WSJ What’s News - Recession Fears Rise as Global Selloff Continues

Episode Date: April 4, 2025

A.M. Edition for April 4. Global markets extend their declines following yesterday's tariff-driven Wall Street rout, with several indicators now pointing to a heightened risk of a global recession. Plus, the chair of the European Parliament’s trade committee, Bernd Lange, explains how the bloc is responding to new U.S. tariffs and what it’s not willing to compromise on. And the WSJ’s Dasl Yoon has the latest from Seoul, as South Korea’s impeached president is removed from office. Luke Vargas hosts. Sign up for the WSJ’s free What’s News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

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Recession fears mount following Wall Street's biggest one-day wipeout since 2020. Plus, as EU officials prepare to head to Washington for tariff talks next week, we'll hear why there are limits to how much the bloc is willing to negotiate. And South Korea's impeached president is removed from office as political divisions grip the country. Following this vote, on one side the crowd erupted with cheers. They were shouting things like, we won. While we also saw UN supporters, some of them crying, appearing devastated on the streets. It's Friday, April 4th. 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. Global markets are extending declines today following yesterday's route on Wall Street. Asian stocks were dragged down by Japan's Nikkei, with analysts chalking up the sell-off to heightened recession risks. European markets are in the red in midday trading, continuing their slide for a second day in a row. And WSJ Markets editor for Europe, Katie Barnado, told me several other indicators point to growing concerns about a worsening economic outlook.

Perhaps the most notable is the fall in treasury yields this morning, down below 4%. That is the lowest level since October. And that would appear to be on rising concerns about a U.S US recession or even a global recession. Yesterday we had JP Morgan say it now thinks a global recession is more likely than not this year. It puts the risk at about 60%. Meanwhile, we saw the US dollar weaken to its lowest of the year yesterday, but it's still holding near those lows. That's a bit of an interesting dynamic in that tariffs would typically cause the dollar to strengthen, but at the same time, it is viewed as a bit of a bet on the strength of the U.S. economy. The other asset of interest is global oil

prices. They are continuing to fall off fairly steeply this morning, and that is on concerns about global demand and again on global recession. Meanwhile, a number of U.S. allies are readying their next steps in response to the latest tariff moves, among them the European Union, which is sending a delegation to Washington next week. Making that trip will be Berndt Lange, a member of the European Parliament for Germany and the chair of the Parliament's Trade Committee. I spoke to him earlier this morning and began by asking him what he made of President Trump's characterization of the EU in his Rose Garden speech.

Uh, European Union, they're very tough, very, very tough traders. Uh, you know, you think of European Union, very friendly, they rip us off. It's so sad to see. It's so pathetic. 39% we're gonna charge them 20%. So we're charging them essentially half. Yeah, first of all, it's unjustified. So we have quite low tariff level

between United States and Europe, around about 5%. But regarding the situation, there's around about 70% of our goods are terrible free, the reality is that we have an average of 2% tariffs between the two regions. And this means this figure of 39% unfair tariffs and non-tariff barriers is totally unjustified and even this 20%. And therefore, we are really clear in rejecting this measure with countermeasures but also we are trying to

negotiate and convince trade guys and the White House that this is not justified. What do you make broadly of the US viewing the EU-US relationship in terms of the trade balance that really is what's going on here? but listen, we have to really look on the whole picture. The trade balance of goods, of course, is negative for the United States, but this is based on our good products because we are not doing any illegal subsidies or dumping practices or so. And if a man or woman in California wants to buy a Porsche instead of a Ford, so what? This is not an illegal process. And secondly, as I mentioned, the deficit on our side on services and also regarding investment. So we need really to look for

the whole picture and then I guess it's more or less balanced. President Trump has said countries that want to negotiate down their US tariffs should get rid of their own tariffs and other trade barriers. They should stop currency manipulation and start buying tens of billions of dollars of American goods. Is any of that on the table? And are you looking at other carrots, if we could call them that, to try and repair the relationship and prevent damage to the EU economy? And the US economy as well, I guess higher prices will be also the result for US consumers. So therefore I am not calling this day a day of liberation, I am calling day of inflation. Look to the reality on tariffs, I'd say on average we

have 5% but looking to the volume of trade, it's only 2%. We can look to specific tariff lines. Of course, always mention 10% for cars imported to the European Union, and only 2.5% for cars going to the United States. So if going to the tariffs, let's go to effects and figures and discuss it. And we can do something.

That is an offer. Secondly, yes, it is also clear that we could buy some US goods to reduce the deficit in goods. That's also in our negotiation basket. But thirdly, it's totally clear that legislation inside the European Union, which is valid for people inside the European Union, for domestic companies, and valid for people coming from outside and foreign companies, that legislation is not on the negotiation table. Soterios Johnson Could you elaborate on that? I know the U.S. released a document this week that described EU legislation. What did you make of that?

Dr. Jens Stoltenberg Yes, there are different standards for several goods and also for agricultural goods. That's for sure. We have a different view on some cases. And there was one remark, our standards are not scientific based. So what? We have a different view on that.

And this is not a trade barrier. And we are convinced that our legislation is proper, because it's also valid for both domestic and foreign companies. On the digital area, we have clear regulation to guarantee fair competition also online, not only offline, and we have clear legislation to protect consumers also online. And this is not a non-tariff barrier. That's a necessary instrument to secure fair competition and protect our consumer. And therefore, this is not on the negotiation table, that's for sure.

Finally, Bernd, going forward, does Europe need to strengthen other trade relationships in response to this? Can it afford to be so closely linked to the US if the relationship can be jeopardized as we've seen it now? Of course, we have a quite diversified trade and we have a lot of trade with a lot of countries worldwide and we want to have stable relations because trade is an engine for sustainable growth and therefore we are really intensifying our relation with our trading partners. We have 44 trade agreements with around about 70 countries worldwide.

We modernize our agreement with Mexico. We are negotiating quite intensively with Indonesia. Of course, we want to guarantee that an open and fair market is given and therefore, we are also looking to trade partners besides the United States. Barron Lange is a member of the European Parliament for Germany and chairs the Parliament's Trade Committee. Barron, thank you so much for being with us on What's News. Thanks a lot.

Coming up, South Korea's president is removed from office, triggering snap elections. Plus President Trump expands his university crackdown. Those stories and the rest of the day's news after the break. 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. South Korean President Yoon Seok-yul has been removed from office over his short-lived

declaration of martial law in December, paving the way for elections to be held in the next 60 days. Eight judges from the country's Constitutional Court voted unanimously to uphold Yoon's impeachment by South Korean lawmakers. Thousands of supporters and anti-Yoon protesters took to the streets ahead of the ruling which Yoon didn't attend. Journal reporter Dossal Yoon in Seoul says the stakes are high for the country's next leader.

So at home, the new president will have to contend with this deep political divide among South Korea's liberals and conservatives. There have been many Yoon supporters who have wanted him to be back in office and the stakes are also high when it comes to the relationship with the US. South Korea has been struggling with a leadership vacuum. And this has made negotiating with the Trump administration difficult, especially when it comes to tariffs. Trump has already taken aim at South Korea's trade surplus.

And in the meantime, South Korea has had difficulty holding direct talks with the administration. On top of this, Trump has signaled discontent consistently over the amount of contribution South Korea is making to U.S. troops stationed here and has threatened to pull them out. We are exclusively reporting that Kirkland & Ellis, the largest U.S. law firm by revenue, is in talks with the White House to avoid an executive order similar to those levied against several of its rivals. That's according to people familiar with the matter, who added that the firm is one of the White House's next targets for sanctions.

It isn't clear what objections Trump and his inner circle would have to the firm's activities, though it was one of 20 firms recently questioned over diversity, equity, and inclusion practices. The president's executive orders so far have generally threatened lawyers' access to federal buildings as well as government contracts held by their clients. And the Trump administration is escalating its campaign against American universities, with Brown becoming the fifth Ivy League institution to face a potential loss of federal funding. The administration is preparing to pull more than $500 million in federal grants from Brown over the handling of anti-Semitism and DEI policies.

According to people familiar with the matter, those would be national institutes of health grants, but Brown said the freeze was a rumor they couldn't confirm. At the same time, a Harvard spokesperson said Thursday night that members of Trump's anti-Semitism task force had sent a letter with nine demands the school must meet to avoid losing billions in government funding, mostly concerning how the university operates. And that's it for What's News for this Friday morning. Today's show was produced by Kate Bullivant, our supervising producer was Daniel Bach, and I'm Luke Vargas for the Wall Street Journal.

We will be back tonight with a new show. Otherwise have a great weekend and thanks for listening.