WSJ What’s News - Trade Framework Emerges for the U.S. and China

Episode Date: October 28, 2025

P.M. Edition for Oct. 28. In an exclusive, we’re reporting on a trade framework that President Trump and Chinese leader Xi Jinping are set to discuss later this week that could see the U.S. rolling back some tariffs on China. WSJ trade and economic policy reporter Gavin Bade discusses what we know about the framework, and what that means for the U.S.-China relationship. Plus, UPS says it has cut 48,000 jobs in management and operations, pushing its stock price to close up 8%. And OpenAI has become a for-profit company. We hear from WSJ reporter Keach Hagey about what that means for the company and its longtime partner Microsoft. Alex Ossola hosts. Sign up for the WSJ's free What's News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

OpenAI is now a for-profit company, opening the door for more fundraising and a possible IPO. This is something investors were really, really hungry for, and we're sort of making some of their fundraising continue upon them being able to do. Plus, Texas is suing the company that makes Tylenol, alleging that it hid autism risks. And Mexico gets drawn into the Trump administration's campaign against transnational criminal groups. It's Tuesday, October 28. faith. I'm Alex Oslob 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.

We're exclusively reporting that the U.S. would roll back some tariffs on China if Beijing cracks down on the export of chemicals that produce fentanyl. Under a trade framework that President Trump and Chinese leader Xi Jinping are set to discuss Thursday. That's according to people familiar with the talks. The expected agreements are subject to change and dependent on the meeting of the two leaders. WSJ Trade and Economic Policy reporter Gavin Bade joins me now with more. Gavin, what do we know about this deal as it exists right now? Broad strokes mostly and not many details.

We're looking at a reduction of 10% in the tariffs that the U.S. has applied to China. So as a reminder, Trump put 20% tariffs on China in response to, its role in the fentanyl trade. We would see him reduce those tariffs by half. And what that would do is bring average U.S. tariffs on China from around 55 percent down to 45 percent. So we're not talking about a huge difference in the overall tariff rate, but there is some movement here. And importantly, it makes a difference with how competitive Chinese goods are compared to others in the region and other trading partners. So a significant move there, if it does pan out from the U.S. side. What does this mean for other topics on the table between the U.S. and China like rare

earths and soybeans? So we do expect some purchase agreements from the Chinese government on soybeans and other agricultural goods, still waiting to suss out the details on those. And then the other big question is these export controls on rare earth minerals from China and the retaliatory export controls that we've put in place from the U.S. side. The broad understanding here is there would be a pause in a lot of these, that the Chinese would delay implementation of their export control regime for about a year. But the devil's going to be in the details there. There's still a lot of uncertainty and still a lot of discussions happening between the sides about exactly which provisions would be included, how long they would be paused, and how you would actually

enforce these things and make them a lasting agreement. The relationship between the U.S. and China has been kind of tense leading up to this meeting. I mean, there was a question about whether the summit would even happen. What does that show us about where this relationship stands now? Does having a framework like this, even if the details don't all pan out, lower the temperature between the two countries? It lowers the temperature, but we're not at cool heads quite yet. We still will have much higher tariffs now than we did on China in the start of Trump's second term. It's a positive indication for U.S.-China relations. It shows that both countries really need a little relief from this trade war right now for their economies for different reasons. These things can

flare up at any time, as we've seen, the real test is going to be, can we find a framework that has more shelf life than the agreements of earlier this year? That was WSJ reporter, Gavin Bade. Thanks, Gavin. Thanks, Alex. President Trump has had a few stops on his Asia tour before were going to meet Xi in South Korea. Today, he and Japanese Prime Minister Senei Takaiichi visited the USS George Washington, an aircraft carrier docked near Tokyo. In an address given there, the two leaders pledged to usher in a new era of cooperation on security and trade, reinvigorating an alliance that Trump described as the foundation of peace in the Pacific.

Trump said that the Japanese prime minister told him that Toyota would be investing some $10 billion in U.S. auto plants. Toyota didn't immediately rest. respond to a request for comment. Separately, defense secretary Pete Hegeseth said today that the U.S. carried out three new lethal strikes on four vessels allegedly operated by drug smugglers in the eastern Pacific yesterday. For the first time, drawing Mexico's military into President Trump's expanding campaign against transnational criminal groups.

Heg Seth wrote in a social media post that, in total, 14 alleged narco-terrorists were killed in the three strikes, which left one survivor. Mexico's Navy said it hasn't found the survivor. Coming up, what a change in OpenAI's corporate structure means for a longtime partner, Microsoft. That's after the break. OpenAI has successfully converted to a more traditional corporate structure, a move that cleared an obstacle for a potential initial public offering and push the valuation of longtime partner Microsoft higher, closing above $4 trillion for the first time.

For more, I'm joined now by Keach Hagee, who covers media and technology for the journal. Keach, what does this new structure enable OpenAI to do? Well, the most important thing is that it lets it raise money and maybe even to IPO sooner rather than later. It restructures the for-profit subsidiary underneath the nonprofit in a way that is a public benefit corporation. A little bit more like a normal company, it lets them give it. equity to employees and investors, most importantly. So this is something investors were really, really hungry for and were sort of making some of their fundraising continue upon them being able to do. What does the public benefit part of that phrase really mean? It means that the company

has a fiduciary duty not just to investors and shareholders, but to sort of larger social principles. So in this case, it's making AGI that benefits all of humanity. AGI, of course, stands for artificial general intelligence. There's been a debate, to put it mildly, about OpenAI's corporate structure for some time. Does this move settle it? I think for the moment it does, although you do still have Elon Musk's lawsuit against Open AI, winding its way through the courts. Musk has argued that they are betraying their mission by doing this and has tried various times to get an injunction and to block the conversion. So that's still happening, but in general, I do think this puts this matter to bed.

Microsoft has invested billions of dollars in OpenAI, and with this move, it has a 27% stake. What does that show about the relationship between OpenAI and Microsoft at this point? Well, it's a pretty good deal from Microsoft. They've had a lot of tension over the past year. We've written a number of stories about how they're kind of frenemies, and they're increasingly competing with each other. But this really does show what Sam Altman and the CEO of Open Eye had said, said, which is that Microsoft is going to be our partner for a really long time. So they're kind of locked in. That was WSJ reporter, Keech Hakey. Thanks so much, Keech. Thank you.

United Parcel Service said today that it has cut 48,000 management and operations positions through a combination of layoffs and buyouts. The job cuts were greater than the shipper announced in April when it said it would cut about 20,000 operational jobs. UPS CEO Carol Tomei has been under pressure to reverse a long slump in the company's stock price. UPS shares rose, closing up 8%. Additionally, Amazon announced job cuts of 14,000 corporate workers today. It was a first move in layoffs that, as we mentioned on this morning show, are expected to affect as many as 30,000 corporate jobs. U.S. stocks drove to new record highs, helped by new artificial intelligence deals and solid corporate earnings.

The NASDAQ lead indexes, rising 0.8%. The S&P 500 added 0.2%, and the Dow rose 0.3%. Drugmaker Eli Lilly and Artificial Intelligence Chipmaker, NVIDIA, announced today that they plan to build what the companies say will be the most powerful supercomputer run by a pharmaceutical company to be used to boost the discovery of new medicines. The company has declined to disclose financial terms of the deal. Lily expects the system to be online by January.

Peter Loftus, who covers the pharmaceutical industry for the journal, explained what Lilly hopes to get out of the deal. The companies hope that the deal will help solve a problem for pharmaceutical companies and drug research and development generally, which is that drug companies, when they try to find new treatments, they have a tough time actually getting them all the way to pharmacy shelves because a lot of times these drugs will fail in clinical testing. It'll take years and years.

The success rate is actually relatively low. And there's probably many potential medicines and molecules that the companies haven't even conceived of yet. And so using AI at least has the potential to apply lightning speed analysis to reams of data. And often cases it's data that Eli Lilly and other drug companies themselves have accumulated. related over the years. So the hope for Eli Lilly is that this kind of a supercomputer can really

ramp up their efforts to find new medicines, to develop them more quickly, and then get them into the hands of patients. In other news, Substrate, a San Francisco startup founded by a protege of investor Peter Thiel has raised over $100 million. The company says it has reinvented a kid. key link in the microchip production process and plans to use its innovation to build more manufacturing facilities in the U.S. The funding values the company at more than $1 billion. Texas has sued Tylenol maker Kenview, alleging the company hid autism risks of its popular pain reliever despite doctors saying it is safe to take during pregnancy. The lawsuit claims that

research shows a link between autism and prenatal and early childhood use of Tylenol's active ingredient acetamethin. Studies examining a link between acetamenefin and autism are inconclusive. Kenvue called the lawsuits claims baseless and said in a statement that the company was concerned by misinformation spread about the drug. And that's what's news for this Tuesday afternoon. In case you missed it, heads up. We dropped a new episode of What's News and Earnings earlier today, looking at how airlines are planning their pricing strategies ahead of the busy holiday travel season. That's in the feed now. Today's show was produced by Pierre Bienn-May and Zoe Colkin. Our supervising producer was Yolanda McBride.

And I'm Alex Ocelo for the Wall Street Journal. We'll be back with the news show tomorrow morning. Thanks for listening.