WSJ What’s News - Big Law Is Split on Trump’s Attacks: Push Back or Lay Low?

Episode Date: March 24, 2025

P.M. Edition for Mar. 24. As President Trump ramps up his attacks on the legal industry, law firms are split on how to respond. WSJ national legal-affairs reporter Erin Mulvaney discusses the implications for the industry. Plus, Trump recalibrates his plans for tariffs on goods from particular sectors and says he might soften reciprocal tariffs on some nations, though the back-and-forth is hard on U.S. small businesses. Senior special writer Ruth Simon joins to talk about how small businesses are responding. And shares in Tesla, a longtime stock-market highflier, are down more than 30% this year. Reporter Hannah Erin Lang explains why. Alex Ossola hosts. Sign up for the WSJ's free What's News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

Markets welcome President Trump's plan to limit his new tariffs, but the back and forth is making life harder for small businesses. Even some companies that manufacture in the U.S. are feeling some softness because their customers are uncertain and they're not investing as much. And why some investors have soured on Tesla. It's Monday, March 24th. 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. First, the latest on President Trump's tariffs. Trump told reporters in the Oval Office today that he might soften reciprocal tariffs on some U.S. trading partners while others might be exempt. Earlier at a Cabinet meeting, Trump said the U.S. will announce tariffs on automobiles soon and pharmaceuticals at some point without offering further details. His comments came a few hours after Trump said the U.S. would impose a 25% tariff on any country that buys oil or gas from Venezuela, sending oil futures higher.

U.S. stocks were up today as investors welcomed Trump's latest pivot on tariffs. Major U.S. indexes all ended the day higher. The Dow rose about 1.4%, the S&P 500 was up roughly 1.8 percent, and the NASDAQ climbed about 2.3 percent. Well the market may be into Trump's latest lighter-touch approach to tariffs, but the back and forth is tough on small businesses. According to a survey conducted by Vistage Worldwide, nearly two-thirds of small business owners said tariffs would hurt their business, while 8% said they'd benefit from them. Joining me now to talk about how the changing U.S. trade policy is affecting small businesses

is our senior special writer Ruth Simon. Ruth, why are small businesses affected more than large ones by these trade policies? There are a whole bunch of different reasons why that's the case. For one thing, small businesses have thinner cash cushions and they often operate with narrower profit margins than big companies. They also are just smaller. They don't have big product and big diverse product lines to spread things around. They're more likely to have production concentrated in one or two places. And perhaps even as important or more important, their staffs are small, so they don't have teams of supply chain experts.

And when somebody has to focus on tariffs, it's taking them away from other roles that they might have, other things that they need to do. And that makes what we've been seeing lately, this stop-start, today it looks like one thing, another day it looks like something else, particularly difficult for small companies to manage. What kinds of small businesses are feeling the squeeze? There is a wide range of small businesses that are feeling pressure. One of the most obvious ones are companies that do a lot of importing from China

who have things like, I talked for this story, to a hat maker. There are people who make aprons, who make all sorts of stationary products, all kinds of different things. But we also have companies that get components from China or components from Mexico or have moved some of their manufacturing to Mexico because they thought, hey, there are going to be more tariffs

on China and suddenly Mexico is in the crosshairs too. Even some companies that manufacture in the US are feeling some softness because their customers are uncertain and they're not investing as much. Okay, that seems like kind of a tough situation for some of these small businesses. What can they actually do about any of this? So some of the small businesses that I talked to tried to move product to the US ahead of the tariffs to at least give them a little bit of a cushion.

They also have to figure out what to do. How much do you pass on tariffs to your customers? Do you put fewer items in a package? Do you make things a little differently? And finally, they're just taking a very close look at their costs. If small businesses are suffering, that can lead to economic weakness, particularly if small businesses slow their hiring or have to lay

off employees or they scale back their investments. That was WSJ senior special writer Ruth Simon. Thank you, Ruth. It was a pleasure to join you. Coming up, President Trump is taking on the legal industry and big law is split on what to do about it. That's after the break. In legal news, the Justice Department is asking the Supreme Court to block a judge's order that required it to reinstate more than 16,000 fired federal employees. Administration officials are seeking the Justice's intervention to clear away lower court rulings

that have slowed President Trump's policies. Meanwhile, Trump has set his sights on law firms, and he's escalating his attacks on the industry. On Friday, he sent out a presidential memorandum broadly accusing law firms of abusing the legal system to challenge his policies, stymie immigration enforcement, and pursue partisan causes. Now, firms are scrambling to stay out of the crosshairs. WSJ National Legal Affairs reporter Erin Mulvaney joins me now with more.

Erin, I want to talk about what happened before Friday's memo. Earlier this month, the president signed executive orders targeting several law firms, including Paul Weiss, which challenged a number of Trump's policies during his first administration. So in these most recent executive orders, what is the president accusing these firms of? So the president has targeted so far three firms in executive orders, and in each one, he has attached the firm to a lawyer that has worked there or represented clients that were considered his political or legal enemies in various ways. And then the result is that the firm has security clearances removed, the lawyers at the firm

cannot access federal buildings, and the agencies are directed to remove federal contracts from any firms or their clients. So it's pretty sweeping. That's at least for two of the executive orders. One of them was a little more narrow, but that's why law firms are scrambling. It's pretty sweeping consequences of those orders. So Paul Weiss was sort of confronted with this situation from the president. What did the firm do about it? But first they were preparing to fight. They were hiring some really important litigation firms to back them and

discussing how to put a lawsuit together. But instead the chair also took this other path where he made his way to the White House and went to the Oval Office, met with Trump, and they hashed out an agreement that would allow Trump to rescind the executive order in exchange for a few things like $40 million to certain pro bono services that the administration cares about, veterans and fights against anti-Semitism, and generally just a support for not taking on clients that are partisan. That's basically how we got out of it. All right, so firms are confronted with a situation that could turn into

something similar to Paul Weiss. What are they doing about it? They're really trying to decide how to respond because there is a divide among firms' clients, which is usually the most important thing to them as it's their business. Clients or some of them are asking them to support efforts to fight back against these orders. Others say, please stay out of this. We don't want the president to come after us. And then they have the internal forces of the lawyers within the firm having different

views on what the best course of action is as well. And in the meantime, they definitely just want to keep their heads down, not make big public statements or swings against the president and his actions against the legal industry out of fear that they'd be the next target. But not everyone is adopting that approach, right? What is Perkins-Cooey doing? So Perkins-Cooey sued the administration over the order. And almost immediately, they did get an emergency ruling

from a judge who blocked the order from taking effect. So agencies can no longer take those actions that I mentioned to stop their lawyers from entering buildings. There is an order against that order right now, because Perkins QE will be suing and that litigation will continue in court. The broader concern is that this chill in the legal industry is quite unprecedented, and there could be broad repercussions on firms across the board.

That was National Legal Affairs reporter Erin Mulvaney. Thank you, Erin. Thank you, Erin. Thank you. Now over to the auto sector. South Korea's Hyundai is planning to invest $20 billion in U.S. manufacturing. The company plans to open an additional auto plant in Georgia, as well as a $5 billion steel plant in Louisiana. President Trump announced the plans from the White House this afternoon with Louisiana Governor Jeff Landry. Chinese automaker BYD has hit $100 billion in

sales, racing past rival Tesla. BYD's has revenue last year grew to the equivalent of $107 billion, beating Tesla's revenue of $97.7 billion for the year. BYD isn't as profitable as Tesla, but it's catching up fast. And speaking of Tesla, for years, investors have flocked to the electric vehicle company, many driven by confidence in CEO Elon Musk and his techno-utopian vision for the EV maker. As recently as a few months ago, investors were betting that a second Trump administration would be great for the company. Instead, shares have fallen more than 30% this year as of today's close.

So why are investors jumping ship? Some tell us it's because of Musk's behavior as part of the Trump administration. But as reporter Hannah Aaron-Lang told our Tech News Briefing podcast, broader economic uncertainty is also a big factor. There's concerns about a trade war, there's concerns about the economy, and even concerns about artificial intelligence, and you know if it's really going to deliver profits at these companies as promised. Tesla stock is definitely being impacted by those broader market

trends. But I do think Tesla has faced some unique problems. The company has seen some hits to their sales numbers. Competition in the electric vehicle industry is intensifying. So I think that there are Tesla-specific challenges, there are Musk-specific challenges, and also just broader market dynamics at work here. You can hear more from Hannah

in today's episode of Tech News Briefing. In other news, German business software group hear more from Hannah in today's episode of Tech News Briefing. In other news, German business software group SAP is now Europe's largest company by market value. Its ascent comes as the company moves away from sales of software licenses in favor of subscription-based cloud services. SAP took the crown from Danish pharmaceutical giant Novo Nordisk, the maker of blockbuster drugs, Wigovie and Ozempic.

Separately, Novo Nordisk has agreed to pay up to $2 billion for the rights to a developmental drug from a Chinese pharmaceutical company. The drug, called UBT-251, targets three different hormones to treat obesity, type 2 diabetes, and other diseases. And that's what's news for this Monday afternoon. Today's show is produced by Pierre Bienneme and Anthony Bansi with Deputy Editor Chris Zinsley. I'm Alex Osala for The Wall Street Journal.

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