WSJ What’s News - President Trump Agrees to Delay U.S. Tariffs on Mexico and Canada

Episode Date: February 3, 2025

 P.M. Edition for Feb. 3. President Trump has stunned corporate leaders and foreign officials by agreeing to last-minute, monthlong delays of his tariffs on Mexico and Canada. Plus, after a push from Elon Musk and the Department of Government Efficiency, the Trump administration closed the headquarters of USAID. WSJ national security reporter Alexander Ward discusses how this might provide a template for the way DOGE could approach other government agencies as it tries to cut spending. And a new study reveals the impact of the tidal wave of cheap Chinese goods on U.S. manufacturing towns. Journal economics reporter Justin Lahart breaks down the findings. Alex Ossola hosts. Sign up for the WSJ's free What's News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

Hey Spotify, this is Javi. My biggest passion is music. And it's not just sounds and instruments. It's more than that to me. It's a world full of harmonies with chillers. From streaming to shopping, it's on Prime. President Trump agrees to delay tariffs on Mexico and Canada by a month. Plus, the Trump administration closes USAID headquarters following a push by Elon Musk and Doge

to eliminate the foreign aid agency. If they are successful, they being Doge, with USAID, then it is wholly possible that we will see similar types of strategies, tactics, plays done on other agencies that they don't like. And how the US manufacturing towns hit by the arrival of Chinese imports a quarter century ago bounced back, but the workers didn't.

It's Monday, February 3rd. 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. President Trump has stunned corporate leaders and foreign officials by agreeing to last-minute, month-long delays of his tariffs on Mexico and Canada. His levies on China are set to go into effect early Tuesday. Trump and Mexican President Claudia Scheinbaum said today that they agreed to put tariffs on Mexico on hold for one month. In a phone call, both leaders agreed to take joint measures to fight fentanyl trafficking

across the U.S. border. Later in the day, Canadian Prime Minister Justin Trudeau posted on X saying U.S. tariffs on Canada were also delayed. Trump confirmed the pause on Canadian tariffs posting on Truth Social that it was, quote, "...to see whether or not a final economic deal with Canada can be structured." Separately, Trump signed an executive order to create a U.S. sovereign wealth fund. The president suggested that the fund could be used to keep TikTok operating without explaining what role the fund would play in a potential purchase of the app.

The Trump administration's proposed tariffs jolted global markets today, driving huge swings in stocks around the world and sending the dollar higher. In the U.S., all three major stock indexes ended the day down. The Dow closed down roughly 0.3%. The S&P 500 dropped about three quarters of a percent. And the NASDAQ shed 1.2%. In the early 2000s, China joined the World Trade Organization, which made it cheap for the US to import goods from China.

That was great news if, like me, you're a fan of things like affordable couches and cheap toasters, but it was damaging for American workers. Many U.S. manufacturing towns in places like the Midwest and Southeast couldn't compete. Now new research posted today as a National Bureau of Economic Research working paper paints a more detailed picture of the impact on these towns and on individual workers. Economics reporter Justin Layhart joins me now. Justin, let's break down some of the findings of this study. How were US manufacturing towns hurt

by the flood of Chinese imports? We'd already known how badly some of these places were hurt. Really what happened was this hollowing out of manufacturing. I mean, it really affected the southeast, in particular, places like Hickory, North Carolina, with a lot of furniture manufacturing. So what was interesting is first, these economists, and these are the economists that originally documented the effects of the China shock.

They found that the places really did come back. Starting in the years ahead of the pandemic, you start to see just kind of an economic revival in a lot of these places. And was that because these workers who were working in manufacturing were continuing to work in that industry or was there a shift? There was a big shift. So this wasn't manufacturing coming back at all. This was really new types of business coming in, a shift towards healthcare, towards retail, and it wasn't the manufacturing workers that were there that benefited from this revival. It was new people coming in. It was a lot

of native Hispanics, a lot of immigrants here legally, more women, more people with college educations coming in and filling these places. So, you know, the places really don't look the same as they did 25 years ago. It seems like there's something kind of interesting going on here because it sounds like most economists would expect that if these manufacturing workers couldn't find work in the places where they were living, they would move to a place where they could

find a job. But it sounds like that didn't really happen here and they didn't move into these new industries either. What's going on? Most of these people didn't lose their jobs outright, but instead a lot of people just sort of aged in place and then they retired for their manufacturing job, and then that job wasn't filled. That might have been because if you're in manufacturing in one of these types of manufacturing jobs and the China shock is hitting everywhere in the United States, there's no place to

move. The other thing to think about is, so even though these people aged out of their jobs, but they didn't see the kind of upward mobility that they might have expected to. So it was a good thing that they were able to hold on to their job, but their futures were a lot more constrained than they might have thought they were. That was WSJ Economics reporter, Justin Layhart. Thanks, Justin. Thank you. Coming up, why closing USAID's headquarters could be a sign of Doge's approach to other government agencies. That's after the break. Treasury Secretary Scott Bessent has ordered the Consumer Financial Protection Bureau to stop work.

The move came after President Trump named Bessent as acting director of the CFPB, which has the authority to regulate financial products such as mortgages and credit cards. In an internal email, Bessent's office directed staff to stop things like enforcement actions and active litigation. Bessent's appointment is the beginning of what is expected to be a rollback of many of the agency's actions under the Biden administration, which included rules capping overdraft fees and banning the use of medical debt by credit reporting companies. Meanwhile, the U.S. Agency for International Development, the government's organization

for carrying out foreign assistance programs around the world, closed its headquarters to workers today. Secretary of State Marco Rubio said that he was the agency's acting director. The closure is at the direction of Elon Musk's Department of Government Efficiency, or DOJ. And it's a sign of just how quickly Elon Musk and his team are moving to exert control over big parts of the U.S. government. Here to tell us more is Alexander Ward, who covers national security for the journal. Okay, so Alex, USAID headquarters are closed. Staff was told to work remotely,

except for officials with essential functions. Where does that actually leave the work of the agency? It's completely unclear. In fact, Secretary of State Rubio said that he was the acting administrator of USAID. Now, it's unclear whether that's legally allowed. USAID is its own independent agency and codified in federal statute. And so can he be made acting administrator? That's unclear. Does that mean USAID has ceased to exist as an organization? That's unclear. Or has it been folded under state?

And that's why Rubio is the acting administrator. That's unclear. No one really knows what this means other than most employees were not allowed to go inside the physical USAID building in downtown D.C. and they had to work remotely. I'm curious what some of the reactions have been to this move, you know, Democrats, fellow Republicans, even people within the agency. Well, let's start with Republicans. Right now, they've been mostly muted. So a sign that Republicans are kind of waving this away. It's just not something they're going to waste

a lot of political capital on. Then you've got Democrats who are up in arms about this, saying that this is an illegal move, saying that this is a constitutional crisis. And then also talking about the fact that at the beginning of the administration, the State Department put on a 90-day freeze in order to assess the kinds of foreign aid that's being given. What Democrats are saying is like during this period, the US is ceding influence around the world to China and Russia who are trying to gain a foothold in the developing world, right? Now you have the US pulling away a lot of its aid

and then USAID officials are going, do I have a job? In fact, someone I talked to at USAID this morning said, hey, at least I still have access to my email. Just a few hours before coming on here, that person has lost access to their email. So it seems like whatever's being done behind the scenes is moving at a relatively quick pace and we should know Elon Musk over X on his social media site was very

clear to say I'm working on weekends because the federal government doesn't I can get a lot of stuff done. Right. Is this maybe the same kind of playbook that we could see Musk following as he turns his attention to different agencies as he tries to do the work that he has said that Doge is seeking to do? Matthew 26 This is one of the fears that federal employees have. If Musk and Doge can do this to USAID, then maybe that's a playbook they could run elsewhere. There are two questions here. For what reason are they folding USA

and the method in which they're doing it? If they are successful, they being doge with USAID, then it is wholly possible that we will see similar types of strategies, tactics, plays done on other agencies that they don't like. That was WSJ National Security Reporter, Alex Ward. Last month, MENA announced loosened restrictions on speech across its platforms. For some advertisers, that's brought concerns that their ads might pop up near content they

consider offensive. WSJ advertising editor Suzanne Vranizza told our Tech News briefing podcast that, despite misgivings about the new speech policy, advertisers are unlikely to step back completely from Meta's platforms. Advertisers, specifically the large advertisers, and most advertisers have become so dependent on Meta and their platforms. They have the most amazing targeting capabilities. They know everything about their consumers. So it performs super well.

They basically are the second largest digital ad company in the US behind Google for that very reason. They had over $130 billion in ad revenue in 2023. So advertisers, they can't come off of it. So there was a big boycott of Facebook a couple of years ago and advertisers came off for a month. And because of this very issue, there were plenty that actually went back immediately because they couldn't live without it.

So this is a tough choice and that's why we're not going to see a lot of them run for the hills. I will say you're going to probably see advertisers say maybe I don't rely as heavily on Metta if it goes south. To hear more from Suzanne, listen to tomorrow's episode of Tech News Briefing. And that's what's news for this Monday afternoon. Today's show was produced by Anthony Bansi and Pierre Bienneme with supervising producer

Michael Kosmitis. I'm Alex Osala for The Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.