WSJ What’s News - China and the U.S. Race to De-Escalate Tensions

Episode Date: October 14, 2025

A.M. Edition for Oct. 14. Beijing is eager to save an upcoming Trump-Xi summit, while Washington wants to stem losses in the stock market. And so WSJ editor Peter Landers explains that President Trump is taking a carrot and stick approach to trade tensions. Plus, we explore what a slew of results from America’s biggest banks say about the U.S. economy. And, WSJ’s Ken Thomas takes a look at which federal agencies are being hit the hardest by shutdown layoffs. Caitlin McCabe hosts. Sign up for the WSJ’s free What’s News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

When you're with Amex Platinum, you get access to exclusive dining experiences and an annual travel credit. So the best tapas in town might be in a new town altogether. That's the powerful backing of Amex. Terms and conditions apply. Learn more at Amex.ca. president trump works to publicly de-escalate trade tensions with china following friday's market freak out plus what a slew of results from america's biggest banks could tell us about the u.s economy and we take a look at

which federal agencies are being hit the hardest by shutdown layoffs we are still trying to get a sense of where some of these cuts are taking place, and Americans might not really notice the difference until the government is back at full force. It's Tuesday, October 14th. I'm Caitlin McCabe 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. After roiling markets late last week with threats to impose new sanctions on China, the Trump administration is working to de-escalate the latest flare-up in trade tensions.

Trump's 100% tariff threat on Friday came after Beijing moved to impose restrictions on the export of rare earth minerals. But our Asia economics editor, Peter Landers, says that President Trump is trying to publicly turn down the heat on China to soothe markets, while speaking to senior officials privately about trying to keep the pressure on. So Treasury Secretary Scott Besson has been at the center of, of these discussions with the White House about how the U.S. could hit back further against China. For example, they could target stocks of Chinese companies that are listed on the U.S. stock exchange. They could sanction Chinese firms that are involved in buying Russian oil, which has been a big issue for President Trump. So lots of tools the U.S. has, lots of tools that China has to hit

the U.S. economy. And we saw that with the rare earth export controls that China stepped up last week. So each side has a whole bunch of tools in its arsenal to hit back against the other guy in this trade war. It's just a question of how many of them will be brought forth in the negotiations coming up and ultimately what kind of settlement might be reached. Media coverage has been muted in China over the latest escalation, with Beijing appearing eager to save a summit between Trump and Xi Jinping slated for the end of this month. But Peter says because China has not fully walked away from its disruptive rare earth export controls. It leaves the door open to a new cycle of retaliation. So on the one hand, China is saying these export controls are not a big deal

and companies should find that everything is going to be fine. On the other hand, the commerce ministry said today that if the U.S. wants a fight, China will fight to the end. So they're putting up a strong front there. And also a foreign ministry spokesman suggested that if the U.S. carries through with its 100% tariff threat, China would retaliate in kind. And that brought to mind the circumstances earlier this year when the U.S. would raise tariffs and China would match those tariffs, you know, percentage point for percentage point, tit for tat. So China is offering both carrot and stick in its public statements. China's export controls on rare earth minerals are also considered a critical issue for the European Union, with EU trade chief Maro Sefcovic saying the

measures are already causing a lot of problems and complications for European companies. Ford Motor is temporarily hitting the brakes on producing at least five of its models after a devastating fire at a plant belonging to a key aluminum supplier. The Novellis plant in upstate New York supplies about 40% of the aluminum sheet used by the auto industry in the U.S., with Ford being its biggest customer. The United Auto Workers recently told members at Ford's Kentucky truck plant that starting this week, the company will pause production of its lucrative three-row SUVs, the expedition and Lincoln Navigator, because of difficulties with aluminum supply. A memo viewed by the Wall Street Journal shows that the pause is set to last a week. Google is ramping up its

artificial intelligence spending in the latest sign of how big tech companies are racing to poor money into the space. Google plans to invest $9 billion through 2027 in South Carolina to scale up its Berkeley County Data Center campus and help build two new sites. And that booming AI demand is also benefiting Samsung Electronics, which said today that it expects third quarter earnings to reach a three-year high. The South Korean technology giant estimates an operating profit of about $8.5 billion. dollars. The 32% increase from a year earlier is being driven by stronger than expected prices and sales of memory chips in particular. And third quarter earning season kicks off in earnest this week with Johnson & Johnson and Domino's Pizza reporting today alongside a slew of big financial

players, including J.P Morgan Chase, Wells Fargo, Goldman Sachs, Black Rock, and City Group. And if you ask Telestimos from the WSJ's Take on the Week podcast, the bank earnings will be an important indicator at a time when the government shutdown is preventing investors from accessing important economic data. So there is uncertainty in the face of not having this data. But in this vacuum of government data, one place people could look for at least economic tips, arrows, are bank earnings. U.S. banks, of course, are giants. They lend to hundreds of thousands, if not millions of companies and people. and what they say in their quarterly reports might point us, at least in the direction of what's going on in the economy.

For more on this week's bank earnings, check out the latest episode of WSJ's Take on the Week, wherever you get your podcasts. Coming up, two weeks into the government shutdown, we take stock of the agency's hardest hit by layoffs, including some with bipartisan support. That story and more after the break. It's been roughly two weeks since the start of the government shutdown, and the Trump administration has made good on its threats to begin slashing federal agencies, and particularly those that are considered democratic priorities. Kate Bolivant spoke to our national politics reporter Ken Thomas, who has been looking at these reductions in force and what that will mean for Americans now and in the future. The cuts are fairly broad across the federal government. It involves an estimated 4,000 federal workers, about 1,400 employees at the Treasury Department, about 400 employees apiece at the Education Department and the Department of Housing and Urban Development. And then within the Health and Human Services, we initially thought there would be about 1,100 to 1,200 workers. We found out, though, over the weekend that about 700 of those workers had been restored mostly from the Centers for Disease Control and Prevention.

And so this is the latest move by the administration to further curtail the size of the workforce. And Ken, how is what you've been describing here? How is that impacting the everyday running of these agencies? We are still trying to get a sense of where, some of these cuts are taking place. You know, we've been told, for example, that within the education department, some of it involves the Office of Special Education, so it could affect Americans who receive services through that office. Certainly, there are other federal offices that have been affected, and Americans might not really notice the difference until we get a government

funding agreement and the government is back at full force. In previous shutdowns, federal workers have been furloughed, whereas in this case, some are actually being laid off. What is the goal of these layoffs? These layoffs are part of the brinksmanship we've seen between the White House and congressional Democrats over the shutdown of the federal government. The Trump administration wants to try to force the issue, get Democrats to agree to a clean spending bill that would end the shutdown. Democrats have been resistant in the Senate where they need 60 votes, and Democrats would like to see some steps being made on some health care provisions. For the federal workforce,

it's yet another challenge that they're facing. The unions have been in federal court over the weekend trying to get a temporary restraining order on these cuts. We expect there to be a hearing in San Francisco later this week that could potentially put a pause on these cuts. And so that could be a reprieve for some of these workers. But it just speaks to the roller coaster ride that many federal employees have faced this year. What makes the GOP think that this tactic might work when it comes to bringing Democrats around to their way of thinking? Well, both the Trump and and congressional Democrats have been trying to apply leverage to the situation to achieve their goals. The Trump White House had held off on these layoffs in cuts for about a week.

The thinking is that it may be something that would lead to some more moderate Senate Democrats to join with a few other Democrats and the Republicans in the Senate to approve a plan to reopen the government. We don't expect to see members of Congress back in Washington until Tuesday. And the president has obviously been in the Middle East. So, you know, it's still unclear whether there's been enough pain inflicted from both sides that we could reach some kind of agreement here. Ken, thank you so much. Great to be with you. And finally, as the standoff continues, watering holes of Washington, D.C. are turning to shutdown specials and unhappy hours in a bid

to console federal workers and keep business flowing. Gridlock nachos, the debt dog, and furlough redas are flying off the menu, while one bar greets visitors with a sign reading, if the government won't serve you, we will. Journal reporter Anbi Bhutani visited a number of these bars and restaurants, which, thanks to two weeks of quiet in D.C., are operating at a loss. When they discount something to like $4 buy one, get one free tacos or a $3 beer, they're not really making a margin. Some of them even called it a lost leader. So really, it's a way to get people through the door, get people in. And the hope is twofold, one that they'll spend a bit more money and it'll bring in revenue for the venue.

But also that they just want to create a sense of community at this time. I mean, we're not really sure how much longer their shutdown will go. So until then, they're hoping that their patrons, their valued customers can enjoy a bit of a discount and despite being on furlure that they can have some fun. According to official estimates, the last government shutdown, which lasted a little over a month in 2018, cost the city an estimated $47 million in lost revenues. And that's it for What's News for this Tuesday morning. Today's show is produced by Daniel Bach and Kate Bolivant. Our supervising producer is Sandra Kilhoff, and I'm Caitlin McCabe for The Wall Street Journal. We'll be back tonight with the new show.

Until then, thanks for listening.