WSJ What’s News - Bonds Sell Off as New U.S. Tariffs Upend Global Trade

Episode Date: April 9, 2025

A.M. Edition for April 9. As U.S. tariffs targeting nearly 100 nations take effect, WSJ reporters Jason Douglas and Kim Mackrael explain how America’s trade partners are responding to the levies, including a 104% tariff on China. Plus, markets reporter Chelsey Dulaney breaks down an intensifying selloff in usual safe haven U.S. Treasurys. And President Trump vows to bring back the declining U.S. coal industry. Luke Vargas hosts. Sign up for the WSJ’s free What’s News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

President Trump cheers on his trade agenda as reciprocal tariffs kick in. And I really think we're helped a lot by the tariff situation that's going on, which is a good situation, not a bad. It's great. It's going to be legendary. You watch? We'll look at how America's trade partners, central banks and investors are responding as U.S. treasuries sell off, plus the rest of the day's headlines.

It's Wednesday, April 9th. 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. Reciprocal U.S. tariffs on nearly 100 countries are officially in effect. As of a minute after midnight, U., US duties now stand at their highest level since before World War II, with the likes of China now facing tariffs of 104%.

No region of the world is being spared, though many Southeast Asian nations are hardest hit, with Vietnam, Laos, and Cambodia on the receiving end of tariff hikes north of 45 percent, moves likely to upend supply chains, dent growth forecasts and ripple through to consumers in the form of higher prices. And on such a consequential day for global trade, it's fitting we've got a pair of journal reporters with us this morning from opposite ends of the world. Kim McCrail is in Brussels and Jason Douglas is in Singapore. Jason, you have been putting out a number of big reports in recent days reckoning with the

enormity of the changes coming to the global trade system, a new reality that is now very much upon us. Yeah, I think that's right. We're all trying to wrap our heads around what this means for globalization, what this means for the global trading system as it stands, as it stood for 30-od odd years. In the short term, I think the economic worry is recession. These recession fears are just getting bigger and bigger. I think you can see in stock markets across Asia that there's real concerns now about

growth. We've seen central banks in New Zealand and India today cut interest rates. We're starting to see all sorts of little support packages being thrown to exporters in the region by countries like South Korea and their auto industry, Japan and Taiwan. There's real anxiety in Asia and I about what all this means for growth for sure. Yeah. Speaking only Jason about the impact of trade volumes, we saw a projection today from Capital Economics about Chinese exports and just there are some potentially massive changes coming. Yeah, that's right. We've seen some forecasts from investment banks and from consultancies

out here suggesting that Chinese exports to the US can drop by as much as half in light of Trump's tariffs of 104% plus, depending on exactly how you calculate it. We're already starting to see the yuan weaken. It's tightly controlled by the central bank and the government, but they are starting to let it weaken a little bit. It's a bit unclear if that'll be the start of a sustained depreciation or something more controlled. But you're right for all the economies out here, Japan, South Korea, Vietnam, these are all very heavily export-dependent economies and the US is by far their biggest market.

So they really are bracing for a great deal of disruption. Lyle Ornstein Kim, the tariff rates are really highest for many of the Asian countries that Jason was just mentioning, but the outlook fundamentally is no better in the EU, is it? No, I think that's right. The US is an extremely important export market for Europe. And in Europe's case, it's 20% across the board tariffs, as well as the auto tariffs of 25%, the steel and aluminum tariffs of 25 percent, the threat of future tariffs. That's a huge threat to the outlook for Europe.

Yeah, future tariffs, including those that could hit pharmaceutical products. President Trump saying yesterday those levies could be coming very shortly. Yeah, and pharmaceutical tariffs for Europe would hit Ireland very hard. Denmark is a major pharmaceutical hub for Europe. There's the potential for even more hits to the economy that could be coming. Pete Slauson Kim, these reciprocal tariffs are kicking in today despite some pretty active tariff diplomacy that's been undertaken by a number of countries. We actually heard from

US Trade Representative Jameson Greer about this yesterday. He was testifying on Capitol Hill. Jameson Greer Nearly 50 countries have approached me personally to discuss the president's new policy and explore how to achieve reciprocity. And they've spoken with many members of the administration. Several of these countries, such as Argentina, Vietnam, India, and Israel have suggested that they will reduce their tariffs and non-tariff barriers in line with the president's policy.

And these obviously are welcome moves. Kim, we had the EU Parliament's Trade Committee Chair on last Friday's podcast. He's actually part of the delegation in Washington this week, offering concessions potentially while also pledging to hit back against the US. Take us into this strategy. The EU is really trying to pursue a two-pronged path in responding to Trump's tariffs. Their goal is to have negotiations and come up with some sort of deal that they hope would be beneficial for both the US and the EU. At the same time, the feeling is that you're not going to make much progress

on negotiations if you don't come at it from a strong position. And the view among EU officials is you need to have a stick waiting. So there'll be a vote today to approve a set of tariffs on specific US products. And if that vote is approved, which is quite likely, then they would go into effect next week. Kim, in terms of what the EU is voting on today, these countermeasures targeting the US, they're getting pretty granular, are they not, in terms of what they might be targeting or sparing?

Coming up with an agreement on which American products to go after is not the easiest thing for the European Union, which has 27 member countries, all sorts of different interests that they have to get everybody basically on board for something that in some cases might cause some pain. So they work to narrow down a list of products to go after all sorts of iconic American products. In some cases, we've got peanut butter chewing gum is actually on the list. So chewing gum will face a European tariff coming soon. Likely we've got boats, motorcycles. Harley Davidson would be affected by that one. Also interesting in this list is what they decided to spare.

So we've got whiskey was on an original potential hit list for European tariffs that was taken off during the process. Same for American wines. And those are interesting because after the EU initially started talking about its retaliation about a month ago, President Trump responded very quickly with a threat of a potential 200% tariff on European alcohols, threatening specifically champagne, but saying that that could apply to other alcoholic beverages as well. That would be absolutely devastating for the wine and spirits industry in Europe. You can see some strategizing going on there

where you still are hitting quite a lot of American products, but there's some care being taken to not overly antagonize. Jason, in our final moments, how does that EU approach compare with what we've been seeing from some of the major Asian economies? Well, if the EU is a carrot and a stick approach, then we have countries like Japan and South Korea that underneath a security umbrella that are mostly doing the carrot bit, they are basically making a beeline to the White House in the hope of getting a trade deal very quickly. And China thinks at any rate that it has a great big stick. And so it is

retaliated hard and it will probably continue to do so. Both sides, US and China, just do not seem to be very close to negotiation at all at the minute and neither side seems willing to back down. Journal reporter Jason Douglas is in Singapore and Kim McCrail is in Brussels. Jason, Kim, thank you both so much. Thanks. Great. Thanks so much, Luke. Checking in on what those tariffs have meant for stock markets this morning, shares in

Japan and Korea slid ahead of the close, with European shares also broadly lower in midday trading. But most surprising is a selloff in the usual safe haven U.S. Treasuries, which has been gathering steam. Instead of rising in response to the stock market sell-off, prices of long-term U.S. debt are falling, driving bond yields higher. Markets reporter Chelsea Delaney says the trade turmoil

is making investors reconsider their U.S. investments. The U.S. Treasury market has been the safe haven market for the entire world for a very long time. That's being tested right now. So there is some indication that foreign investors are potentially selling treasuries, taking that money back home, investing them in their home markets. There's also concern about the unwinding of some leveraged hedge fund bets on treasuries, which regulators have been warning about this for quite a long time. There's just a lot of uncertainty around the US economy

right now and how the Federal Reserve is going to respond to that. So what we're seeing basically is investors becoming a lot more skeptical of US assets across the board. That includes treasuries, that includes stocks, that includes the dollar. The investor nervousness around holding treasuries has kicked up a notch ahead of government

auctions of 10-year notes today and 30-year bonds tomorrow. Coming up, we've got the rest of the day's headlines including a big IMF bailout for Argentina and a White House-led effort to boost American coal. Those stories and more after the break. Okay, Martin, let's try one. Remember, big. You got it. The Ford It's a Big Deal event is on. How's that? A little bigger.

The Ford It's a Big Deal event. Nice. Now the offer? Lease a 2025 Escape Active all-wheel drive from 198 bi-weekly at 1.99% APR for 36 months with 27.55 down. Wow, that's like $99 a week. Yeah, it's a big deal. The Ford It's a Big Deal event. Visit your Toronto area Ford store or ford.ca today. The International Monetary Fund has agreed to provide Argentina with a new $20 billion loan, which, if approved,

would boost President Javier Millet's free market overhaul. The U.S. is the biggest shareholder of the IMF, with the Trump administration holding significant influence over the approval of new financing programs. Millet has praised Trump and drawn close to Elon Musk while moving to align Argentina's foreign policy with Washington. Argentina is the country most in debt to the IMF, and the new loan would be on top of a current $40 billion bailout Argentina received following the 2018 financial crisis.

President Trump has signed a series of executive orders aimed at expanding the production and use of coal in the U.S. after years of decline. Pound-for-pound, coal is the single most reliable, durable, secure, and powerful form of energy. It's cheap, incredibly efficient, high density, and it's almost indestructible. Analysts and executives say it's unlikely new coal plants will be built in the U.S., though some operators may delay plans to wind down existing plants if Trump rolls back certain environmental regulations. Energy experts say any boost for coal is likely to be temporary, as renewables like wind and

solar farms and gas-fired power plants are significantly cheaper alternatives. Meanwhile, the Trump administration has frozen more than a billion dollars in federal funding for Cornell University and $790 million for Northwestern University. That is according to a Trump administration official and comes as the federal government is investigating both schools for alleged civil rights violations, part of a rapidly expanding crackdown on elite research universities across the U.S. A Northwestern University spokesman said the school hasn't received any official notification

about the freeze, while the president of Cornell said in a letter that the university hadn't received information confirming the $1 billion figure, but had received more than 75 stop work orders from the Department of Defense related to national defense, cybersecurity, and health research. And a federal judge has ordered the White House to restore the Associated Press's access to presidential events, saying the decision to limit AP's access violated the news organization's free speech rights. AP sued in February after its journalists were barred from the White House press pool

because the outlet refused to change its style guidance for the Gulf of Mexico, which President Trump renamed the Gulf of America. The White House didn't immediately respond to a request for comment, and despite yesterday's ruling, AP journalists weren't permitted to join the press pool on Tuesday evening. And that's it for What's News for this Wednesday morning. Today's show was produced by Daniel Bach and Kate Bullivant 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.