Alex Osola (3:04)

Mr. Secretary Ryan December, who covers markets for the Journal, told me that while markets are celebrating, what it means in practice remains to be seen.

Economic Commentator (3:12)

Wall Street's sort of still figuring it out. A lot of analysts and investors seem to be operating under the impression that the 10% tariffs blanket are still on tariffs on specific items and sectors like autos and steel are still on, but that those big 50 and 40% on every country you can think of, that those are on pause. And really the market, what we're seeing is it seems to be celebrating the that there's maybe a pain threshold or a willingness to back down on some of these, to negotiate. Of course, this still leaves a huge escalation in the trade war with China and that while sort of lost maybe in the the rejoice of the concessions and the pause that Trump has made this afternoon, that's still to come and to play out. And I would expect that we're going to see a lot of businesses hurt by this next month's jobs report is going to be really enlightening in terms of small businesses and importers and how they're faring and whether they' able to keep their staffing at such a high level as it's been for a few years. The market, once we get past this sort of overall celebration, we'll start to look at individual companies and parse the winners and losers. They'll start to see which companies, you know, can't do without China.

Alex Osola (4:27)

US Stocks stage a historic rally after days of market turmoil, gaining roughly $5.1 trillion in market cap today, the largest one day market cap gain on record. The Nasdaq roared ahead over 12%. The S&P 500 added nearly 10%. And the Dow moved about 8% higher, adding more than 2,900 points, its largest one day point gain on record. I'm joined now by investing columnist Spencer Jacob. Well, Spencer today offered some good news on tariffs that investors seem to really be hankering for.

Spencer Jacob (5:04)

Yeah, that's putting it mildly. It was news that they were hankering for and the reaction was the most violent reaction, positive reaction that I've ever seen in stock markets.

Alex Osola (5:16)

So obviously everything is up, up, up today. How sustainable really is this, especially given this escalation of the trade war with China.

Spencer Jacob (5:24)

We're down 3 point something percent since the Liberation Day announcement. We're down less than 10% from the peak. So we never actually closed in a bear market 20% from the peak to be down 3 point. That's fair. That's actually getting off very mildly. So when we resume trading, we could see more declines. When people have time to think about it, the sort of reaction that we saw today is exaggerated by how people are positioned because people got very, very defensive. And so when you have this kind of sudden reversal, this piece of news that's a bombshell like this, the announcement that tariffs would be suspended for a while, it can elicit a reaction that's in excess of the economic benefit of the news itself. When smoke clears tomorrow, we might not like we've had in the last few days, we might resume a downward trend because this all has been a hit to the economy. Not just the tariffs themselves, but the chaos and the uncertainty surrounding the tariffs.

Alex Osola (6:21)

That was WSJ investing columnist Spencer Jacob. Thanks so much, Spencer.

Spencer Jacob (6:25)

Hey, thanks for having me.

Alex Osola (6:29)

President Trump's new batch of tariffs went into effect at midnight last night. Of course, the President's announcement of a 90 day pause on them this morning will change things for most nations, but already some governments had responded to the tariffs. This morning, China said it's raising its additional tariff on U.S. goods from 34% to 84%, matching what was at the time the latest level imposed by the White House. Beijing also issued warnings for citizens considering travel or studying in the US a sign that China wants to put pressure on America's tourism and education sectors and the European Union. Member states approved earlier today an initial list of U.S. goods that will be subject to tariffs to match the value of U.S. steel and aluminum tariffs that went into effect last month. Goods including soybeans and orange juice are in the EU's firing line, though American whiskey has been taken off the list. Coming up, changing tariff rates aside, how does the US Actually collect levies? That's after the break.

Event Announcer (7:33)

Save the date for the future of everything and join the Wall Street Journal this May 28th and 29th, 2025 at the Glass House in New York City. The Journal's premier live event returns with leading voices across business, tech, sports and beyond to answer the most pressing question of the present day. As human life expectancy increases, how will we work, spend and plan for an AI enabled future? As a podcast listener, enjoy 20% off current ticket rates with code PODCAST. Visit WSJ.com foepodcast to secure your spot.

Alex Osola (8:11)

Starting at 12:01 this morning, President Trump's retaliatory tariffs went into effect. Yes, he effectively dropped most of them to 10% this afternoon, though the tariffs on goods from China are even higher now than they were this morning. No matter whether they stay this way, more tariffs makes the actual process of calculating and paying for them much more complicated. Liz Young, who covers logistics and supply chains for the Journal, joins us now. Liz, how will this all work?

Liz Young (8:38)

So the tariffs taking effect just after midnight today means that any shipments that left the country of origin after that point will be eligible for these tariffs. So goods that were already on a ship, already on the water, already on their way to the US Will be exempted from these new tariffs. You know, if a shipment's being delivered by air, it'll be a little faster, but certainly it'll take days or weeks for these tariffs to really fully come into effect.

Alex Osola (9:05)

How are the new tariffs making the importing process more complicated?

Liz Young (9:10)

It's more complicated because now companies that may not have traditionally had to pay tariffs or that may have paid quite minimal tariffs are having to go through their books again. Work with these licensed customs brokers and figure out what is the actual duty rate we need to be prepared to pay. How do we pay it? They have to calculate those levies themselves and then make payment. So they are responsible for making sure that it's the correct amount. This isn't a case where the US Sends them a bill and they pay it online. It's a little more complicated than that. Companies that may have only previously had to calculate one duty rate may now have to calculate three or four or more. So items that contain steel, for example, they might have a separate line item based on how much steel is in that item and then the country they come from. If it's China, for example, it would have several other duties on top of that. So this is making a process that might have previously been, you know, let's say 10% for any item imported is now several line items that they have to go through and calculate.

Alex Osola (10:10)

How are companies contending with this?

Liz Young (10:12)

Companies are grappling with this largely by relying on licensed customs brokers. Customs brokers specialize in this. They have to set up their systems, too. So it's been something where they have to kind of race to get ready for this. But they are skilled and ready to help with the importing paperwork, help with calculating the duty rate, help with facilitating payment. And most companies rely on those brokers to help them navigate this.

Alex Osola (10:37)

That was WSJ reporter Liz Young. Thanks so much, Liz.

Liz Young (10:40)

Thank you.

Alex Osola (10:41)

And that's what's news for this Wednesday afternoon. Today's show was produced by Pierre Biennime and Anthony Banci, with supervising producer Michael Cosmitis. I'm Alex Osala for the Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.