WSJ What’s News: Trump’s Economic Messaging Spooks CEOs. Why Are They Keeping Quiet?
Release Date: March 12, 2025
1. US Inflation Data and Federal Reserve Implications
The episode opens with a discussion on the latest Consumer Price Index (CPI) figures. In February, US inflation rose by 2.8% year-over-year, which is a decrease from January's 3.0% and slightly below economists' expectations. Core inflation, excluding volatile food and energy prices, increased by 3.1%, marking the lowest year-over-year rise since 2021.
Key Insights:
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Justin LeHart, WSJ Economics Reporter, explains that the recent inflation data has not yet been significantly impacted by President Trump's tariffs, as most were only implemented in the current month.
"Not yet. Most of the tariffs didn't go into effect until this month." [01:38]
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Impact on the Federal Reserve: While the headline inflation numbers may appear encouraging, LeHart cautions that the decline is largely due to a drop in airline prices, indicating underlying complexities.
"It's comforting to see sort of that headline, but once you dig in, it's not as happy as you might have thought." [02:01]
2. Retaliatory Tariffs from Canada and the European Union
The conversation shifts to the international trade tensions sparked by the Trump administration's tariffs on steel and aluminum. In retaliation, both Canada and the EU have announced additional tariffs on US goods valued at over $20.5 billion.
Key Details:
- Canada targets approximately $9 billion in US steel products and $2 billion in aluminum, alongside other imports like computers and sports equipment.
- European Union plans to impose 50% levies on goods such as American whiskey, motorcycles, motorboats, cranberries, soybeans, and various agricultural exports from Louisiana.
Reporter Kim McCrail provides an in-depth analysis of the EU's strategy:
"The EU has really emphasized the idea that if there was any way of coming to a deal with the US to avert the steel and aluminum tariffs, they could not impose these retaliatory tariffs or they could take them away later on." [04:20]
3. Market Reactions and European Central Bank Commentary
US stock markets experienced volatility in response to the trade tensions and the recent inflation report. By the end of the day, the S&P 500 increased by about 0.5%, the Nasdaq rose approximately 1.2%, while the Dow Jones Industrial Average fell by 0.2%.
Christine Lagarde, President of the European Central Bank (ECB), addressed the heightened uncertainty in global markets:
"Because our expectations have indeed been swept aside in the last few years... the level of uncertainty we are facing is exceptionally high." [06:03]
Her remarks underscore the impact of the Trump administration's policies on international economic stability and alliances.
4. CEOs' Concerns with Trump's Economic Messaging
A significant portion of the episode delves into the apprehensions among US CEOs regarding President Trump's inconsistent economic messaging, particularly concerning tariffs. While privately, business leaders are reaching out to the White House for clarity, they remain publicly silent.
Insights from Brian Schwartz, White House Economic Policy Reporter:
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CEOs are flooding the White House with concerns about the potential negative impacts of tariffs on their industries and consumers.
"They are trying to really be very clear that if these tariffs are put in place, they will, in fact hurt their industries, they will, in fact, potentially be a detriment to consumers because prices... will go up." [07:48]
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Historically, direct appeals to remove tariffs have been ineffective, leading CEOs to adopt a more cautious approach in their communications.
"They tried these campaigns and they really didn't do anything. So now it appears that... they're trying to do this this way in their meetings." [08:32]
Comments from Chip Cutter, WSJ Management Reporter:
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The reluctance of CEOs to voice their concerns publicly stems from fear of retaliation and the precarious business environment under the current administration.
"They're scared. They're worried they're going to be targeted... They really just want to be very careful in this moment..." [10:22]
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A survey highlighted that a significant number of CEOs would only speak out if the stock market experienced a substantial decline (44% cited a 20% drop, 22% a 30% drop).
"CEOs are saying the stock market would have to fall by a lot for them to really say anything." [11:35]
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Unlike the first Trump administration, where CEOs were more vocal, the current administration sees a more subdued response from the business community.
"Unlike the first Trump administration, when a number of CEOs were very vocal, we're just not seeing that this time." [11:35]
Conclusion
The episode highlights the intricate dance between economic policies, international trade relations, and the business community's responses. While inflation data provides a mixed picture, the looming tariffs from major trading partners and the ensuing uncertainty jeopardize market stability and business confidence. CEOs are grappling with how to navigate these turbulent waters, balancing their private concerns with the potential repercussions of public dissent.
Notable Quotes:
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Justin LeHart:
"Not yet. Most of the tariffs didn't go into effect until this month." [01:38]
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Kim McCrail:
"The EU has really emphasized the idea that if there was any way of coming to a deal with the US to avert the steel and aluminum tariffs..." [04:20]
-
Christine Lagarde:
"The level of uncertainty we are facing is exceptionally high." [06:03]
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Brian Schwartz:
"They are trying to really be very clear that if these tariffs are put in place, they will, in fact hurt their industries..." [07:48]
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Chip Cutter:
"They're scared. They're worried they're going to be targeted..." [10:22]
"CEOs are saying the stock market would have to fall by a lot for them to really say anything." [11:35]
This summary encapsulates the key discussions from the podcast episode, providing a comprehensive overview for listeners and non-listeners alike. The inclusion of direct quotes with timestamps offers additional context and depth to the highlighted topics.