WSJ What’s News - Investors Hold Their Breath as Trump Tariffs Loom

Episode Date: April 2, 2025

A.M. Edition for April 2. Markets are on edge ahead of President Trump’s long-awaited tariff announcement in the Rose Garden later today. Neuberger Berman’s Maya Bhandari explains what market signals tell us about the likely scope of the U.S. actions. Plus, a liberal judge wins the Supreme Court race in Wisconsin in a rebuke of Trump and Elon Musk. And a potential TikTok takeover deal takes shape days ahead of a deadline to sell the platform or shut it down. Luke Vargas hosts. Sign up for the WSJ’s free What’s News newsletter.  Learn more about your ad choices. Visit megaphone.fm/adchoices

With the Fizz loyalty program, you get rewarded just for having a mobile plan. You know, for texting and stuff. And if you're not getting rewards like extra data and dollars off with your mobile plan, you're not with Fizz. Switch today. Conditions apply. Details at fizz.ca. Investors hold their breath ahead of President Trump's long-awaited tariff announcement later today. Plus a liberal judge wins the Supreme Court race in Wisconsin in a rebuke of Trump and Elon Musk. Wisconsin stood up and said loudly that justice does not have a price. Our courts are not for sale.

And we'll look at a potential TikTok takeover deal just days ahead of a deadline to sell the platform or shut it down. It's Wednesday, April 2nd. I'm Luke Vargas for The Wall Street Journal. And here is the AM edition of What's News, the top headlines and business stories moving your world today. world today. We are mere hours away from the announcement of new U.S. tariffs, which President Trump is set to unveil at a White House press conference after the close of markets. We report that so-called reciprocal tariffs are expected and that whatever measures are announced will take effect immediately, though the precise contours of the likely sweeping

announcement remain under wraps. Well as we await the news, we've got Maya Bondari with us to preview the coming trading day and beyond. She is the Chief Investment Officer for Multi-Asset EMEA at asset manager Newburger Berman. Maya, we half expected that by this point we would have a sense of what was going to be announced today. Alas, as it stands, we don't. Could you read the tea leaves though a bit on what might be coming?

It does seem likely that what we learn today is going to include some non-tariff measures, capturing things like currency undervaluation as a possible gauge, which is about 15 odd percent when you weigh it by US trade partners. VAT, an area of particular focus here in Europe, also around 15%. And as you see with these numbers, Luke, the ranges is wide, uncertain. And at Nürburgring-Bürmen, we wouldn't rule out a high starting point,

perhaps even as high as 20% for major trading partners. But we would also emphasize two other points here. First, and importantly, this is likely to be a negotiation, a point Treasury Secretary Besant made quite clearly, including yesterday reflecting on today's announcement as quote unquote a cap. So a final number is likely to be lower. And second, kind of in keeping with this conclusion, tariffs

to date sort of take the US effective rate from about two and a half percent to about seven percent. So the numbers we're speaking of here are a meaningful increase that would take us back to, you know, the sort of tariff regime we lost in the 1940s. And so on balance, our judgment is that these are unlikely in full force. And we do know, Maya, 15 countries are likely to be targeted here, just a few out of the whole world. And yet there could be some massive economies directly affected here with repercussions for a big chunk of global trade.

Absolutely. And so we're talking about some of the US's largest trading partners, countries like Mexico, Canada, Europe, China, of course. But when we put these countries together, these 15 countries, they together account look for about 90% of US imports. So we are covering, if you will, the lion's share of US trade partners. Now there's been a little bit of toing and froing on that overnight. So I think for our listeners,

perhaps the most important takeaway here is that, what is being discussed could be very disruptive indeed to a highly integrated global economy, but this is gonna be a negotiation and uncertainty is here to stay because what we didn't come to is, how other countries respond and I think that is perhaps one of the bigger risks out there.

So for example sitting where I'm sitting in Europe, there have been discussions of deployment of the anti-coercion instruments or the ACIs in jargon in order to respond to the tariffs that may be announced today. Namely to go after the services sector, right, taking this beyond goods. Yeah, I mean, these are a serious toolkit. It absolutely takes the trade war, if you will, to services, in addition to goods. But in practical terms, the ACI can be used to restrict the activities of banks. It can be used to revoke patents. It can be used to prevent companies receiving revenues from software

updates or streaming. So it is significant. And in addition, so far, we've also heard from the US administration that any such counter response will be met with another response. So you can see how this could get quite messy. A bit of a messy outlook there. What does that mean for markets? Small stocks, for instance, on the Russell 2000 have been suffering more than other corners of at least the US markets lately. Absolutely. I mean, you know, I like to say that every risk has attached to it a price. For example, the US tech stocks that have been hit harder by this uncertainty.

You know, they're down 14, 15% this year, about three times the broader index. Now I should say that, you know, at Nuborga Burman, we have been neutral equity markets overall, but actually have been favoring the non-MAG7 stocks, so the other 493 stocks in the S&P 500, and that's played out relatively well so far. I'd say more recently, you know, while small cap is clearly an area that's baked in some bad news,

you do need typically a trigger for these companies to start outperforming. And we can't quite see what that trigger will be. More recently, we have actually been expecting a broadening out away from the US to the rest of the world, in particular areas like Europe and Japan. One of the consequences of recent geopolitical developments, of course, has been a really significant shift in European fiscal policy. And that's something that we're quite keen to capture in our asset allocation as well. Maya Bandari is the Chief Investment Officer for multi-asset EMEA at asset manager Neuberger Berman. Maya, thank you so much for joining us on What's News.

My pleasure. Coming up, results from a closely watched Supreme Court race in Wisconsin, seen as a bellwether of support for President Trump and Elon Musk. And we'll look at a potential tick tock takeover deal days ahead of a deadline to sell the platform or shut it down. Those stories and more after the break. Voters in Wisconsin have elected liberal judge Susan Crawford to a seat on the Battleground State Supreme Court, cementing its 4-3 liberal majority. ended liberal judge Susan Crawford to a seat on the Battlegrounds State's Supreme Court, cementing its 4-3 liberal majority.

The result could suggest a voter pushback against President Trump ten weeks after his inauguration and deals a blow to Elon Musk, who along with groups tied to him, spent at least $20 million to support Crawford's conservative opponent. Here was Crawford after her victory. As a little girl growing up in Chippewa Falls, I never could have imagined that I'd be taking on the richest man in the world. For justice in Wisconsin. And we won!

Meanwhile, in Florida yesterday, Republicans Jimmy Patronus and Randy Fine won a pair of special House elections, though the results in traditionally deep red congressional districts were closer than expected. The win bolsters the GOP's majority in the House of Representatives to 220 to 213. Well back in Washington, New Jersey Democrat Cory Booker set a record for the longest speech in Senate history after wrapping up 25-plus hours of remarks in protest of the president's actions. The speech, which attracted cable news attention and was spliced into clips for TikTok, comes

as Democrats struggle over whether and how to resist Trump and rebuild their brand, a challenge that Booker acknowledged after leaving the Senate floor. My team and I have really been struggling in this period. Democrats have to own up for a lot. I think that we have contributed to where we are. I'm not just talking about losing an election. I'm talking about a lot of the ways that the partisan politics of this country have worked.

And we should be stepping up and saying we accept a lot of responsibility for this moment. But we also have a lot of responsibility for meeting this moment. We are exclusively reporting that the Trump administration is trying to strike agreements with several more countries to take in migrants deported from the U.S. Officials say the desired model would be similar to a deal struck with Panama in February, in which over a hundred migrants mostly from the Middle East were sent there for detention and processing in order to be sent back to their home countries. Some countries have been slow to take back their nationals or simply refuse to, leading

the administration to explore whether the likes of Libya, Rwanda, Benin, Iswatini, Moldova, Mongolia, and Kosovo would take in migrants, possibly in exchange for financial arrangements. Meanwhile, the Pentagon is rapidly expanding its forces in the Middle East as the US military continues airstrikes against Houthi militants in Yemen and looks to put pressure on Iran. In recent days, President Trump has threatened to bomb Iran if Tehran doesn't agree to a deal to roll back its nuclear program. Two officials said the deployments aren't preparation for an imminent attack on Iran, but rather to bolster the U.S. campaign in Yemen.

Iran has provided arms and training to the Houthis who've been attacking ships transiting the Red Sea and nearby sea lanes. President Trump will be briefed today on a potential deal to keep TikTok operational ahead of a pending US deadline to sell it or shut it down. That's according to people familiar with the matter who said that cloud computing company Oracle, along with several others, would join with existing US investors to make an offer to TikTok owner ByteDance. Blackstone is among the investors in talks to potentially participate in the deal. The exact value of TikTok and the size of investments are expected to be ironed out

in later negotiations once the general structure is agreed upon, though journal reporter Rafael Huang says the deal could still face extended delays or even fall apart. So to separate TikTok's U.S. operation from its global business, one of the technical questions that remains to be answered is who will control TikTok's content recommendation algorithms. The deal eventually will need approval from Beijing. So if the proposed deal allows Biden to keep its control over the algorithm, then that

would leave some room for negotiation. And the authorities in Beijing have signaled that China would be open to a deal, but they also see it as part of a cluster of issues that they hope to negotiate with Washington. So Chinese officials are now awaiting the president to unveil new tariff plans today. And any additional tariff highs on China could again limit the rooms for compromise And we are exclusively reporting that Visa is offering Apple roughly $100 million to operate the tech giant's co-branded credit card, which is up for grabs as Goldman Sachs exits consumer lending. Apple is expected to select a network before it picks the bank to replace Goldman, a competition

pitting Visa against incumbent MasterCard as well as American Express. According to journal reporting, Visa offered a similar upfront payment when Costco was selecting a network for its credit card about a decade ago. And that's it for What's News for this Wednesday morning. Additional sound in this episode was from Reuters. Today's show was produced by Kate Bulevent and Daniel Bach, with supervising producer Sandra Kilhoff. And I'm Luke Vargas for The Wall Street Journal.

We will be back tonight with a new show. Until then, thanks for listening.