WSJ What’s News - Trump Defends Tariffs, Budget Cuts in No-Apologies Address

Episode Date: March 5, 2025

A.M. Edition for Mar. 5. After a volatile day of trading as U.S. tariffs kicked in, President Trump previews further trade action while acknowledging his policies could trigger an "adjustment period." The WSJ's Brian Schwartz and Damian Paletta break down the speech. Plus, China sets a strong economic growth target and doubles down on home-grown AI. And WSJ AI Editor Ben Fritz shares how researchers hope to stop chatbots from “hallucinating.” Luke Vargas hosts. Check out WSJ’s special report, What's Ahead for AI.  Learn more about your ad choices. Visit megaphone.fm/adchoices

I've got this condition where I don't feel pain. You're a superhero. No, I'm not. This is how intense Nova Kane sounds. Oh, wow. Imagine how it looks. Is there more? Yeah, big time.

Nova Kane, forming theaters March 14th. President Trump defends his trade and government reform agenda in an unapologetic address to Congress. And we are just getting started. Plus, Commerce Secretary Howard Ludnick hints at a looming deal to reduce tariffs on Canada and Mexico. And China sets a strong growth target and doubles down on homegrown AI. It's Wednesday, March 5th. I'm Luke Vargas for The Wall Street Journal,

and here is the AM edition of What's News, the top headlines and business stories moving your world today. In his first major speech since the inauguration, President Trump told a joint session of Congress last night that his agenda, which he described as swift and unrelenting and which has included an immigration crackdown, cuts to the federal workforce, and stiff tariffs on imports, had already succeeded in revitalizing America's momentum.

Gone were appeals to unity. Trump attacked Democrats as radical left lunatics and blamed former President Joe Biden for the country's problems. At multiple points, Democrats broke out in boos. And just seven minutes into the speech, Democratic Representative Al Green of Texas was escorted out after rising from his seat and shouting at the president, prompting an intervention by House Speaker Mike Johnson. Finding that members continue to engage in willful and concerted disruption of proper decorum,

the chair now directs the sergeant-at-arms to restore order. Remove this gentleman from the chamber. So what did the record hour- and 40-minute address tell us about what's in store? WSJ economic policy reporter Brian Schwartz said more protectionism. He touched on how he was going to move ahead with 25 percent tariffs on copper and 25 percent tariffs on imports of aluminum, lumber and steel. Speaking after a volatile day of trading in which

the S&P 500 closed below its final election day level as U.S. tariffs went into effect on Mexico, Canada and China, Trump acknowledged that retaliatory measures, especially those from China targeting American farmers, could trigger an adjustment period, but he defended the necessity of continuing his approach. Just remind us that tariffs are not just about protecting American jobs. They're about protecting the soul of our country. Tariffs are about making America rich again and making America great again and it's happening and it will happen rather quickly.

There'll be a little disturbance, but we're okay with that. Trump filled in some additional details about so-called reciprocal tariffs, saying the measures to equalize U.S. duties with the tariff and non-tariff barriers imposed by other nations would be imposed on April 2, though administration officials have told industry groups they could take six months or more to fully implement. Well, Brian said Trump was equally enthusiastic about continuing the hunt for cuts to the government budget, even as top House Republicans urged GOP lawmakers to stop holding in-person town halls after

confrontations with constituents and Democratic activists over government layoffs and feared Medicaid cuts went viral. In front of hundreds of members of Congress, live on television, he gave Elon Musk, who was overseeing the Department of Government Efficiency, a salute of sorts. And when he did that, Musk notably bowed to him, the president, and the crowd of lawmakers

who were there to watch Trump on Capitol Hill. WSJ Washington coverage chief Damian Paletta described what followed from Trump. He listed a bunch of government programs by name that this Department of Government Efficiency led by Elon Musk has identified for cuts. And he went through a number of African countries, for example, that have gotten millions of dollars for specific programs. And he listed them in great detail. By identifying these programs in places like Lesotho, he's trying to show Americans this

is not where your tax money should be going. This money should stay within the United States. One interesting part of the speech though was when he attacked Democrats and said that, for example, civil servants are unelected bureaucrats and they should not have a say in how the government's run. Some Democrats at that point pointed to Elon Musk suggesting he is an unelected bureaucrat. They were trying to turn the tables on him. But quite frankly, there weren't enough of them doing it and it wasn't effective because the cameras didn't really cut to them. So it was just to show that really President Trump had the mic and he had the night. In a speech that has traditionally served as a White House wish list for congressional action, Trump did present some specifics.

He called for a repeal of the 2022 CHIPS Act, which pumped billions of dollars into domestic semiconductor development and manufacturing, and which was backed by 17 Republicans in the Senate and 24 in the House. You should get rid of the CHIP Act and whatever's left over, Mr. Speaker. You should use it to reduce debt or any other reason you want to. Trump also asked lawmakers to pour vast new resources into securing the border, and he reiterated calls to see large new tax cuts on top of extending expiring ones, moves that could further reduce revenues by $2 trillion over a decade.

That last request could complicate GOP efforts to agree on an already sprawling tax bill amid conservative concerns about such large cuts without accompanying reductions in spending. Damien told us that debate in Congress is likely to become a major theme to watch in the second half of this year, but that Trump made it clear he is the one steering the ship. One thing that we should expect to see according to President Trump is more executive actions, more unilateral moves without Congress, because he thinks this is effective and this is the only way to get results. This is a warning to Congress essentially, that he doesn't need their support or approval to enact his agenda and that he's going to continue to act without them even if it makes some Republicans uncomfortable.

And as for one policy domain that's squarely in the president's court, foreign policy, Damian said that Trump seemed to dial back some of the more bombastic comments that he'd made in recent weeks. He talked about getting a deal between Russia and Ukraine. He was not as adversarial when he was talking about Ukraine in this speech as he was in the past few days. He made it sound like a deal was within reach. Similarly, he did not talk about in this speech taking over the Gaza Strip,

which is something that he kind of shocked the Middle East by introducing a few weeks ago. He said that Greenland, if they want, can join the United States. In the past, he said, we. He said that Greenland, if they want, can join the United States. In the past, he's said, we're going to take over Greenland. And he also did not mention this threat that he's made multiple times about making Canada the 51st state. So it's interesting to see whether he was intentionally trying to present a softer foreign policy in this speech than he has in recent weeks, or if he'll be back making those same pledges. But it seemed like he was intentionally trying to soften his foreign policy in this speech than he has in recent weeks, or if he'll be back making

those same pledges. But it seemed like he was intentionally trying to soften his foreign policy that has made many world leaders in Europe, Asia and around the world very uncomfortable. And before we move on, we should point out that after Trump's address to Congress, Commerce Secretary Howard Ludnick spoke to reporters and said the administration could announce a deal today to reduce, though not eliminate, tariffs on Canada and Mexico. He added that the agreement could include increased border security, but the details

were still being discussed. Coming up, China shrugs off looming trade tensions as it targets yet another year of five percent economic growth, and our AI editor drops by to discuss the race to stop AI chatbots from hallucinating. Those stories and more after the break. Sick of dreaming smaller? Sick of investing but not seeing your money grow? Sick of feeling like you're leaving money on the table,

paying high fees, and not knowing if you're even making the right investments? With Questrade, you get the right tools, stock insights, and proper guidance so you can become a better investor. It's time to get the financial future you deserve. Get yours, Questrade. China has set its 2025 growth target at around 5 percent, the same as last year, signaling that it expects its economy to withstand rising trade pressure coming from Washington. It also set a deficit target of around 4 percent of GDP, the highest in years, which suggests

more stimulus may be on the way to help jumpstart its flagging economy. WSJ tech reporter Rafael Huang says China is also tying its economic goals to increased efforts to achieve technological independence, particularly in AI. Chinese Premier Li Qiang said AI would be key to boosting China's digital economy. He pledged that China would boost support for applications of large AI models and AI hardware, such as smartphones and robots. And China's top economy planner also said that the country aims to develop a system

of open source models while continuing to invest in computing power and data for AI. And in other business and markets news, the Senate has voted to repeal a Biden era rule that would have required decentralized cryptocurrency exchanges to report their customers' transactions to the Internal Revenue Service as of tax year 2027. The 70 to 27 vote delivers a bipartisan victory to the crypto industry, teeing up the measures to be signed into law soon.

And we're exclusively reporting that Goldman Sachs is preparing its annual round of layoffs and this time is focusing on its vice presidents. According to people familiar with the matter, Goldman CEO David Solomon told senior executives that the firm hired too many VPs in recent years in relation to its overall hiring. About 3 to 5 percent of the firm's workforce is expected to be cut. And as tech industry leaders continue to meet at this year's Mobile World Congress in Barcelona this week, artificial intelligence has unsurprisingly been in focus. But as journal AI editor Ben Fritz reports, AI's utility, especially in sensitive corporate or legal contexts, is being held back by the seeming inability of chatbots to admit, I

don't know, when presented with difficult questions. It's a lesson that Ben found out when he asked, who am I married to? One of them said I was married to a tennis influencer, and it said that I had proposed to her in front of the Eiffel Tower. Then one of them came up with a random person in Iowa and another one came up with another journalist. And yes, I'm in the world of journalism, so maybe there's some logic, but I've never met this person.

In the AI world, those wrong answers, expressed with total confidence, are known as hallucinations. And once dismissed as a relatively minor problem, Ben said that researchers are urgently pursuing fixes, though the work is proving difficult. It's this unfortunate paradox where the smarter the AIs get, the more confident they get. The way that they're programmed in order to try to solve complex problems is to essentially be confident they can do it. Programmers are all in a competitive race with each other to have the smartest AI that can do

the coolest things. And they've largely decided that it's better to err on the side of going for it rather than to err on the side of saying, I don't know. There are some attempts to do it. I thought the most interesting one was that AIs are built on training data and that they need to built on training data it I don't know too much, then it's going to start doubting itself and it's going to not come up with answers that it actually could come up with. But clearly right now a growing number of people think it's going too far in the other direction. And for much more on those efforts to end AI hallucinations, as well as other dispatches from across the cutting edge of the artificial intelligence world, journal subscribers can

check out the WSJ's special report on What's Ahead for AI. We've left a link to it in our show notes. And that's it for What's News for this Wednesday morning. Today's show was produced by Kate Bulevant and Daniel Bach, with supervising producer Christina Rocca and I'm Luke Vargas for The Wall Street Journal. We will be back tonight with a new show. Until then, thanks for listening.