vargas]

The administration has said those tariffs would likely come in after it completes a review of its trade policy on April 1, and Trump said companies may be given time to move production to the US Thereby avoiding the measures. He also suggested countries could negotiate for lower tariffs. Comments that raised the stakes for the EU's trade commissioner, who's visiting Washington this week and who Journal European autos reporter Stephen Wilmot says faces the difficult task of sticking up for the continent's struggling auto sector.

[Paul Kiernan]

Interestingly, Trump said that the EU had cut its tariff on car shipments from the U.S. which is at 10% down to 2.5%, matching the U.S. tariff. There's been no official announcement and the EU denies the fact that it's cut it. The challenge is that within the WTO system there's this provision, the most favoured nation status, which means that you can't simply reduce the tariff for one country and not do it for everyone else. So if it reduces its tariff from 10% to 2.5%, then the question is what's it going to do for all the other countries? And it takes away essentially its big point of leverage in its negotiations with any other trading partner, which is this 10% external tariff.

[Luke Vargas]

Also yesterday, President Trump signed an executive order to rein in government agencies that Congress established to operate with some independents from the White House, including the Federal Election Commission and securities and Exchange Commission. The order would require them to submit major regulations for review by the White House Budget Office and give its chief, Russell Vogt, the power to adjust their budgets and write agency head's performance standards and management objectives. Agencies must also align their legal positions with the president or attorney general, a requirement that may conflict with the autonomy Congress granted the likes of the Federal Trade Commission or Consumer Product Safety Commission to take positions in areas of the law they enforce. On Capitol Hill today, President Trump's pick to run the Labor Department former Republican Congresswoman Lori Chavez Darimer is set to face a confirmation hearing. Journal reporter Paul Kiernan says that hearing could shed light on where the GOP is heading in its approach to workers, given that Chavez Darimer's support cuts across traditional party lines.

[Sean O'Brien]

Her nomination by President Trump was encouraged by the Teamsters president Sean O'Brien, who made waves during the 2024 campaign by not endorsing the Democrats as they had done previously. As a congresswoman, she was one of only three Republicans in the House to co sponsor the PRO act, the Protecting Right to Organize act, which as its title suggests, tries to make it easier for workers to form a union and fight back against employ employers that don't want their workplaces unionized.

[Luke Vargas]

While union leaders and many Democrats are embracing Chavez Darimer's pro union positions, Trump has also taken more adversarial actions since taking office, including dismissing a Democratic member of the National Labor Relations Board. Last month. Kentucky Senator Rand Paul became the first Republican to oppose Chavez Darimer's confirmation, saying her endorsement of the PRO ACT is disqualifying. Paul sits on the Health and Labor Committee that will vote on her confirmation, and he told the press last month she may lose up to 15 Republicans on the Senate floor. Former Brazilian President Jair Bolsonaro has been charged with plotting to overturn his 2022 election laws. Brazil's attorney general charged Bolsonaro and 33 of his right wing allies over what police said was a plot to stop President Luis Inacio Lula da Silva from taking office in 2023, including plans to assassinate the leftist leader. Bolsonaro denies the acc, saying he's the victim of a witch hunt by opposition politicians and judges. Though he has been barred from running for office until 2030. He told the Journal in November that he's banking on support from the Trump administration so he can run again next year. Trump hasn't publicly responded to Bolsonaro's pleas, though people close to his administration say he's open to using tariffs to pressure Brazil. And on deck today, Apple is expected to announce a new product after CEO Tim Cook teased an event to meet the new newest member of the family. Housing starts data for January are due at 8:30am Eastern, and the Fed will release minutes from its January policy setting meeting at 2pm coming up. A few months ago we talked about how China was assembling an economic bazooka to revive growth, while now it's building an economic fortress to help insulate it from tensions with the West. That story after the break.

[Stephen Wilmot]

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[Luke Vargas]

With President Trump turning up the heat on Beijing, China is racing to become more self sufficient, part of a decade long effort by Chinese leader Xi Jinping to make the country's economy less reliant on products and technology from the outside world. But as Journal China correspondent Bryan Spiegel told our Kate Bullivant, that strategy has come at a considerable cost.

[Kate Bullivant]

Brian, tell us about this self sufficiency drive. How comprehensive is it?

[Bryan Spiegel]

Yeah, this is an across the board effort throughout the Chinese economy to advance high tech, manufacturing and industry. There's really 10 sectors in particular China has been focused on and they include things like electric vehicles, biotechnology, robotics. These are all categories the Chinese government has earmarked as being critical to the future of their economy. So it's hard to understate. Living in Beijing right now, we've seen the change has been so dramatic in recent years. I walk outside and it's full of the streets of Chinese electric vehicles, people using quite advanced Chinese cell phones. Even now at the airport they're starting to have Chinese passenger jets instead of Boeing and Airbus. Last year, you know, electric and plug in hybrid cars. They made up 48% of car sales in China and a huge portion of that is coming from Chinese branded vehicles that wouldn't have existed, you know, even just a few years ago.

[Kate Bullivant]

So some considerable wins here for China in this self sufficiency drive. But I think I'm right in saying that that's whole picture.

[Bryan Spiegel]

Yeah, that's right. It's not. The way they've managed to do this is through a state led, top down approach to economic development and technology development. And what they've needed to do is to incentivize through state subsidies, state investment, and that is incredibly expensive. One of the estimates I looked at for this article found that as of 2019 annually, China was spending something around $250 billion to advance these strategic industries, which mind you, that's coming as the Chinese economy has been slowing, as government revenues have been stagnating. But I think we should also just mention that there is another cost in all of this for China. It's in the form of their trade tensions with the West. So Western countries are grappling in industry after industry with a flood of Chinese exports. And one of the reasons for this is that state subsidies have supported these sorts of strategic high end industries as a way to advance the Chinese economy. Well, demand in China for many of the products that they're producing is not sufficient to soak up all of the supply, so that leads to more exports. So there's a certain paradox in all of this in that China is seeking to protect its national security by promoting this mass manufacturing. But at the same time this sort of strategy is also serving to undermine its relations with other countries. Which I think is one of the things that is very, very interesting to watch going forward.

[Kate Bullivant]

Definitely something we will be watching. But Brian, what do economists you spoke to for this story make of this strategy? Do they think it will succeed despite these high costs?

[Bryan Spiegel]

So one of the questions they have is will this state led top down approach to technology development, Will it spur the sort of gains in productivity that the Chinese economy needs to actually make its people wealthier over the long term? And so far we're not actually seeing very much evidence that this is actually good for the economy overall. Is China making progress technologically? Absolutely. But at the same time, when you look at the macro data out of China, this has not been enough to turbocharge the Chinese economy by any means. So as much as anything, this is about national security, this is about an insurance policy, if you will, that if relations with the west or just the world becomes more turbulent, China has what it needs at home to sustain itself.

[Kate Bullivant]

So what does this all mean for Western firms? You know, will they be slowly or maybe quickly pushed out of the Chinese market?

[Bryan Spiegel]

As we've been reporting for a while now, Western firms across the board in China have been struggling all sorts. On one hand, in many sectors, they're coming up against increasingly advanced domestic competition. At the same time, the sorts of products that Chinese firms really want to buy, the really advanced things like semiconductors that China's not able to produce on its own, Western companies, especially American companies, are being told by the US Government, government, don't sell these products to China. And actually American companies are really finding themselves in the middle, being squeezed from both sides.

[Kate Bullivant]

That was Journal China correspondent Brian Spiegel. Brian, thanks so much for your time.

[Bryan Spiegel]

Thank you.

[Luke Vargas]

And that's what's news for this Wednesday morning. Before we go, heads up, we've got another bonus episode for you later today. In our next what's news in earnings. We'll be looking at big oil and how the boom times of a few years ago are looking now that President Trump has come into office promising to bring gas prices down. That'll be in the feed around midnight today. And then we'll have our usual PM show tonight. Today's show was produced by Daniel Bach and Kate Bullivant with supervising producer Christina Rocca. I'm Luke Vargas for the Wall Street Journal. And as always, thanks for listening.