U.S. Stocks Tumble as Trump Delays Tariffs on Canada, Mexico

Summary

WSJ What’s News: U.S. Stocks Tumble as Trump Delays Tariffs on Canada, Mexico
Release Date: March 6, 2025

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Introduction

In this episode of What’s News by The Wall Street Journal, host Alex Osola delves into the significant developments affecting the U.S. markets, focusing primarily on President Trump's decision to delay tariffs on Canada and Mexico. The episode also explores the implications of this decision on investor sentiment, the burgeoning U.S. trade deficit, challenges in nuclear waste management, and shifts in the nonfiction publishing landscape.

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Tariff Delays and Market Impact

President Trump's Tariff Adjustment

President Trump announced a strategic pause on tariffs for certain goods imported from Mexico and Canada until April 2nd. This decision marks a continuation of his approach to moderate recent trade policies that have previously unsettled markets and strained alliances with neighboring countries.

• White House Statement:
  “The US will pause tariffs on goods from Mexico and Canada that comply with the North American Free Trade Agreement until April 2nd,” stated a White House official at [00:52].

This exemption encompasses approximately half of Mexico’s imports and over a third of Canada’s, although companies will not receive refunds for tariffs already paid since Tuesday.

Trump’s Oval Office Address

In a subsequent Oval Office briefing, President Trump clarified that his decision to alleviate some tariffs was not a direct response to the market volatility they had induced.

• President Trump:
  “My decision to roll back some tariffs on Mexico and Canada was unrelated to the volatility they caused in US Markets,” he stated at [00:52].

Market Reactions

The immediate response from the financial markets was negative. Major indices experienced notable declines:

• NASDAQ: Fell by approximately 2.6%
• S&P 500: Dropped around 1.8%
• Dow Jones: Decreased by about 1%

These movements underscore the fragile investor confidence prevailing at the start of 2025, contrasting with earlier optimism fueled by a robust economy and a seemingly deregulation-friendly administration.

Investor Sentiment and Anxiety

Matt Grossman, WSJ markets reporter, discusses the root causes of investor anxiety, attributing it primarily to the unpredictable nature of tariffs and the broader uncertainty they introduce into the economic landscape.

• Matt Grossman:
  “It's largely one word which is tariffs and uncertainty about tariffs, which is changing day by day, hour by hour,” he explains at [02:37].

This volatility leads investors to adopt a cautious stance, often moving away from riskier assets like stocks in favor of safer investments such as gold and U.S. government bonds. The resultant behavior is a reflection of concerns over potential economic slowdowns, even in the absence of an outright recession.

• Investment Shifts:
  “In short, selling riskier assets like stocks and buying safer assets like gold and US Government bonds,” Grossman notes at [03:28].

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Surging U.S. Trade Deficit

January Trade Data

The episode highlights a significant increase in the U.S. trade deficit in January, driven by a substantial rise in imports compared to modest export growth.

• Import Growth:
  "Imports rose 10% to about $401 billion," as reported at [04:26].

• Export Growth:
  "Exports climbed by 1.2% to roughly $270 billion," resulting in a deficit of approximately $131 billion, marking a 34% increase from December.

Drivers Behind the Deficit

Eric Kneeler, an economist, provides insight into the factors contributing to this surge. Anticipation of upcoming tariffs led U.S. companies to increase imports ahead of the imposition, exacerbating the trade imbalance.

• Eric Kneeler:
  “Companies ... ramped up their imports in January, thinking that tariffs would come into play down the line,” he explains at [05:26].

Future Outlook

The uncertainty surrounding tariffs and fluctuating exchange rates complicates predictions for the trade balance in subsequent months. Economists are cautious, noting that current data is still reflective of pre-tariff adjustments, and future trends may vary as new policies take effect.

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Challenges in Nuclear Waste Management

Growing Demand for Nuclear Energy

With the rise in demand for nuclear energy, particularly due to power-hungry AI data centers, the issue of managing radioactive waste has resurfaced as a pressing concern.

Supreme Court Case on Temporary Storage

The Supreme Court recently heard arguments regarding the legality of private companies temporarily storing spent nuclear fuel in Texas and New Mexico. This temporary solution is costly for taxpayers and highlights the lack of progress in establishing permanent disposal facilities.

• Supreme Court Proceedings:
  “Yesterday, the Supreme Court heard arguments in a case over whether private companies can temporarily store spent fuel at facilities in Texas and New Mexico,” Sam Goldfarb reports at [07:19].

Scale of the Problem

Eric Kneeler and Alex Osola discuss the magnitude of the nuclear waste issue, citing that approximately 90,000 metric tons of spent fuel are stored across 39 states, with an annual production of about 2,000 metric tons.

• Alex Osola:
  “There's about 90,000 metric tons of spent nuclear fuel being stored...” at [07:56].

Economic and Regulatory Hurdles

The absence of a permanent disposal solution has led to significant financial strain, with the Department of Energy facing projected costs of up to $44.5 billion. Regulatory challenges, including local opposition and litigation, have stalled progress towards sustainable waste management.

• Alex Osola:
  “Under federal law passed in the 1980s, the Department of Energy was supposed to pick up all the nuclear waste and find a location for it. Starting in 1998, it was federal law. That didn't happen,” she states at [08:42].

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Decline in Nonfiction Paperback Publishing

Decreasing Paperback Releases

The nonfiction publishing sector is experiencing a notable decline in paperback releases, with a 42% drop in titles between 2019 and 2024, compared to a mere 9% decrease in hardcover nonfiction titles.

• Publishing Trends:
  “Adult nonfiction paperback titles dropped by 42% between 2019 and 2024,” reports Sam Goldfarb at [10:00].

Reasons Behind the Decline

Jeffrey Trachtenberg, WSJ’s book industry expert, attributes this trend to the proliferation of diverse formats and the shifting preferences of readers.

• Jeffrey Trachtenberg:
  “Publishers have found that people ... can buy the cheaper ebook or audiobook editions instead of waiting for a paperback,” he explains at [10:47].

The availability of immediate, cost-effective digital and audio formats reduces the demand for paperbacks, diminishing their perceived value and relevance in the current market.

Impact on Authors

Authors are adversely affected by this shift, as they rely on paperback releases to reach a broader audience who may be unable or unwilling to purchase more expensive hardcover editions.

• Jeffrey Trachtenberg:
  “Authors want to be in the bookstore. When the natural shelf life of their hardcover is over, they count on a paperback appearing a year later to give them a second chance to reach readers,” he notes at [11:37].

Future of Nonfiction Publishing

The decline suggests that nonfiction publishers may need to innovate and adapt to changing consumer behaviors, possibly by enhancing digital offerings or finding new avenues to engage readers beyond traditional paperback releases.

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Conclusion

This episode of What’s News provides a comprehensive overview of the interconnected factors influencing the U.S. economy and markets. From President Trump's tariff adjustments and their immediate impact on investor confidence to the broader implications of a growing trade deficit, the challenges in nuclear waste management, and the evolving landscape of nonfiction publishing, the discussion paints a nuanced picture of the current economic climate. As these issues continue to develop, their outcomes will significantly shape the future trajectory of U.S. markets and industries.

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Notable Quotes:

• Matt Grossman [00:43]:
  “There's also just the uncertainty. It potentially unnerves businesses. They don't know what's in the future, so it's harder for them to plan, harder for them to make investments.”

• Eric Kneeler [05:26]:
  “Companies ... ramped up their imports in January, thinking that tariffs would come into play down the line.”

• Jeffrey Trachtenberg [10:47]:
  “Publishers have found that people ... can buy the cheaper ebook or audiobook editions instead of waiting for a paperback.”

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This detailed summary encapsulates the key discussions and insights from the What’s News episode, providing a clear and comprehensive understanding for those who haven't listened to the podcast.

Transcript

[Alex Osola]

Over the past several days, three females have been found dead.

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[Sam Goldfarb]

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[Alex Osola]

Streaming March 13th.

[Jeffrey Trachtenberg]

You really want what happened if it's when it happened to you?

[Alex Osola]

Exactly why I need to keep going on this.

[Jeffrey Trachtenberg]

Starring Emmy award winner Amanda Seyfried.

[Alex Osola]

I'm worried about what you're gonna find.

[Sam Goldfarb]

So am I.

[Alex Osola]

Long Bright River, a limited series streaming March 13th only on Peacock.

[Sam Goldfarb]

The US grants tariff exemptions for certain goods from Canada and Mexico. Plus stocks sink as trade policy changes make investors anxious.

[Matt Grossman]

There's also just the uncertainty. It potentially unnerves businesses. They don't know what's in the future, so it's harder for them to plan, harder for them to make investments.

[Sam Goldfarb]

And what can the U.S. do with its nuclear waste? It's Thursday, March 6th. I'm Alex Osola for the Wall Street Journal. This is the PM edition of what's News, the top headlines and business stories that move the world today. We start our show with the latest developments on President Trump's tariffs. The White House said today that the US Will pause tariffs on goods from Mexico and Canada that comply with the North American Free trade pact until April 2nd. It's a continuation of the president's streak of moderating his recent trade actions that have disrupted markets and strained relations with close allies. A White House official said the exemption will cover about half the imports from Mexico and more than a third of imports from Canada. Any tariffs already paid since Tuesday will not be refunded to companies. In a later address from the Oval Office, Trump said that his decision to roll back some tariffs on Mexico and Canada was unrelated to the volatility they caused in US Markets. The day to day changes in the White House's tariffs policy did spook the markets. The tech heavy NASDAQ closed in correction territory, falling by about 2.6%. The S&P 500 tumbled roughly 1.8% and the Dow dropped about 1%. The reaction in the markets is a sign that 2025 isn't going as some investors had hoped and at the start of the year they were optimistic. The economy was strong and a market friendly administration seemed poised to roll back regulations. Instead, today's market performance is a continuation of the recent dip, which shows that investors are more anxious. WSJ markets reporter Sam Goldfarb is here to tell us more. Sam, what is underpinning investors anxiety?

[Matt Grossman]

It's largely one word which is tariffs and uncertainty about tariffs, which is changing day by day, hour by hour. It does Seem that US Tariffs on a broad array of goods coming from a broad array of countries are going to be going up. And so that's one thing that investors are a little queasy about, because the fear is that those tariffs, the cost of those will be passed on to consumers. Then consumers might pull back spending a little bit. Either that or the businesses will have to accept smaller profit margins if they don't pass on those costs. So either way, it's not great for stocks. And then there's also just the uncertainty. It potentially unnerves businesses. They don't know what's in the future. So it's harder for them to plan, harder for them to make investments.

[Sam Goldfarb]

So investors have all this anxiety. What are they doing as a result?

[Matt Grossman]

In short, selling riskier assets like stocks and buying safer assets like gold and US Government bonds. That's kind of like the standard playbook for when they're concerned about at least a slowdown in economic growth, even if we don't have a recession. So yields on US Government bonds have fallen since January and the price of gold has gone up.

[Sam Goldfarb]

You know, you write that so far the worst economic reports have been confined to soft data like confidence surveys. How significant is that? What does that mean for the prospect of a recession or a slowdown in growth?

[Matt Grossman]

So, you know, I guess it's step one. And because they could signal that the hard data, like the jobs report that we're going to get on Friday or the incoming months could turn worse. Sometimes the soft data doesn't translate to the hard data. People, people might be saying that they're not feeling great, but they actually just keep on spending. That's happened a little bit in recent years, so we'll just have to see.

[Sam Goldfarb]

That was markets reporter Sam Goldfarb. Thank you, Sam.

[Matt Grossman]

Thank you.

[Sam Goldfarb]

The US Trade deficit surged in January as imports grew much more than exports. According to Commerce Department data out Today, imports rose 10% to about $401 billion, while exports climbed by 1.2% to roughly $270 billion. That resulted in a deficit of about $131 billion, which was 34% greater than the deficit in December. I'm joined now by Matt Grossman, who covers economics for the Journal. Okay, Matt, break it down for us. What is driving this growth and the deficit?

[Eric Kneeler]

A lot of economists think that what's going on is companies in the US that rely on goods from overseas, whether that's products that they want to sell to American consumers or. Or things that they need for their factories to create goods in the United States. Those companies saw tariffs coming. And in anticipating that, many of those companies really ramped up their imports in January, thinking that tariffs would come into play down the line.

[Sam Goldfarb]

So where do we go from here? Was this just potentially a one off?

[Eric Kneeler]

It's a little bit hard to say. These data are more than a month old now and we're going to have to wait a couple months to see how the tariffs that went into place this week affected the trade balance in March. Often the exchange rates between countries adjust and that's another layer that affects the decisions that companies and shoppers make about where to buy things from. This is really a new world. So it's going to be very challenging for economists to see what's coming. And that's why data like this are so important.

[Sam Goldfarb]

That was WSJ reporter Matt Grossman. Thank you, Matt.

[Eric Kneeler]

Thank you.

[Sam Goldfarb]

And in companies reporting today, Macy's said it expects sales to decline again this year as even affluent customers wait to see how swirling tariffs and inflationary pressures hit the economy. Speaking of retailers, we've got another bonus episode for you today in what's News and Earnings. We take a look at American retailers and how the industry is grappling with a growing list of issues, including tariffs, cautious consumers and still high inflation. You can find it in the what's News feed just before this episode. Coming up, what should US Nuclear power plants do with their waste? That's after the break.

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[Sam Goldfarb]

Demand for nuclear energy is growing, driven in part by power hungry AI data centers. And that's revived a thorny problem. What's to be done with the radioactive waste nuclear power plants produce? Yesterday, the Supreme Court heard arguments in a case over whether private companies can temporarily store spent fuel at facilities in Texas and New Mexico. But this kind of temporary storage is especially costly for taxpayers and efforts at permanent disposal often run into dead ends. My colleague Pierre Bienname spoke with Wall Street Journal science reporter Eric Kneeler and asked about the size of this radioactive Mess.

[Alex Osola]

There's about 90,000 metric tons of spent nuclear fuel and and that's being Stored at sites in 39 states. Now, most of it is from commercial nuclear reactors, but it also includes more than three dozen university and government facilities, according to a report by the Pacific Northwest National Laboratory. Every year, just with current production from nuclear facilities and research labs, it's about 2,000 metric tons. Now, of course, that number is going to increase just because we've seen a greater demand for nuclear energy, for AI data centers, for just electricity demand throughout the economy.

[Eric Kneeler]

How is it that the lack of permanent disposal ends up costing taxpayers more than it otherwise would?

[Alex Osola]

Basically, under federal law passed in the 1980s, the Department of Energy was supposed to pick up all the nuclear waste and find a location for it. Starting in 1998, it was federal law. That didn't happen. And since then, basically the commercial nuclear reactor fleet, these utilities that run these plants, they've been suing the federal government and getting court ordered payments of anywhere from 600 million to $800 million a year to pay for basically not picking up the waste. That waste disposal cost is projected to reach up to $44.5 billion, according to a 2024 audit by the Department of Energy's Office of Inspector General.

[Eric Kneeler]

Why is it so difficult to figure out permanent disposal?

[Alex Osola]

Well, for a while, it was sort of not in my backyard syndrome. There was a permanent repository that was selected in Nevada. State officials said, no, this is not going to happen. Since then, there's just been sort of a lack of momentum, a lack of progress. The Nuclear Regulatory Commission has given licenses to two interim storage facilities. These places, one in New Mexico, one in Texas, are under litigation themselves.

[Sam Goldfarb]

That was Wall Street Journal science reporter Eric Kneeler speaking with Pierre Bienname. When a splashy new nonfiction book comes out, thrifty readers may figure, I'll buy it when it's cheaper in paperback. These days, they may just have to keep waiting. Publishers are increasingly reducing their orders of nonfiction paperbacks or dropping them altogether. According to bibliographic database Bowker books in print, adult nonfiction paperback titles dropped by 42% between 2019 and 2024, while the number of adult hardcover nonfiction titles fell by just 9% in that same period. Jeffrey Trachtenberg covers the book industry for the Journal and is here to tell us more. So, Jeffrey, why are publishers choosing to print fewer nonfiction paperbacks? What's going on here?

[Jeffrey Trachtenberg]

It's really a confluence of economic events all taking place. On one hand, you have three different formats the same day, the hardcover edition, a much cheaper e book edition, and an audiobook edition. And what publishers have found is that People, if they want to read a nonfiction book right away and they don't want to wait, they can buy the cheaper ebook. Many nonfiction readers are buying the audiobook. And then, of course, you have your hardcover. So by the time the paperback is issued nine months, a year later, there's less demand. It used to be publishers believed that when they issued a paperback, they could gin up excitement about it. The feeling is today is that's become very, very difficult. One agent said to me, there's no second life anymore.

[Sam Goldfarb]

What does this mean for authors? I mean, don't they earn more from a hardcover book?

[Jeffrey Trachtenberg]

Yes, economically, they benefit more from a hardcover. They get a higher royalty rate. But at the same time, authors want to be in the bookstore. And when the natural shelf life of their hardcover is over, they count on a paperback appearing a year later to give them a second chance to reach readers who may be younger, who maybe can't afford a $30 hardcover but can afford a $15 paperback. It gives them one more shot to be a star, an extra opportunity to find a readership.

[Sam Goldfarb]

Where does this tell us about where nonfiction publishing might be headed?

[Jeffrey Trachtenberg]

It is possible that nonfiction is having a more difficult time right now competing in the marketplace. We don't see as much Nonfiction promoted on TikTok. By comparison, there are many popular fiction categories, such as romantasy and fantasy and other genres, where influencers on social media platforms hold up copies of a trade paperback and represent those books as a good opportunity for a reading experience to their viewers.

[Sam Goldfarb]

That was WSJ reporter Jeffrey Trachtenberg. Thanks, Jeffrey.

[Jeffrey Trachtenberg]

Thank you.

[Sam Goldfarb]

And that's what's news for this Thursday afternoon. Today's show is produced by Anthony Bansi with supervising producer Michael Kosmides. I'm Alex Osola for the Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.

[Alex Osola]

It.