WSJ What’s News - DeepSeek’s Breakthrough Pushes AI Up on Trump’s To-Do List

Episode Date: January 28, 2025

P.M. Edition for Jan. 28. Now that Chinese company DeepSeek has made a sophisticated—and cheaper—artificial-intelligence model, American tech companies want clarity on what the Trump administration will do about AI. Amrith Ramkumar, who covers tech policy for WSJ, discusses what President Trump might do. Plus, WSJ deputy bureau chief for autos Mike Colias discusses GM’s plans to soften the blow of potential U.S. tariffs on Mexico and Canada. And Panamanian officials meet with their U.S. counterparts to defuse tensions with the Trump administration over the Panama Canal. Alex Ossola 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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the risks posed by China and other countries racing ahead. Plus, General Motors prepares for possible US tariffs on Mexico and Canada. And the makers of prescription drugs modestly raise prices in the US. It's Tuesday, January 28th. I'm Alex Osala 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. The release of a sophisticated and cheaply trained artificial intelligence model from Chinese company DeepSeek has rocked the tech world. It has also refocused President Trump on the AI race and created urgency for

his administration to figure out what to do about AI. Here to tell us more about what the administration is thinking is Amrit Ramkumar, who covers tech policy for the Wall Street Journal. Amrit, I want to start with export restrictions on semiconductors. The Biden administration limited which chips could be exported to China, though despite that we have DeepSeek tilting the global tech race. So what's the Trump administration planning to do here? Nobody really knows. So that's probably the most pressing question among companies.

Investors, lobbyists as it relates to the AI race between the US and China. So people are waiting on pins and needles for some clarity on that. We'll see where Trump lands on this because companies like Nvidia and others pins and needles for some clarity on that. week on China. thing people expect Commerce Secretary Howard Letnick to be asked about at a Senate hearing and people will be really falling for any clues and indicators the administration gives in the coming weeks. But let's shift gears a little bit to the Trump AI action plan. Last week, the president signed an executive order about AI, which revoked one of Biden's executive orders that asked companies to tell the government when they're developing powerful models and it directed his team to create an AI action plan.

So where does Deepseek's model fit into this? Deepseek's model and their breakthrough really just creates more urgency for Trump's team to make concrete what is in the action plan. Like you said, Trump revoked that order. But the key is what he's going to replace it with. And that's what people don't really know. Trump revoked that order, but the key is what he's going to replace it with. And that's what people don't really know. Biden and his team also created something called the AI Safety Institute within the Commerce Department, and that's an organization that works with companies to develop testing standards

and really make sure that these models are safe, so they've been working with companies the road are. And a lot of people will be upset if the action plan is just no regulation and take a hands-off approach because they do want to see some federal government leadership in this area. Yeah. What are the stakes here exactly? Like if Chinese models end up being the ones that are sort of more commonly used or more popular versus U.S. models? The stakes here are staggering from an economic and national security perspective. Already models. that are much cheaper and more accessible, then that's probably where the route they're going to go, and that creates a lot of potential issues geopolitically for the US and other countries. That was WSJ reporter Amrit Ramkumar.

Thanks so much, Amrit. Thanks for having me. [♪THEME MUSIC PLAYING》 Tech stocks rebounded after yesterday's deep-seek-inspired route. Some stocks that had swooned Monday, including Nvidia and Oracle, posted solid gains today, though not enough to make up for yesterday's losses. U.S. stock indexes were up today.

The NASDAQ added about 2 percent, the Dow rose 0.3 percent, and the S&P 500 gained just shy of 1 percent. Confidence among U.S. consumers fell for the second straight month. That reflects a retreat in optimism for both current and future conditions at the start of President Trump's second term, and expectations that inflation will rise again. The Index of Consumer Sentiment, which is published by the research group the Conference Board, fell more than economists expected, but remained above the threshold that usually signals a recession ahead.

The data showed that consumers under 55 years old led the fall in sentiment, while those above 55 registered a small uptick in confidence. Still, consumers remained bullish about the stock market, though slightly less than at the end of last year. Coming up, what tariffs against Mexico and Canada could mean for General Motors. That's after the break. General Motors posted nearly $3 billion in losses for the fourth quarter. The cause? A restructuring of the company's China operations and its decision to abandon its robotaxi ambitions.

The losses marred what was otherwise a relatively strong year for the company. Here to tell us more about what this means for GM's future is Mike Kaleis, the deputy bureau chief for autos for the Wall Street Journal. Mike, I want to start by digging into the reasons behind those losses. In China, the company is taking some steps to restructure their operations. Does that seem like it's working? Well, I'd say yes and no. So what the company said today is they've spent all this money, $4 billion plus, that

closed some factories, probably cut some vehicle lines, reworked things with its joint venture partner over there. And all of these steps are being taken to mitigate some of the losses that we're seeing because GM and quite frankly, a lot of other major automakers in China have had a really tough time competing with the Chinese players So this is GM trying to sort of right size its business there because it's basically acknowledging It's never gonna be a major top player in that market anymore. The Chinese automakers have got a big cost advantage They've pivoted to electric vehicles more quickly. They're delivering the kind of digital tech features

that Chinese buyers really want. And so it's not game over for the big foreign automakers, but they've already shrank in size. Despite this, we're reporting that this was a pretty decent year for GM. What were some of the bright spots? That big loss in China was really an accounting balance sheet thing, right? Had to take these

charges. But if you just look at the underlying operations of the company, it had its most profitable year ever from just an operating income standpoint. That's driven mostly by the US market. So GM is really taking advantage of considerably higher prices that car buyers have been paying really since the pandemic. Like American car buyers are really paying up for higher end models and features and bigger cars in some cases. And GM, you know, that's kind of the sweet spot

of the company. Looking ahead, one of the big potential issues on the horizon for GM is tariffs. If President Trump goes through with these tariffs against Canada and Mexico, how exposed is the company in and what are they doing about it? Just big picture, there would be big ramifications for the entire industry if this 25% tariff on Mexico

and Canada goes through. The industry has spent 30 years kind of setting up its supply chain and its factory network to be able to move trade and goods freely between those countries. So GM as an example, one of the most exposed players about a third of what it sells in the US, its vehicles comes from either Mexico or Canada. And so that would raise costs for GM and companies like it by a lot.

And it would probably lead to higher prices is what analysts expect. And how are they preparing for that? GM CEO, Mary Barra talked about this a bit when she addressed investors on their conference call today. She said, we're looking at a number of things we could do. We're looking to see if we were faced with paying levies on stuff coming in from Canada and Mexico. We could potentially make more trucks in the US.

I know that they've been expediting some shipments of inventory that has been sitting over in Canada and Mexico to get that across the border before any tariffs take place. So they're definitely scrambling and monitoring. And I know that they're also talking to the administration and talking to Congress about the impact this would have. You know, when you talk to people in the industry,

one of the things you hear is, we ultimately don't think this is gonna go into effect or go into effect for a long period of time just because it would be so damaging to an industry that President Trump's on record as saying he wants to see thriving. That was Mike Koliath, WSJ's Deputy Bureau Chief for Autos. Thanks Mike. Thanks for having me on. Drugs Drugmakers raised the list prices of more than 800 prescription drugs in the U.S. at the

start of this year. Many of them kept the increases relatively modest, with prices rising a median of 4%, lower than the 4.5% rise last year. That could help companies avoid criticism from President Trump as they seek his administration's support. The impact for patients will depend on their health plan, which usually pays most of the cost of a prescription. To defuse tensions over the Panama Canal, Panama's government is preparing a charm offensive. Top Panamanian diplomats are meeting today with counterparts from the U.S. State Department

in anticipation of Secretary of State Marco Rubio's stopover in the country on Saturday. The State Department didn't immediately return a request for comment. And finally, if you've been making a bit of money selling things online, the U.S. government wants its cut. Granted, this isn't completely new, but now the threshold for how much you've made is lower, which, as WSJ Personal Finances reporter Ashleigh Ebling told our Your Money Briefing podcast, means millions more taxpayers should expect to receive a form to report that income on their taxes. Mainly, it's people making between $5,000 to $20,000 who this will be new for.

And it's not just people who sell stuff like tickets and clothes online. It's also people making stuff and selling it on Etsy. It's people taking online payments for their services. And really big thing, the IRS has just launched an investigation into taxpayers who earn money as experts on the online platform, JustAnswer. And they allegedly failed to accurately report their income. It was in the past from 2017 through 2020. And a judge in December just authorized the IRS to issue summons requiring just answer to provide the names of these people. So the point is, you know, you might be found out. You can hear more about this story in today's episode of Your Money Briefing.

And if you're wondering what else is new for the 2025 tax season in the US, Aishalea breaks down key changes to consider before you file in a two-part series with your money briefing. The first episode drops Sunday, February 2nd. And that's what's news for this Tuesday afternoon. Today's show is produced by Pierre Bienamé and Anthony Bansi with supervising producer Michael Cosmitis. I'm Alex Osala for The Wall Street Journal.

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