WSJ What’s News - Nasdaq Enters Bull Market After U.S.-China Temporarily Slash Tariffs

Episode Date: May 12, 2025

 P.M. Edition for May 12. U.S. stocks rallied today—with the Nasdaq entering a bull market, closing 20% above its April low—after the U.S. and China agreed to temporarily unwind most of the tariffs they have imposed on each other’s goods since April. Plus, President Trump signs an executive order intended to lower U.S. drug prices. WSJ White House correspondent Natalie Andrews joins to discuss the order and what it means for consumers. And the retail-property market, which had bounced back after the pandemic, is starting to fall flat. Kate King, who covers real estate for the Journal, talks about why that is and what it means for the broader state of the retail industry. Alex Ossola hosts. Sign up for the WSJ's free What's News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

The NASDAQ enters a new bull market and U.S. stocks soar after a major thaw in U.S.-China trade relations. Plus, President Trump signs an executive order aimed at lowering drug prices. Consumers are not going to see anything right away, but it is putting a process into play behind the scenes of telling the U.S. trade representative and the Commerce Department to look at any unreasonable and discriminatory practices in foreign countries. And why the retail property market isn't looking great for the rest of 2025. It's Monday, May 12th. I'm Alex Osela 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. The Treasury said the US collected over $16 billion in customs duties in April. That's $7.6 billion more than in the previous month as revenue from tariffs accelerated sharply. US stocks rallied after the US and China announced that they have agreed to temporarily slash tariffs on each other's goods. Shares of companies that had been punished

by the trade war, such as Amazon, Apple, and Tesla, advanced. The dollar jumped, bond yields rose and investors scaled back bets on Federal Reserve rate cuts. In the end, major U.S. indexes closed higher. The tech-heavy Nasdaq climbed 4.3 percent. It entered a new bull market by closing more than 20 percent above its April low. The S&P 500 rose 3.25 percent. And the Dow ended the day 2.8 percent higher. So what did the U. the US and China agree to that made investors happy?

As we mentioned in our morning show, the US will lower tariffs of 145% on Chinese goods to 30%. Within that framework, Washington will cut its 125% reciprocal tariff on Chinese goods to 10%. A 20% tariff tied to the fentanyl crisis will remain. China will cut its retaliatory levy on US goods to 10% from 125%.

Treasury Secretary Scott Besant said today that the agreement doesn't include any sector-specific tariffs that have been put across all trading partners. He also said there were no discussions on currencies. The truce, which is a bigger U-turn than many market watchers were expecting, lasts 90 days, but it could take longer than that for the countries to reach a full trade agreement. Some economists anticipate that the U.S. trade deficit with China could widen as businesses

restock inventories to take advantage of the lower tariff rates. That temporary agreement may be good news for markets, but not everyone is optimistic. With so much instability around tariffs and trade, analysts offering their expectations are now flying pretty much blind. They're taking their cues from the same corporate executives who are now issuing meaningless forecasts as a number of companies have scrapped their guidance for 2025 or have offered one scenario for a stable environment and another for a recession. WSJ herd on the street columnist Johnson Drehu told our Your Money Briefing podcast what the temporary trade war truce between the US and China means for companies. It's hard to know because the guidance that we're getting from companies is very

conditional and very uncertain. So for example, BMW said the other day when they reported their quarterly earnings that they actually expect a big chunk of the tariffs that got announced on the famous liberation day to be rolled back by July or mitigated through some types of offsetting policies. Of course, nobody knows that and many equity analysts immediately pointed that out that BMW was being pretty optimistic here. We saw Volkswagen, they announced guidance for 2025 that assumed that there were no extra tariffs, which is probably wrong too. If you assume that all of what's been announced will stay, you're probably wrong. If you assume that none of it is going to stay, you're probably wrong too. The bottom line being, it's very unclear what this means because it was unclear what the previous announcements meant.

And you can listen to John's interview on your money briefing later this week. President Trump has signed an executive order aimed at lowering the cost of prescription drugs. Speaking from the Roosevelt Room of the White House this morning, Trump said the order is intended to tie U.S. drug prices to what other countries pay. For years, pharmaceutical and drug companies have said that research and development costs were what they are, and for no reason whatsoever, they had to be borne by America alone.

Not anymore they don't. This means American patients were effectively subsidizing socialist healthcare systems in Germany, in all parts of the European Union. They were the toughest of all. They were nasty. And I see that. I see that with trade too. European Union is in many ways nastier than China. For more on the executive order, I'm joined by WSJ White House correspondent, Natalie Andrews. So Natalie, what are the details of this plan? What do we know about it? We know the goal is to lower the price of prescription drugs. Consumers in the United States pay a lot more, in many cases,

for prescription drugs. Elsewhere in developed nations, you have a lot of countries with universal health care systems, and that has allowed them to negotiate and block with drug companies. The United States doesn't have that. And so we see consumers paying all across the board on drug prices.

So this is a campaign promise from Donald Trump, but it's an executive order. And one thing, they're not legislation. They're not mandates from Congress and they're not a law. So it first relies on drug companies to lower the prices themselves. And then has some teeth in telling HHS to go after the drug companies or commerce, and commerce department has some levies

and levers they can pull there. But it will be difficult for the president to do what he says, which he says this is equalizing drug prices across the world. So what does this change or put into place here? Consumers are not going to see anything right away, but it is putting a process into play behind the scenes of telling the US Trade Representative and the Commerce Department to look at any unreasonable and discriminatory practices in foreign countries. It also is telling HHS secretary Robert F. Kennedy to take the next 30 days to work with pharmaceutical companies

on lowering prices. That could include talking to the pharmaceutical companies and saying, hey, we've done an analysis and you're charging as X and everywhere else you're charging these countries Y. We need you to bring that in. If you don't, we're going to use powers that we have through the FDA, powers that we have as the country's health agency to make your life more difficult.

What does the pharma industry say about this? It is not happy. The pharma industry about this, they're saying it's going to hurt consumers, that government price setting is bad for American patients, that it could limit choices. The pharma industry, as Kennedy noted in the Roosevelt Room at the White House today, they are a strong lobbying organization that has a lot of money behind it that does focus on research and development.

And one reason why they have a lot of lobbyists is to get that research and development money to get those government grants. But they're also a powerful force in Washington. That was White House correspondent, Natalie Andrews. Thank you, Natalie. Thank you. House Republicans have unveiled a tax plan that raises the state and local tax deduction and some taxes on tipped income and overtime pay, and extends President Trump's expiring

2017 tax cuts, partially paid for with a rollback of clean energy tax breaks. High on their list of targets? University and foundation endowments, remittances to foreign countries, and tax credits for electric vehicles and renewable energy projects. The House Ways and Means Committee will meet tomorrow to consider the plan, which is expected to advance easily and get folded into Trump's One Big Beautiful bill. Coming up, why the post-pandemic retail property surge seems to be sputtering. That's after the break.

For the past few years, the retail property market has been on a post-COVID rebound. Now that rebound is starting to fizzle. According to real estate firm Cushman and Wakefield, retailers vacated nearly six million more square feet than they occupied during the first three months of the year. That marked the weakest quarter for shopping center leasing since the onset of the pandemic in 2020.

Real estate reporter Kate King joins me now with more. Kate, the big question I have here about all of this is why? What is happening? The biggest reason that retail leasing is slowing down is that retailers are closing more stores than they're opening. After two years of the opposite of retailers opening more stores than they were closing,

we're now starting to see some large retailer bankruptcies and closures which are leaving holes in shopping centers. Some examples are Big Lots, Party City, and more recently the craft supply store Joanne. And then we also have these kind of large closures, particularly in the pharmacy sector, CVS Health and Walgreens. What does this say about the retail sector overall? Certainly people who own shopping malls and shopping centers don't want to see closures

at their properties because then they have to spend money and time finding replacement tenants. The good news is that the retail sector is in the strongest position that it's been in a while and that's due to a couple of factors. The biggest factor is that very few people are building new retail. So there's less competition from new properties and there's fewer options for retailers who do want to open more stores. So they're going to be driven to the existing shopping centers. This is going to keep vacancy a little bit in check.

We did see retail vacancy tick up a bit, but it's still really close to the historic low levels. So overall, the retail sector is pretty well positioned to handle the economic turmoil that many people feel is advancing. That was WSJ Real Estate reporter Kate King. Thank you, Kate. Thanks, Alex. In other news, Hamas has released the last remaining living American hostage in Gaza, marking a diplomatic win for the Trump administration that has brought mixed reactions in Israel.

Edan Alexander, a 21-year-old American Israeli soldier who was captured while serving near the border with Gaza, was released as part of a deal between the U.S. and Hamas. President Trump announced the agreement a few hours before Alexander's release. It ends the only American citizen, it's captured, and held hostage by Hamas since October 7th, 2023, and he's coming home to his parents,

which is really great news. I mean, to me, it's big news. They thought he was dead. Hamas still holds the bodies of four slain American Israelis taken during its assault on southern Israel on October 7th, 2023. The U.S. is also working on their release. And Fox Corp said it would launch its direct toto-consumer streaming service that will include Fox News, Fox Sports, and other entertainment offerings before the start of the NFL season in September.

On an investor call this morning, Fox CEO Lachlan Murdoch said the new platform will be called Fox One. Murdoch didn't disclose pricing details for the new product, but said it won't undercut deals Fox has with cable and satellite television distributors. Fox and The Wall Street Journal's parent company News Corp. share common ownership. And that's what's news for this Monday afternoon. Today's show was produced by Anthony Bansi with supervising producer Michael Kosmides. I'm Alex Osoleff for The Wall Street Journal.

We'll be back with a new show tomorrow morning. Thanks for listening.