U.S. Tariffs Test Allies’ Trust

Summary

WSJ What’s News: U.S. Tariffs Test Allies’ Trust Episode Release Date: March 5, 2025

In this episode of WSJ What’s News, host Alex Osola delves into the pressing issues surrounding U.S. tariffs, the proposed federal cryptocurrency reserve, the challenges of mining in Greenland, and emerging trends in high school education. The episode features insightful discussions with senior market columnist James McIntosh, crypto and tech policy expert Amrith Ramkumar, and European security reporter Sune Rasmussen. Below is a detailed summary capturing the key points, discussions, insights, and conclusions from the episode.

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1. U.S. Tariffs and Their Impact on Allied Trust

Introduction to Tariff Developments: The episode opens with Alex Osola discussing President Trump's decision to grant a one-month exemption to automakers from the newly imposed 25% tariffs on goods from Canada and Mexico. This exemption applies to major automakers like Ford, General Motors, and Stellantis, aiming to mitigate immediate economic impacts.

Discussion with James McIntosh: Osola introduces James McIntosh, a senior markets columnist, to explore the broader implications of these tariffs on U.S. allies.

• Erosion of Trust Among Allies: McIntosh explains, “The fact that the first big tariffs are on the US closest trading partners, Canada and Mexico is for them a real shock. [00:46]”

  He further elaborates on the implications:

  “If they can't rely on the President's own trade deals, who in future is going to be willing to rely on new trade deals that the US might agree or old existing trade deals? It makes it a very untrusting world.” [02:02]

• Perception of American Reliability: McIntosh highlights the growing skepticism:

  “People start to say, well hang on, can we really trust America?” [02:02]

• Protectionism Trends: Addressing whether this signifies a return to protectionism, McIntosh responds:

  “People who've been following trade closely would argue that actually, Biden showed clear protectionism. He continued many of the Trump policies. ... But yes, this is a moment when people start to say, well hang on, can we really trust America?” [02:52]

• Long-Term Consequences: McIntosh warns about the unpredictable nature of U.S. trade policies:

  “Companies aren't going to be saying we can build our cross border supply chains reliant on this new deal the way they did after, for example, Trump renegotiated NAFTA in his first term. Now I think companies would be very cautious about doing that because even with that deal he was quite happy to find another excuse and impose the tariffs.” [03:23]

Market Reactions: Following the discussion, Osola reports on the market’s positive response to the tariff exemptions. Stock indices saw significant gains:

• Nasdaq: +1.5%
• S&P 500 and Dow: +1.1% each
• Carmakers: Ford (+5.25%), General Motors (+7%), Stellantis (+9%)

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2. President Trump’s Proposal for a Federal Cryptocurrency Reserve

Introduction to the Crypto Reserve: Osola shifts the focus to President Trump's announcement of establishing a federal cryptocurrency reserve, slated to be discussed further at a White House industry summit on Friday.

Interview with Amrith Ramkumar: Amrith Ramkumar, a specialist in crypto and tech policy, provides an in-depth analysis of the proposed reserve.

• Source of Cryptocurrencies for the Reserve: Ramkumar highlights the ambiguity surrounding the reserve's funding:

  “...he did not specify whether there would be new purchases or if this would just be holding on to cryptocurrencies that have already been seized from criminals.” [04:54]

  He emphasizes the differing impacts:

  • New Purchases:

    “...buying new cryptocurrencies...making the industry more legitimate. It has all these ripple effects and investors think it's super bullish for crypto.”

  • Existing Holdings:

    “...holding on to what you already have, that's much less exciting...” [05:46]

• Types of Cryptocurrencies Considered: Ramkumar outlines the selected cryptocurrencies:

  “...the main cryptocurrency that everyone knows about is bitcoin. ... ether is another widely traded cryptocurrency... but then there are three much smaller, more volatile currencies, xrp, Solana, and Cardano...” [05:50]

• Industry Reception: He discusses the mixed reactions within the crypto community:

  “A lot of people don't like the idea of crypto or bitcoin reserve, particularly if there are new purchases being made with taxpayer money.” [06:53]

  Ramkumar contrasts crypto with traditional commodities:

  “...bitcoin and crypto are not like oil or gold or these other commodities that are strategically held.”

  Yet, proponents argue:

  “...it could attract more crypto activity to the U.S., support the dollar, and serve as a hedge.” [06:53]

Conclusion of the Segment: Osola thanks Ramkumar for his insights, highlighting the ongoing debates and uncertainties surrounding the federal cryptocurrency reserve.

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3. Challenges of Mining in Greenland

Introduction to Greenland’s Mineral Wealth: Osola introduces the segment on Greenland’s vast reserves of critical minerals, essential for national interests, particularly rare earth metals.

Interview with Sune Rasmussen: Sune Rasmussen, covering European security, explains the complexities of mining in Greenland.

• Geographical and Logistical Challenges: Rasmussen outlines the environmental hurdles:

  “80% of the island is covered by ice. Most of the mining locations are above the Arctic Circle, and shipping is treacherous...logistically very difficult.” [08:48]

• Lack of Local Exploration Tradition: Comparing to regions like Canada and Alaska, he notes:

  “Greenland doesn't have a history of local companies doing exploration. So if you invest in mining in Greenland, you run a greater risk.” [09:32]

• Geopolitical Significance of Minerals: The strategic importance of Greenland’s minerals is emphasized:

  “China completely dominates the global market for rare earths and other minerals...controlling about 94% of the production of magnets, which is the main thing that these rare earths are used for.” [09:37]

  Rasmussen underscores the economic and strategic potential:

  “Access to rare earths in Greenland could help the west break this dominance that China wields over rare earths globally.” [10:31]

Conclusion of the Segment: Osola wraps up the discussion with Rasmussen, highlighting the significant but challenging prospects of mining in Greenland.

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4. Additional News Highlights

Military Deportation Flights Halted: Osola reports that the Trump administration has ceased using military aircraft to deport migrants to Guantanamo Bay or other countries. Defense officials indicated that the last such flight occurred on March 1, with no flights scheduled in the next 48 hours. There is potential for this pause to become permanent due to the high costs and inefficiencies associated with military deportations.

Supreme Court Ruling on Foreign Aid: The U.S. Supreme Court has lifted a pause on foreign aid payouts, rejecting the Trump administration's emergency request. Consequently, the administration must comply with a lower court's order to pay nearly $2 billion to contractors for already performed work.

Rise of Shop Classes in High Schools: Osola highlights a growing trend in U.S. education where manual skills are gaining popularity over traditional academic classes.

Interview with Ta Ping Chen: Ta Ping Chen discusses the surge in enrollment in architecture, construction, and manufacturing courses in Wisconsin, noting a 10-13% increase in student participation.

• Reasons for Increased Interest: Chen attributes this trend to:

  • The rising cost of college education
  • Reevaluation of the four-year college path as the sole viable option
  • High employment rates for graduates in roles that do not require a college degree

  “There is a sense that the four year path, which for many years was presented to students as really the only path, might not make the most financial sense.” [12:05]

  She emphasizes the shift towards alternative education paths that better align with students' financial and career goals.

Conclusion of the Segment: Osola encourages listeners to tune into the Your Money Briefing podcast for a deeper dive into these educational trends.

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Final Remarks

Alex Osola concludes the episode by acknowledging the contributors and producers, emphasizing the comprehensive coverage provided to keep listeners informed on critical global and economic developments. The episode underscores the intricate balance between U.S. domestic policies and their far-reaching implications on international trust and economic stability.

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Notable Quotes:

• James McIntosh on Trust:

  “If they can't rely on the President's own trade deals, who in future is going to be willing to rely on new trade deals that the US might agree or old existing trade deals?” [02:02]

• Amrith Ramkumar on Crypto Reserve Components:

  “The president on Sunday hastily tweeted out which cryptocurrencies would be included in the reserve. But he did not specify whether there would be new purchases or if this would just be holding on to cryptocurrencies that have already been seized from criminals.” [04:54]

• Sune Rasmussen on Geopolitical Importance:

  “Access to rare earths in Greenland could help the west break this dominance that China wields over rare earths globally.” [10:31]

• Ta Ping Chen on Educational Trends:

  “...a lot of folk who are reassessing whether or not these sorts of college for all paths and mindsets are the best routes for all kids and whether they might be alternatives out there.” [12:05]

This comprehensive summary encapsulates the critical discussions and insights from the episode, offering a clear understanding for those who have not listened to the podcast.

Transcript

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[Alex Osola]

President Trump gives some automakers a one month exemption to tariffs, but is the damage to the US's reputation already done?

[James McIntosh]

This is a moment when people start to say, well, hang on, can we really trust America?

[Alex Osola]

Plus, how would the President's crypto reserve actually work? And why aren't mining companies all over Greenland extracting its mineral riches? It's Wednesday, March 5th. I'm Alex Osola for the Wall Street Journal. This is the PM edition of what's Headlines and Business Stories that Moved the World Today. First, on today's show, the Latest on President Trump's 25% tariffs on goods from Canada and Mexico. The White House Press secretary, Caroline Levitt said the President is giving a one month exemption to automakers who comply with the usmca, a previous trade deal between the US, Canada and Mexico. She said the request came from the heads of Ford, General Motors and Stellantis. Meanwhile, President Trump and Canadian Prime Minister Justin Trudeau spoke this morning about tariffs with no apparent breakthrough. In a social media post this afternoon, Trump said he had told Trudeau that Canada's efforts to stop the flow of fentanyl into the US weren't good enough. But no matter what happens with these tariffs, they've already changed how other countries perceive the U.S. wSJ senior markets columnist James McIntosh is here to tell us about it. James, what did the tariffs change for US allies?

[James McIntosh]

The fact that the first big tariffs are on the US closest trading partners, Canada and Mexico is for them a real shock. But then on top of that, this is the President who renegotiated the trade deal precisely with Canada and Mexico. So if they can't rely on the President's own trade deals, who in future is going to be willing to rely on new trade deals that the US might agree or old existing trade deals? It makes it a very untrusting world. And of course, tariffs are only a part of that. We've also got the geopolitics of it, with Europe in particular.

[Alex Osola]

So are we talking about a return to protectionism?

[James McIntosh]

People who've been following trade closely would argue that Actually, Biden showed clear protectionism. He continued many of the Trump policies. The shift that began under Trump's first turn against China was intensified by Biden. And there has been a general trend in the world towards de globalization for quite a while now. But yes, this is a moment when people start to say, well hang on, can we really trust America?

[Alex Osola]

Where does that leave us now?

[James McIntosh]

However it comes out, people are not going to be saying, well, whatever deal we now have with the US Is something that is going to be there for the long run that we can rely on. Companies aren't going to be saying we can build our cross border supply chains reliant on this new deal the way they did after, for example, Trump renegotiated NAFTA in his first term. Now I think companies would be very cautious about doing that because even with that deal he was quite happy to find another excuse and impose the tariffs. And it's the unpredictability that is damaging and it'll take a very long time to rebuild that.

[Alex Osola]

That was senior Markets columnist James McIntosh. Stocks climbed in response to the President's one month tariff exemption for automakers. The Nasdaq was up roughly 1.5% and both the S&P 500 and the Dow ended the day about 1.1% higher. Carmakers stocks also rose, with Ford motor up roughly 5 1/4 percent, General Motors rising about 7%, and Stellantis was up more than 9%. President Trump has said that he wants to build a federal cryptocurrency reserve. He's expected to speak about crypto on Friday at a White House industry summit, but many details about how the reserve would work are still unclear. Amrit Ramkumar, who covers crypto and tech policy for the Journal, joins me now with more. Amrith I want to start by talking about where the crypto for this reserve would come from. Would the government buy it or something else?

[Amrith Ramkumar]

That's the enormous question that is unanswered. So the president on Sunday hastily tweeted out which cryptocurrencies would be included in the reserve. But he did not specify whether there would be new purchases or if this would just be holding on to cryptocurrencies that have already been seized from criminals. And those are two very different things. Obviously, if you're buying new cryptocurrencies, that's a source of new demand. It's seen as like making the industry more legitimate. It has all these ripple effects and investors think it's super bullish for crypto. If you're holding on to what you already have, that's much less exciting to a lot of people, and they don't think it requires that much fanfare. I talked to Beau Hynes, who's coordinating a lot of the administration's crypto work, early last week, and he said things are still in the super early stages and they're just starting by getting an accounting of what they already have.

[Alex Osola]

You mentioned the cryptocurrencies that would be a part of it. What are those?

[Amrith Ramkumar]

So the main cryptocurrency that everyone knows about is bitcoin. It's the largest, most valuable. You can justify how having bitcoin in reserve to a lot of people, because they say it's sort of digital gold, it holds its value over time, it's a hedge in case the dollar has issues. All that sort of stuff is what a lot of people say. And ether is another widely traded cryptocurrency, and basically the blockchain technology that underpins ether is widely used. And so people also said, we can see why that's in there, or you can make a case for it. But then there are three much smaller, more volatile currencies, xrp, Solana and Cardano, that are small, risky, and volatile. And so people in the crypto industry are very divided on including those in a reserve, particularly if there are new purchases.

[Alex Osola]

It sounds like there are so many factions within the crypto community, but more broadly, how has the idea of having a crypto reserve gone over? What has the reception been?

[Amrith Ramkumar]

A lot of people don't like the idea of crypto or bitcoin reserve, particularly if there are new purchases being made with taxpayer money. And the main thing you hear from a lot of financial analysts who have looked at a lot of this stuff is bitcoin and crypto are not like oil or gold or these other commodities that are strategically held. Proponents say it would help attract more crypto activity to the U.S. they say it could support the dollar and also serve as a hedge. The big thing, though, is again, just sort of providing that legitimacy and change the moment for the industry.

[Alex Osola]

That was WSJ reporter Amrith Ramkumar. Thank you, Amrith.

[Amrith Ramkumar]

Thanks for having me.

[Alex Osola]

Coming up, why isn't there a mining boom in Greenland? That's after the break.

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[Alex Osola]

Greenland is rich in mineral deposits. The sparsely populated Danish territory has some 43 of the 50 critical minerals that the US considers vital to its national president. Trump has said and reiterated in his address to Congress yesterday that he wants to own or buy Greenland, in part to access these minerals, which include rare earth metals. But getting to those minerals is not so easy. Sune Rasmussen, who covers European security for the Wall Street Journal, recently went to Greenland to understand just what it takes to mine there. Okay, so, Sune, what makes mining in Greenland so difficult?

[Sune Rasmussen]

First of all, there's the weather and the location of Greenland. 80% of the island is cover by ice. Most of the mining locations are above the Arctic Circle, and shipping is treacherous in Greenland because of floating ice off the coast. So getting to the mines and getting to the minerals is logistically very difficult. But another thing that kind of sets Greenland back is that, for example, Canada and Alaska have a tradition of local companies doing exploration of the underground. So that means if you come in as an investor, you kind of know what you're buying. Greenland doesn't have a history of local companies doing exploration. So if you invest in mining in Greenland, you run a greater risk.

[Alex Osola]

Why are its minerals important? From a geopolitical standpoint, Greenland is home.

[Sune Rasmussen]

To a huge wealth of rare earth minerals, which are used in everything from fighter jets to iPhones to electric vehicles headphones. So there is an economic potential here. But in fact, Greenland's minerals is about more than just profit. It's also about resource control. China completely dominates the global market for rare earths and other minerals, and it could wield this dominance as a weapon in a trade war. China produces roughly 60% of the world's mined rare earth minerals, but it controls the entire supply chain to an even greater extent. It controls about 90% of refining activity and even more, about 94% of the production of magnets, which is the main thing that these rare earths are used for. So getting access to rare earths in Greenland could help the west break this dominance that China wields over rare earths globally.

[Alex Osola]

That was WSJ reporter Sune Rasmussen. Thank you, Sune.

[Sune Rasmussen]

Thanks for having me.

[Alex Osola]

In other news, we're exclusively reporting that the Trump administration has stopped using military aircraft to fly migrants who entered the US Illegally to Guantanamo Bay or other countries. Defense officials said that the last military deportation flight was March 1, and yesterday noted that no such flights were scheduled for the next 48 hours. They added that a pause on such flights could be extended or made permanent. The Wall Street Journal has reported that using military aircraft has proved expensive and inefficient. The U.S. supreme Court lifted a pause on foreign aid payouts, rejecting the Trump administration's emergency request to pause foreign aid funding. The Trump administration will now have to follow a lower court order to pay nearly $2 billion to contractors for work already performed. And finally, what do you think is the most cutting edge class in a high school? Computer science? Biology, maybe? Well, at a growing number of schools, the answer is shop class. During the 2022-2023 school year in Wisconsin, 32,000 high school students took classes in architecture and construction, a 10% increase over the year before. 36,000 enrolled in manufacturing courses, a 13% increase over the same period. Schools around the US are betting on the future of manual skills that have been overlooked in the digital age, WSJ reporter Ta Ping Chen told our your Money Briefing podcast. What's driving that interest?

[Ta Ping Chen]

A lot of the reason why there is a rise in interest in many cases among, say, school districts as well as the business community as well as voters and families in these classes is also because of the rise in the cost of college and the sense that the four year path, which for many years was presented to students as really the only path, might not make the most financial sense. And it might not make the most career sense either, when you look at some of the stats and see that many college students graduate and get jobs that didn't require college degrees. And so you have a lot of folk who are reassessing whether or not these sorts of college for all paths and mindsets are the best routes for all kids and whether they might be alternatives out there.

[Alex Osola]

To hear more from T'ping, listen to tomorrow's episode of youf Money Briefing. And that's what's news for this Wednesday afternoon. Today's show is produced by Anthony Banci and Pierre Bienname 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.