WSJ What’s News - Stocks Slump as Trump Threatens Tariffs on All U.S. Trading Partners

Episode Date: March 31, 2025

A.M. Edition for Mar. 31. The Trump administration is still scrambling to set out the specifics of its new tariff agenda ahead of ‘Liberation Day’ on Wednesday. WSJ reporter Caitlin McCabe explains how the tariff threats are ramping up market volatility and dampening the outlook for the U.S. economy. Plus, Trump threatens Russia with new tariffs, after expressing anger at Vladimir Putin as Ukraine peace talks make little progress. And Apple clashes with SpaceX amid a race to eliminate cellphone dead spots. 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. Markets brace for a big week of trade announcements since the U.S. puts universal tariffs back on the table. So what we're seeing is what the world's largest banks have been doing really for the last several weeks now, which is essentially escalating their warnings about the American economy.

Plus, President Trump threatens sanctions on Russia as Ukraine peace talks stall and Apple's satellite expansion plans landed in SpaceX's crosshairs. It's Monday, March 31st. 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. Tariff week is upon us. President Trump has set Wednesday as Liberation Day when he'll pull back the curtain on

a range of new levies. And even as that deadline nears, we report that the administration is still scrambling to nail down the specifics, including whether to impose individualized tariffs on specific trading partners, or reach for across-the-board tariffs, potentially as high as 20%, that would affect virtually every country doing business with the U.S. That's according to people familiar with conversations between the president and his team in recent days in which he's pushed them to be more aggressive. Trump for months promoted the idea of universal tariffs during his campaign, but later ditched the

idea in favor of a so-called reciprocal tariff plan. An administration official said that reciprocal plan is still on the table, but that whatever's unveiled on April 2nd, Trump wants the policy to be quote, big and simple. Well, suffice it to say, market watchers care a great deal about where the president lands on his tariff strategy. And here to parse the news heading into a pivotal week, I'm joined by journal reporter Caitlin McCabe. Caitlin, I see Goldman Sachs and Barclays are both out with new growth forecasts that

really feature the growing risk of a global trade war front and center. Walk us through what they're saying. So Goldman raised the probability of a recession in the US economy in the next 12 months to around 35%. And that's the second time that Goldman has done this in the past few weeks. In addition, the bank said it is expecting an increase in pricing pressures, a decline in GDP, and that it is expecting an increase in the year end unemployment rate. And basically in calculating this stuff, Goldman's looking at the deterioration in business and consumer confidence.

We saw some of this come through last week with the University of Michigan sentiment survey. It also said it's doing it because of comments from the Trump administration that it's willing to tolerate some economic weakness in pursuit of their policies. Meanwhile, we also have Barclays saying something similar. It says that for the first time in years, it finds itself, quote, genuinely worried about risk assets. And it says that cash allocations for investors should be higher. Alright, so Barclays and Goldman, they there both seeing the risk of a trade war increasing

based on actions likely coming out of Washington, but this does go both ways. Yesterday, we heard from German Chancellor Olaf Scholz, who pledged that the EU was ready to hit back against existing US tariffs, though as you'll hear, he didn't exactly sound thrilled about it. We know that free global trade, which has created so much prosperity, is at risk because political movements of protectionism are becoming fashionable all over the world. We also know that this benefits no one, that there are only losers if we all carry this in front of us.

Katelyn, I guess we can see that sentiment kind of rippling through into market behavior today. Asian stocks falling and European markets opening lower as well. Yeah, it's been pretty ugly this morning in Asia and Europe. And we're already seeing that bleed through in US pre-market trading, where US stock futures are lower. And I think this speaks to concerns about just not US growth, but global growth, too. Of course, there are expectations that tariffs will hit these economies and some of their important sectors very hard. And I think it's worth noting that a lot of these areas and countries were already at

a disadvantage in terms of economic strength, even before all of this started. And so in terms of market action, what we're seeing this morning is really a flight to safety everywhere. Gold, which has had a pretty stunning rally this year. It's up again this morning. US bond prices are up again, sort of considered another flight to safety. Other risk assets like Bitcoin is falling again. And I think what investors are saying right now is riskier assets are not where they want

to be. And so instead, they're hanging out in cash or other cash like products. Right. Sounds like investors are preparing for volatility this week. I think that's exactly right. And I think a really key place that we can look is the VIX. It's also known as Wall Street's fear gauge. And this is a metric that people really look to quite closely when things are starting

to get choppy in markets this morning. The VIX is trading around the 23 range. And when we think about the VIX, anything over 20 indicates that nervousness and expectations for volatility are increasing pretty markedly in markets. So to see the VIX trading around the 23 range this morning is something that is important to pay attention to, especially given where it was trading last week. Last week we were seeing it in the 17 to 18 range. So we are definitely seeing a noticeable leg up in expectations for volatility today.

That was Wall Street Journal reporter Caitlin McCabe. Caitlin, thanks for stopping by and for the VIX crash course there. Happy to. Thanks for having me. And coming up, we've got the rest of the day's news, including frustration in Washington, as Vladimir Putin appears to drag his feet on peace talks with Ukraine. That story and much more after the break. Okay, flights on air Canada. How about Prague? Ooh, Paris. Those gardens.

Gardens. Amsterdam. Tulip Festival. I see your festival and raise you a carnival in Venice. Or Bermuda has carnaval. Ooh, colorful. You want colorful. Thailand. Lantern Festival. Boom. Book it. How did we get to Thailand from Prague? Oh right, Prague. Oh boy. Thailand from Prague? Oh right! Prague! Oh boy.

Choose from a world of destinations. If you can. Air Canada. Nice travels. We are exclusively reporting that Apple has clashed with Elon Musk's SpaceX in its push to eliminate cell phone dead spots with its satellite technology. The iPhone maker is investing heavily in satellite-based communications, while SpaceX has launched more than 500 satellites that provide cell phone connectivity through Starlink.

Now the companies are competing for the limited supply of spectrum rights, the airwaves to carry their signals, with Musk pushing federal regulators to stall an Apple-funded satellite expansion effort. People familiar with the matter said the conflict has intensified in recent months after SpaceX and its partner T-Mobile asked Apple to offer Starlink on iPhones. After tense discussions, the sides reached an agreement that allows the SpaceX and T-Mobile satellite cell phone service to be offered on newer iPhones, which will roll out this summer.

President Trump is threatening new economic penalties on Russia as talks have resulted in little progress toward a real ceasefire in Ukraine. Speaking yesterday, Trump expressed anger at recent comments by Vladimir Putin where he called for interim governance in Ukraine under the auspices of the United Nations, which would essentially push out Ukrainian President Volodymyr Zelensky. I was disappointed in a certain way, some of the things that were said over the last day or two having to do with Zelensky because when he considers Zelensky not credible, he's supposed to be making a deal with him, whether you like him or you don't like him.

So I wasn't happy with that. Trump said that if a deal isn't reached, then it was quote, Russia's fault, end quote, and said he'd impose secondary tariffs on Russian oil without providing specifics. Trump added that U.S. officials had conveyed his frustration to Russia and that he expected to speak to Putin later this week. Despite this, the president reiterated that he and Putin have a good relationship before shifting some of his criticism to Zelensky over negotiations for the U.S. to access critical minerals in Ukraine. I see he's trying to back out of the rare earth deal.

And if he does that, he's got some big, big problems. Rescue workers in Myanmar are continuing the increasingly desperate search for survivors after Friday's 7.7 magnitude earthquake that devastated parts of the country's second-largest city, Mandalay, and the surrounding areas. Myanmar's military government has said that more than 1,700 people are confirmed dead and more than 3,000 have been injured while making a rare appeal for foreign aid. Early modeling from the US Geological Survey suggests that the number of deaths stemming

from the earthquake could rise above 10,000 and that economic losses might surpass the value of Myanmar's GDP. Back in the U.S., Elon Musk has given out $1 million checks to two Wisconsin voters ahead of the state's Supreme Court election tomorrow that Musk sees as critical to President Trump's agenda. Just minutes before the Tesla CEO took to the stage at a town hall in Green Bay last night, the court rejected a last-minute attempt by the state's Democratic Attorney General to stop Musk from handing over the checks. Musk and groups he supports have spent more than $20 million to help conservative favorite

Brad Schimel, who's running against liberal candidate Susan Crawford for a seat on the state Supreme Court, which is currently controlled 4-3 by liberal justices. Tuesday's tightly contested race will determine the ideological makeup of a court likely to decide key issues in a perennial battleground state. And finally, if you've heard a one-time climate startup talking about jet fighters or AI lately, there's a reason for it. The journal's Ed Ballard says that following a third consecutive year of declines in equity funding for climate tech startups and a new administration intent on canceling the prior

one's green funding programs, a number of small businesses that just months ago were touting the green benefits of their work are making a handbrake turn. Among them, Magrathia Metals, a California company that Ed told me is developing a process for extracting magnesium from saltwater and which until recently had a sales pitch that was focused on the climate benefits of its technology. So now it says there is zero magnesium production in all of NATO. This is a national security emergency. And the website sort of reels off various things that magnesium can be used for, including fighter jets and drones.

A slightly different case is a company called Veer, which makes these super conducting wires. And originally they were saying that these wires were going to help prepare the grid for all the extra power demand that was going to be coming from things like electric vehicles and recently that changed because while the EV rollout has slowed down a bit there has been this whole new boom in artificial intelligence and so now they're redesigning their technology to make a slightly different product that will be used to help data center operators deal with the massive power demands of AI. So they started out with this climate mission and now they've sort of taken a bit of a side track.

Ed told me that not all businesses will be able to pull off that shift, but some will. I think there's two different ways of looking at that. Firstly, lots of these businesses are helped along by government subsidies. So if those subsidies evaporate, then yeah, you can definitely see crucial technologies falling by the wayside. On the other hand, the message I heard from a bunch of venture capitalists and investors was a bit more

along the lines of, well, look, if these technologies are gonna take off, they have to be competitive. They have to actually be able to make money. And so there was almost a feeling of like, well, this might be a healthy refocusing of minds towards what's the market that's actually going to make you money. And if that means you end up cutting emissions, that's great into the bargain.

And that's it for What's News for this Monday 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.