WSJ What’s News: Why Has the Tariff Effect Been So Mild?

Release Date: August 6, 2025

In this episode of WSJ What’s News, hosted by Alex Osaleh, listeners are provided with an in-depth analysis of the surprisingly subdued impact of recent U.S. tariffs, the shifting dynamics within the American automotive industry, and the administration’s escalating pressures on public universities. The episode also touches on critical changes within the Bureau of Labor Statistics and a notable incident at Fort Stewart base. Below is a comprehensive summary of the key discussions and insights from the episode.

1. U.S. Tariffs: Limited Impact So Far

Executive Order on Indian Imports

President Trump has recently signed an executive order imposing an additional 25% tariff on imports from India, citing India's continued purchases of Russian oil—a move India has vehemently opposed, labeling the tariffs as "unfair, unjustified, and unreasonable." This new levy, set to take effect in 21 days, brings the total U.S. tariffs on Indian imports to 50%, aligning them with the punitive tariffs already imposed on Brazil.

Gene Whalen on Tariff Effects

Gene Whalen, WSJ economics reporter, provides a nuanced perspective on the actual effects of these tariffs:

• Inflation: While there has been a slight uptick in inflation—June saw a rise of 2.7% year-over-year ("inflation has ticked up a little bit due to the tariffs")—it remains under control compared to initial fears of rampant price increases.

• Trade Deficit: Contrary to Trump's promises, there hasn't been a significant or sustained reduction in the U.S. trade deficit. The minor drop observed in June appears to be more of a technicality than a sign of long-term improvement.

• Tariff Revenue: The U.S. government is indeed collecting more revenue from tariffs, fulfilling one of Trump's objectives. However, this revenue is insufficient to offset income tax revenues, as suggested by critics.

Absorbing Tariff Costs

Gene Whalen further elaborates on how U.S. companies are managing the additional tariff burdens:

• Cost Absorption: Numerous U.S. firms are choosing to absorb the extra costs rather than passing them onto consumers immediately. This strategy is partly due to pre-tariff inventory buildups and a reluctance to increase prices unless absolutely necessary ("US Companies are absorbing the extra tariff costs").

• Future Inflation: Economists anticipate that companies will eventually transfer more of these costs to consumers, leading to a gradual rise in inflation, albeit not as sharply or as prolonged as initially predicted ("everyone expects inflation to continue rising due to the tariffs").

2. U.S. Stock Market and Corporate Investments

Market Performance and Corporate Commitments

The episode highlights a positive movement in U.S. stock markets:

• Stock Indexes: The Dow Jones Industrial Average edged up by approximately 0.2%, the S&P 500 rose about 0.7%, and the Nasdaq increased by around 1.2%.

• Apple’s Investment Pledge: In a significant development, Apple announced an additional investment of $100 billion in U.S. operations during a White House event, reinforcing the company's commitment to expanding domestic manufacturing. This is in addition to a previous $500 billion four-year commitment made in February, which analysts believe primarily reshaped Apple’s existing U.S. spending plans ("Apple will pledge to invest another $100 billion in U.S. operations").

Presidential Meetings

President Trump is set to meet with Russian President Vladimir Putin to discuss ending the war in Ukraine, following an offer made by Russia during envoy Steve Witkoff’s trip to Moscow. Additionally, Trump has expressed openness to engaging with Ukrainian President Volodymyr Zelensky. The timing and location of these meetings remain undisclosed ("President Trump will meet soon with Russian President Vladimir Putin").

3. Automotive Industry: A Shift Back to Gas-Powered Vehicles

Policy Changes Impacting EV Investments

The Trump administration's recent policies have favored traditional gasoline-powered vehicles over electric vehicles (EVs), prompting a strategic realignment within the U.S. automotive sector. Sharon Terlip, WSJ auto industry reporter, provides detailed insights into this shift ("the Trump administration's war on electric vehicles will allow the auto industry to keep selling big gas powered vehicles for the foreseeable future").

Drivers of the Shift

• Demand Slowdown: There has been a prolonged decline in EV demand over the past year, compounded by the recent dismantling of regulations that previously supported EV production ("the very dramatic and very quick shift has been the dismantling of these regulations").

• Reallocation of Investments: Automakers are reallocating significant investments from EVs to more profitable gas-powered vehicles such as V8 engines, SUVs, and pickup trucks. Ford CEO Jim Farley highlighted this as a "multibillion-dollar opportunity for the company" ("Ford CEO Jim Farley said this is a multibillion dollar opportunity for the company").

Financial Implications

While this strategic pivot promises enhanced short-term profitability due to higher margins on large trucks and SUVs, questions linger about the long-term sustainability of forsaking the growing EV market. Terlip notes that despite the focus on gas-powered vehicles, companies like GM and Ford are not abandoning their EV initiatives entirely and continue to develop new models ("they're still working on EVs. GMs putting out new models").

Balancing Act

Automakers face the dual challenge of managing tariff-induced costs while benefiting from deregulation. While tariffs have imposed financial strains, the relaxation of certain regulations has partially offset these impacts. The broader market dynamics, including robust EV growth in international markets like China, suggest that U.S. automakers must navigate a complex landscape where domestic policy shifts may not align with global trends ("EVs are growing very fast elsewhere. China's BYD has been on a huge roll").

4. Trump Administration’s Pressure on Public Universities

Targeting University of California

The Trump administration is intensifying its scrutiny of public universities, with a particular focus on the University of California (UC) system. UC President James Milliken announced that the university has agreed to enter discussions with the administration to address allegations of anti-Semitism stemming from campus protests in spring 2024 ("the university agreed to talks with the administration to resolve allegations that... fostered anti Semitism").

• Financial Stakes: UCLA stands to lose $584 million in federal research funds as a consequence of these allegations, following a suspension initiated by the Justice Department ("At risk is $584 million in UCLA's federal research funds").

• Broader Investigations: Other prominent public universities, including Berkeley, UC Irvine, UC San Diego, the University of Virginia, and George Mason University, are also under investigation, indicating a widespread effort to enforce civil rights adherence across major educational institutions ("Two more public universities, the University of Virginia and George Mason University, are also under pressure").

Impact on Academic Freedom and Funding

UC President Milliken argues that the suspension of funds does not address the underlying issue of anti-Semitism, raising concerns about academic freedom and the potential chilling effect on university campuses ("the Trump administration's war on electric vehicles will allow...").

5. Bureau of Labor Statistics Leadership Change

Concerns Over Data Reliability

The episode underscores anxieties within the economic community following the Trump administration's decision to fire the head of the Bureau of Labor Statistics (BLS). Heather Gillers, WSJ reporter, explains the profound implications of this move:

• Essential Data Services: The BLS is responsible for critical data collection, including the Consumer Price Index (CPI), which measures inflation by tracking prices across a wide range of goods and services ("The Bureau of Labor Statistics is a federal agency that collects all kinds of data").

• Impact on Financial Instruments and Programs: Reliable BLS data underpins numerous financial products and government programs, including Treasury Inflation-Protected Securities (TIPS), 401(k) contributions, health savings accounts, Medicare payments, and Food Stamps ("TIPS, and the IRS relies on Bureau of Labor Statistics inflation data").

• Nonpartisan Expectation: The integrity and nonpartisan nature of BLS data are vital for ensuring trust and consistency in economic assessments and policy-making. The leadership change raises concerns about potential biases and the reliability of future data releases ("the idea that these numbers are totally nonpartisan").

6. Incident at Fort Stewart Base

Shooting Incident Overview

In the final segment, Alex Osaleh reports on a tragic incident at the U.S. Army’s Fort Stewart base in Georgia:

• Details of the Attack: A suspect, identified as a 28-year-old sergeant, has been taken into custody after injuring five soldiers in a shooting.

• Status of the Injured: All injured personnel are reported to be in stable condition and are expected to recover.

• Motivation: The motives behind the shooter’s actions remain unclear, pending further investigation.

Bonus Content Announcement

Before concluding, the episode promotes a bonus installment titled "What's News and Earnings," which delves into the food industry's strategies to balance inflation and tariffs while catering to budget-conscious consumers. This episode is available in the listeners' What’s News feed, offering additional insights into the intersection of business challenges and consumer behavior.

Production Credits

Today's show was produced by Pierre Biennale, with Michael Cosmides serving as the supervising producer. Alex Osaleh extends his gratitude to all contributors and listeners, assuring them of new content available the following morning.

This episode of WSJ What’s News provides a thorough examination of the current economic and political landscape, highlighting how U.S. tariffs have had a more contained effect than anticipated, the automotive industry's pivot back to traditional vehicles, and the administration’s contentious interactions with public institutions. Additionally, it underscores the importance of reliable economic data amidst leadership changes and reports on significant incidents affecting national security.