WSJ What’s News - Trump and Xi to Meet in China: What’s at Stake

Episode Date: May 12, 2026

P.M. Edition for May 12. President Trump left today for his summit with Chinese leader Xi Jinping. WSJ Washington bureau chief Damian Paletta lays out the stakes, with the two leaders expected to tackle trade, Iran and Taiwan. Plus, inflation hit its highest level in three years last month, outpacing wage growth. Journal economics reporter Chao Deng explains how the war in the Middle East is driving up prices. And there’s a fire sale on MBAs, with a number of business schools offering deep discounts on their tuition. We hear from reporter Ray Smith about why it has everything to do with AI. 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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If he has a good meeting and he comes away with some tangible things from Beijing, he could sell that to the American people that his brand of 2026 diplomacy is still effective. And criminal charges against the operator of the ship that crashed into Baltimore's key bridge and killed six people. It's Tuesday, May 12th. I'm Alex O'Sullough 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 start the show today on a topic that's on top of mind for a lot of people, how much things cost.

And it turns out they're costing more. New data from the Labor Department out today showed that inflation rose 3.8% in April from a year early. earlier. It's the biggest jump in three years and clearly shows the effect of the Iran war on energy costs. Journal Economics reporter Chao Dang joins me now to discuss what's behind the numbers. Chow, I feel like this is what economists have been afraid of ever since the start of the Iran war, that higher gas prices would start to make their way through the economy. Is that what's driving the numbers? Yeah, unfortunately, energy prices, they were up 18 percent from a year earlier, and within that you have gas. All Americans who drive know that gas was up 28% from a year earlier.

Airfare prices were up 21%. It's really all about energy. This report suggests that our economy is almost entering a new chapter where inflation appears to have stepped up. And some of the analysts I was talking to you today were talking about inflation at 4, even 5% as the year goes on. Inflation is now growing faster than people's paychecks. And that's the first time since 2023 that that's been the case. Families are having a harder time paying for things that even if their salary paychecks are going up, it's just not keeping up with inflation. That reflects why consumers are constantly feeling so down about the economy.

Keeping inflation down is one of the things the Fed is supposed to be doing, right? What does this new data mean for the central bank and for Trump's pick for Fed chair, Kevin Warsh? President Trump has made it pretty clear that he expected. interest rate cuts. This is going to be very difficult for Kevin Warsh. Investorsh started the year talking about potential rate cuts by the Fed, and this report pretty much takes that all off the table. That was WSJ economics reporter Chow Dang. Concerns about inflation pushed 10-year treasury yields to a one-year high. And oil prices keep rising. The global benchmark Brent Crude gained more than 3 percent to above $107 a

barrel. As for stocks, they were mixed today. The NASDAQ led losses and ended down 0.6%, while the Dow edged up by 0.1%. In other business news, we're exclusively reporting that Google is in talks with SpaceX for a rocket-launch deal that would help Google put its own data centers in space. A deal like this would have Google and SpaceX working together, even as they prepare to compete on orbital data centers. That speculative technology is at the heart of SpaceX's IPO pitch to investors. SpaceX's SpaceX didn't respond to a request for comment. And eBay's board has rejected an unsolicited takeover proposal from GameStop for $56 billion. The company says the offer is incredible or attractive.

GameStop CEO Ryan Cohen is a meme stock favorite, but the rollout of his campaign for eBay appears to have fizzled. One of his TV appearances left many on Wall Street confused, as he offered limited details on how he plan to finance the deal. Cohen has said that he's prepared to take an offer directly to shareholder. if eBay isn't receptive. Shares of GameStop fell three and a half percent, while eBay stock added about 2%. Coming up, why some business schools are offering discounts on their MBA programs.

That's after the break. Okay, when I sell my business, I want the best tax and investment advice. I want to help my kids, and I want to give back to the community. Ooh, then it's the business. vacation of a lifetime. I wonder if my out of office has a forever center. An IG Private Wealth advisor creates the clarity you need with plans that harmonize your business,

your family, and your dreams. Get financial advice that puts you at the center. Find your advisor at IGPrivatewealth.com. Today, President Trump took off for China, where he's planning to meet with Chinese leader Xi Jinping. This will be the first visit to China by a U.S. leader since 2017, and it comes at a key moment. There's a fragile truth in the trade war between the two countries, the war in Iran, and growing competition in AI. For more on what to expect from this meeting, I'm joined now by WSJ Washington Bureau Chief Damian Paletta.

Damian, I want to talk about what position everybody's in coming into this meeting. So President Trump has involved the U.S. in the Middle East war with no end in sight. Courts have struck down big parts of his tariff regime. How does that affect his standing going into this summit with Xi? Well, he's been a real moment here in his presidency, and he has a lot to gain because the U.S. and China are the two biggest economic global superpowers. And if he has a good meeting and he comes away with some tangible things from Beijing, he could sell that to the American people that his brand of 2026 diplomacy is still effective and can get results. So does he get investment in the United States from China? Does he get some kind of agreement on artificial intelligence, which has been something in the U.S. and the Chinese have been squaring off about for months? If it's a summit where there's a lot of pomp and circumstance and he comes back and gas prices are still really high and there's still a lot of problems in Iran and around the world, it might be harder for him to sell this as a victory.

What is Chinese leader Xi Jinping coming into this meeting with and hoping to get out of it? The Chinese dynamic is fascinating. In fact, I went to China many years ago when Xi Jinping had first become the leader. I traveled with the Treasury Secretary at the time. This was during the Obama administration. And to see the way the Chinese kind of put on all the pomp and pageantry just for the president. that visit. It's going to be in such a different scale now with President Trump going. Xi Jinping really wants to convey to the world that China is still strong, the economy is resilient, that China has some leverage here because Trump's trade agenda hasn't gone the way the White House has wanted. President Trump needs China's help on Iran. And if China digs in and says they won't

help, that can make it even harder for him to get a resolution to get the straight of Hormuz open and to get gas prices to come back down. The Chinese, if they are too antagonistic, we all know President Trump won't like that. And so if President Trump decides to keep the tariffs in place or even raise the tariffs, that'll hurt the Chinese economy. What does President Trump want from this meeting on trade specifically from China? One thing we should really be watching for is one, to see if the Chinese agree to invest a lot in the United States, which would, you know, look good from President Trump's perspective because it would bring money into the United States, but at the same time could raise national security concerns about Chinese getting access to U.S. intellectual property and things like that.

We should also watch to see if the Chinese agree to purchase things like soybeans or other agricultural products, which would really help U.S. farmers who have been battered by the trade war. One thing that we're all watching closely for is Taiwan, of course, because if the Chinese can pull Trump back a little bit from the U.S. to support of Taiwan, that would be a huge victory for China. And that's the kind of thing that could be on the table. In fact, President Trump even said he expects to talk to the Chinese about Taiwan during his visit. That was WS.J. Washington Bureau Chief, Damien Pelletta. Thanks, Damien. My pleasure.

We have an update on the cruise ship Haanta virus outbreak. Yesterday, 16 Americans arrived at a biocontainment facility in Nebraska. One tested positive for the virus, while the 15 others are in quarantine at the University of Nebraska Medical Center. Another couple from the crews was taken to a biocontainment unit at Emory University Hospital in Atlanta. One of them had hontovirus symptoms. Officials said they're monitoring all cruise passengers for flu-like symptoms. The passengers will be told if they can isolate at home or if they will need to stay at a facility for the full 42-day hauntavirus incubation period. The Justice Department has filed criminal charges against the operator of the ship that crashed into Baltimore's Key Bridge in 2024.

Six construction workers died as a result. At a press conference this morning, FBI Special Agent-in-charged Jimmy Paul detailed the charges against the defendants, Singapore-based Synergy Marine and Radha Khrushnan Karthik Nair, an Indian national who worked work for both Synergy and its India-based subsidiary, Synergy Maritime. The indictment shows that Synergy and Radha Christian Karthik Nair repeatedly failed to document, investigate, and report significant safety risks and hazards aboard the Dolly. They forge safety inspections and certifications.

Synergy could face a fine of up to $10 billion. The company didn't immediately respond to a request for comment. Nair is thought to be in India, and the DOJ says it will try to bring him to the U.S. to face the charges. FDA commissioner Marty McCarrey is leaving his role. He had fought with officials in the health department and the White House on many policy issues. The WSJ has learned that McCary was planning to resign today. Trump had signed off on a plan to fire McCary, as you heard on our show last week.

And New York City Mayor Zoran Mamdani is abandoning his proposal to raise property taxes by 9.5%. That could have generated $3.7 billion for the city, but many homeowners and the real estate industry opposed it. Momdani continues to work with New York Governor Kathy Hokel on a more targeted Pietater tax, which would apply to second homes worth $5 million or more. And finally, business schools like those at Purdue, Johns Hopkins, and the University of Maryland are holding a fire sale. They're offering discounts, sometimes as much as half off, on certain programs for this fall. That's a pretty big change for one of America's most expensive graduate degrees. Ray Smith, who covers workplace and career issues for the journal, says the trend is growing.

We're seeing a lot of these announcements roll out this year, this week even. We're not necessarily seeing sort of like the big league. We haven't heard from a Harvard business school yet, but, you know, we can see a lot more schools going this way. What's changed is AI. No one's quite sure what the future workplace is going to look like with AI. And so the cost of going to business school is already so expensive. When you throw AI in the mix and what it may, potentially, potentially due to the future workplace. People are questioning whether that's an investment they want to make. And schools are very aware of this.

Some of these schools are saying that they're offering these discounts or scholarships precisely because they feel like some workers out there already have had their jobs disrupted by AI. And so the schools are saying, not only are we going to give you a discount, we're going to give you these programs that will help you if you've been displaced or if you're just feeling lost because AI is moving so fast. And that's what's news for this Tuesday afternoon. Today's show is produced by Danny Lewis, Anthony Bansy, and Alexis Moore, with supervising producer Tali Arbell.

I'm Alex Ocelo for The Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening. The Madamy Holmes Bike for Brain Health supporting Baycrest returns on May 31 for its fifth anniversary, with a new start and finish at the Aga Khan Museum. Join thousands of cyclists as we take over the DVP and Gardner Expressway in support of dementia research and brain health. Riders of all abilities are welcome,

and both regular bikes and e-bikes can participate. Bring your friends, family, or corporate team, and make an impact. Register today at bikeforbrainhealth.ca.