WSJ What’s News - Goods From Canada, Mexico Still Exposed to U.S. Tariffs, Despite Pause

Episode Date: March 7, 2025

P.M. Edition for Mar. 7. Despite Thursday's pause on tariffs on goods from Canada and Mexico many products are still exposed to them. WSJ economics reporter Chao Deng tells us which goods fall under the new exemption and why it is so hard to parse. Plus, Fed chair Jerome Powell says that changing trade policies keep the Federal Reserve in a holding pattern on rates. And the Justice Department opens an investigation into whether egg producers have conspired to raise prices. Alex Ossola hosts. Listen to “Palmer Luckey's 'I Told You So' Tour: AI Weapons and Vindication” in Bold Names. Sign up for the WSJ's free What's News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

Uncertainty around trade policy keeps the Fed in a holding pattern on rates. Plus, which goods from Canada and Mexico are still exposed to U.S. tariffs? The answer is less straightforward than it might seem. What we're going to see in the next month or so is businesses scrambling to figure out, well, should they file the paperwork, should they not? What is the cost around filing the paperwork versus maybe just waiting for another month and seeing if Trump's policy changes again?

And are egg producers engaged in foul play in setting prices? The Justice Department wants to find out. It's Friday, March 7th. 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. New data out from the Labor Department today shows that the U.S. added 151,000 jobs in

February. That's slightly below the gain of 170,000 jobs economists expected to see, but better than the 125,000 jobs added in January. The unemployment rate, which is based on a separate survey from the jobs figures, rose to 4.1% from 4%. To give us some insight behind the numbers, I'm joined now by WSJ Economics reporter Justin Lehart. Okay, Justin, what stood out to you in this jobs report? The first thing that stood out was we saw a decline

in federal government jobs. We saw a decline of 10,000. And so economists don't think that the layoffs that we saw last month have really registered just because of when the Labor Department collects the data for the report, those layoffs really hadn't happened yet. However, there was a hiring freeze.

So it does suggest that the hiring freeze that went into effect when Trump came into office, that may have led to increased attrition. And so that's sort of the leading edge of some of the government job cuts that we expect to see. And of course, the big question every time we get a jobs report, does this change anything for the Fed? Not at this point.

We might see weakness in the months ahead. Most economists expect to see that. This month, the Fed can leave rates on hold as widely expected to. If you see deterioration in the job market, that could lead to a cut. There is a complication, of course, with tariffs expected to raise prices.

You could get inflation going one way, jobs going the other way, that puts the Fed in a very tough spot. That was WSJ Economics reporter Justin Lehart. Speaking at a conference in New York today, Fed Chair Jerome Powell said the central bank is comfortable with its wait-and-see approach to rate cuts as it digests the effects of changing policy.

Looking ahead, the new administration is in the process of implementing significant policy changes in four distinct areas. Trade, immigration, fiscal policy, and regulation. It is the net effect of these policy changes that will matter for the economy and for the path of monetary policy. While there have been recent developments in some of these areas, especially trade policy, uncertainty around the changes and their likely effects remains high. As we parse the incoming information, we are focused on separating the signal from the noise as the outlook evolves. We do not need to be in a hurry and we are well positioned to wait for greater clarity.

The Fed chair said that despite uncertainty, the U.S. economy continues to be in a good place. U.S. stocks turned higher today following Jerome Powell's remarks, but remained lower on the week after an onslaught of tariff-related news. The Dow rose about half a percent, the S&P 500 went up around 0.6 percent, and the NASDAQ closed 0.7 percent higher. Previously on the show, we've talked about how a new guard of defense startups are trying to secure contracts from Trump's Pentagon. Andril is one such company, and its founder, tech veteran Palmer Lucky, was part of a minority

in the tech sector that supported Trump during his first run for the White House. This week, Lucky joined our sister podcast Bold Names to talk about how he's trying to remake the government's approach to national security. The United States should not be the world police. We should be the world gun store. We need to stop sending our people overseas to die for other people's sovereignty. And we need to be willing to sell them the weapons they need to make themselves into prickly porcupines that nobody wants to step on, nobody wants to bite, nobody wants to take a bite of them. To hear more of the conversation with Lucky, check out the link to the Bold Names podcast

in our show notes. Coming up, what goods are actually affected by Trump's tariff pause? That's after the break. Yesterday, President Trump suspended tariffs on Mexican and Canadian products for one month. But there's a catch. The deal only applies to goods that had been traded duty-free under an existing trade agreement called the U.S.-Mexico-Canada Agreement, or USMCA. Putting that into practice is actually less straightforward than it might seem.

WSJ economics reporter Chao Dang breaks it down for us. OK, Chao, what kinds of goods are covered by the USMCA? We've got a really long list of goods. It could be Mexican TVs, air conditioners, avocados, tomatoes, but for some products, it's gonna be more complicated. So for example, if you take a car, you're gonna have to look at what components and

parts go into that car. Is the majority of that car made out of steel that is originating from North America? What percentage of the car's value comes from factories where workers earn at least $16 an hour? So the rules can get quite complicated quickly. And what proportion of goods coming into the U.S. from Canada and Mexico qualify for the USMCA? Last year analysts calculated that roughly 45% of goods entering the U.S. from Canada and Mexico entered under USMCA. That is, they entered duty-free because they fulfill the requirements of the USMCA rules.

And then outside of that, you had 40% of goods that were coming in tariff-free simply because businesses didn't need to claim USMCA on those products. And then the remaining 15% faced tariffs for various reasons, either because the businesses didn't bother to claim for USMCA because they felt the process would be too complicated or that the tariff rate for those products was extremely low and so therefore businesses just decided to pay those tariffs. How easy is it for companies in Canada and Mexico who want to export to the US to be compliant with USMCA. So when a company tries to apply for USMCA, all they have to do is file the paperwork

with authorities and check a box that says their product is compliant. Of course, then the authorities can come back and actually do a check. And if the product isn't compliant, the firm could face fees. So essentially what we're going to see in the next month or so is businesses scrambling to figure out, well, should they file the paperwork? Should they not? What is the cost around filing the paperwork versus maybe just waiting for another month and seeing if Trump's policy changes again? How about on the US side? Is it equally complicated?

It's the US Customs and Border Protection officials that will be implementing Trump's rules. So they're going to have to be really reconfiguring a lot of things, including their electronic databases to properly charge tariffs on products. It's really complicated. And they could face a lot of legal challenges and headaches from businesses if they don't agree with what's being tariffed and what's not. That was Journal Economics reporter Chao Dang. Thanks Chao. Thank you.

In other news, the Justice Department has opened an investigation into the cause of soaring egg prices, including whether large producers have conspired to raise prices or hold back supply. That's according to people familiar with the matter. Egg prices have doubled over the past year and eggs are sometimes entirely absent from grocery store shelves. The department's investigation is in its early stages and might not lead to any formal action.

A Justice Department spokeswoman declined to comment. The United Egg Producers, a trade group for the industry, said egg farmers are, quote, "'doing everything they can to fight back against this deadly bird flu outbreak.'" And the Trump administration said it's canceling roughly $400 million in federal grants and contracts to Columbia University.

The Ivy League school has come under scrutiny by the Trump administration for an alleged failure to protect Jewish students. A Columbia spokesperson said the school is reviewing the agency's moves and promised to work with the government to restore its funding. A person with knowledge of the discussions said the university will have a 30-day review period to address the government's concerns and potentially reinstate the contracts. And finally, were you someone who went to math camp?

Maybe your parents signed you up for an extra computer course? It was probably because they saw science and tech as a good, solid career path. Now though, parents are taking a different approach and pushing their kids towards the arts instead. WSJ columnist Callum Borchers told our Tech News Briefing podcast why parents are rethinking careers in tech for the next generation. It's not just that kids all of a sudden develop this newfound interest in computer science. A big part of it is thinking, well, that's where the jobs are, right?

And it would be hard to say that those people or their parents have been wrong in recent years, except for maybe just the last couple of very recent years where we see a spate of layoffs in the tech sector. And for the people who were maybe part of that generation, the millennial parents who now have kids of their own, maybe they went into tech because they thought that's going to be the safe, smart, lucrative career. They're second guessing that plan for their own little ones now. To hear more from Callum, check out today's episode of Tech News Briefing.

And that's What's News for this week. Tomorrow you can look out for our weekly markets wrap up, What's News in Markets. Then on Sunday we'll have the final installment of our special series, Building Influence, about China's trillion dollar global infrastructure program. This time we look at how the West has responded so far and how President Trump is taking a very different approach.

That's on What's News Sunday. And we'll be back with our regular show on Monday morning. Today's show was produced by Anthony Bansi with supervising producer Michael Kazminis. Michael Laval wrote our theme music. Aisha Al-Muslim is our development producer. Scott Saloway and Chris Zinsley are our deputy editors. And Philana Patterson is the Wall Street Journal's

head of news audio. I'm Alex Osala. Thanks for listening.